Here’s some news from the Merc (motto: Also available on paper!) that won’t come as a surprise to anyone who studied economics.

Bay Area rents are flattening out, new study says

By Pete Carey, San Jose Mercury News
Posted:   01/21/2013 05:47:55 PM PST; Updated:   01/22/2013 05:25:31 AM PST

The torrid pace of rent increases in the Bay Area is slowing, according to a survey of apartment complexes released Monday.

Average rents in the East Bay, Peninsula and San Francisco were nearly unchanged in the fourth quarter of last year and declined slightly in the South Bay, according to RealFacts, a Novato consulting group that tracks rents in apartment complexes with 50 or more units. That compares with the first half of the year, when some areas saw quarterly increases of 4 percent.

Some renters may be deciding that interest rates and low prices have made the time right to buy a condo, and that may account for some of the leveling off of rents, a RealFacts representative said. Occupancy rates for apartments have flattened out while condo sales were in the double digits in December from a year earlier in Alameda, Contra Costa, Santa Clara and San Mateo counties.

This is supply and demand.  If people are buying houses, then they don’t need apartments.  If people are buying houses, they don’t need to rent them, either.  So who loses in a hot housing market?  The landlord.

Are you noticing rents flattening, or even going down? Are more people moving because they bought something, or do new renters spring up instantly to replace them?  Are your rental properties still generating long lines and people offering to fight each other for the right to write you checks?

Thanks very much to Burbed reader Real Estater, who passes along the news that We’re Number One.  Again.  That is, We’re Number One as long as you don’t count ranches with a hundred thousand acres in Montana.

Silicon Valley real estate stunner: Woodside estate sells for $117.5 million

By Pete Carey, SJ Mercury News
Posted:   01/25/2013 07:00:12 PM PST; Updated:   01/25/2013 09:13:29 PM PST

WOODSIDE — A legendary investor’s sprawling estate here has sold for $117.5 million, one of the highest prices ever for a residential property in the U.S.

The sale price eclipses the previous Silicon Valley record of $100 million paid for a Los Altos Hills mansion by Russian investor Yuri Milner in 2011 and comes amid a red-hot market for luxury home sales in Silicon Valley and the Peninsula.

The private sale was closed in November between the owner, private equity investor Tully M. Friedman, and an undisclosed buyer represented by SV Projects, according to public records.

Nice going, San Jose Mercury “We once were a real News organization! Really!”  You’re reporting on a record-breaking property sale and couldn’t find any pictures of the property?  And it’s not like you didn’t have a few leads to go look for them.  Like the one from SFLuxe you alluded to at the end of your story and didn’t even hotlink in.

Their article has several excellent photos of delicious houseporn, all credited to photographer Jay Graham.

SFLuxe states their article is an exclusive, so they must have an arrangement with Graham to feature his photos.  Do check out their article.  In the meantime, Redfin is redirecting any requests to see the property record with a lovely redirect loop, so let’s see what we can find out elsewhere.

Update 20:50 — The Redfin link is working again but it’s been somewhat scrubbed. What a coinky-dinky.

360 Mountain Home Rd
Woodside, CA 94062

California > Redwood City > 94062 
Not for Sale
Zestimate: $19,227,778
Rent Zestimate: $12,677/mo
Est. Mortgage:
$69,193/mo

Bedrooms:4 beds
Bathrooms:4.5 baths
Single Family:8,930 sq ft
Lot:391,604 sq ft
Year Built:2005
Last Sold:Jul 1997 for $8,000,000
Parking:Garage
 
Description
This 8930 square foot single family home has 4 bedrooms and 4.5 bathrooms. It is located at 360 Mountain Home Rd Woodside, California.

Sure makes you wonder about those Zestimates when they’re off by 500%, although it’s hard to model paying top dollar for bragging rights.

We’re not going to find much in the public real estate websites, because the property was never listed for sale.  Still, the SFLuxe article gives a few hints.  The architect is Allan Greenburg, who featured four photos of the house in his online portfolio:

Woodside Residence
California

This northern California home sits in an elaborate hilltop garden. Reflecting the strong Palladian tradition in the United States, it is planned around hyphens and dependencies and features a double volume, elliptical garden room.

Photo: Michael Biondo

And as to why we are almost Number One in expensive real estate transactions?  There’s that 124,000 acre ranch in Montana that Stan Kroenke bought, listed for $132.5 million (including the cattle).

Update 20:50: Adding in an aerial shot.  Note the road at the side of the house is not where the entrance is, that’s far off beyond the lower right.

Anyway, eat your heart out, Yuri Milner.

Can there be any question that The Bubble is Back? Buyers are returning to that delightful 2005 method: the Begging Letter. It must be true, because it’s in a newspaper.

Can I Buy Your House, Pretty Please?

By JOANN S. LUBLIN, The Wall Street Journal, January 10, 2013

Rob and Julia Israch won a fierce bidding war for a three-bedroom townhouse in Mountain View, Calif., late last year even though their $750,000 offer—while $92,000 above the asking price—was topped by 11 rivals and was several thousand dollars below the highest bid.

A key reason: The seller, software engineer Lev Stesin, was moved by a letter in which the Israchs said they worked in the technology industry and explained how the home’s spacious layout would be perfect given the imminent arrival of their first child. Among other things, the townhouse has three bathrooms, a wood-burning fireplace and a roomy backyard.

The only problem with this real estate story is the author’s contention that it isn’t just happening where it’s Special, namely Mountain View. Pitch letters are also going to sellers in Seattle, San Diego, suburban Chicago, and Washington D.C. Hah, and you thought we were going to say Belmont or something. No, we really meant places where it isn’t Special at all (e.g. where you can make an offer and be the only one! Redfin’s CEO said 95% of the offers their agents made in Silicon Valley had competing offers.)

The WSJ piece included two examples of House Begging Letters that worked. Both were from Silicon Valley buyers. Here’s one.

Note the use of photos. Don’t beg without them. Also don’t house beg with form letters. You’re going to have to write an individual letter for each seller, calling attention to their home’s marvelous features. Comments such as “Of all the 1954 era crapboxes we looked at today, yours had the fewest pet odors and the least offensive paint scheme” will probably not be effective. Some tips:

• Remind the seller how attractive your offer is. You could write this note on the back of a hundred dollar bill to show how many more you have waiting.
• Mention all the things you have in common with the seller, so they identify with you and not any of those other Less Special buyers. If you can’t find the sellers on social media, a good private detective can ferret that info out. Or spend some of those C-notes on the gabbiest neighbors.
• Gush about their house and neighborhood without overdoing it. Otherwise they’ll figure you’re using irony. After all, it is one of several hundred 1954 era crapboxes in the tract. But — close to Google! (Don’t mention this if they tried and failed to get jobs there.)
• Describe your difficult house hunt without sounding whiny. If you can fake sincerity here, you’ll have it made:

A few years ago, the owners of an older Los Altos home got more than 21 offers and picked the one from a woman who also submitted a love letter from her dog, said Kathy Bridgman, an Alain Pinel Realtors agent who represented the sellers. “She won’t touch a thing,” promised the letter, signed with a paw print. “I will be able to play in the yard.”

After closing, the buyer immediately tore down the home and built a bigger one.

Note: In case you’re noticing that we’ve repeatedly reformatted this piece, you’re correct. Our blogging tools aren’t as compatible with each other as we wish they were.  In this particular case, one tool supports photo captions but won’t strip styles out properly, the other is the reverse.  Don’t even get us started on what WordPress is doing to both of them.

Discuss.

As disappointed visitors and new employees discover, Silicon Valley is a dull and ugly landscape of low-rise stucco office parks and immense traffic-clogged boulevards. The fancy restaurants are in strip malls, like you’d find in Arizona or something. There is nothing to do, nowhere to go. Massive arcologies like the new Apple campus are where the tech giants are headed, but until there are living urban neighborhoods connecting these monstrosities, anyone with hopes for a life outside of work will pay a ridiculous premium to live in San Francisco and spend two hours of every day sitting on a bus.

Meanwhile, the areas around and in between the tech giants of Silicon Valley are mostly ready to be razed and rebuilt. There are miles and miles of half-empty retail space, hideous 1970s’ two-story apartment complexes, most of it lacking the basic human infrastructure of public transportation, playgrounds, bicycle and running and walking paths, outdoor cafes and blocks loaded with bars and late-night restaurants. This is where the new metropolis must be built, in this unloved but sunny valley.

And then the new supercity gets linked to San Francisco by an existing boulevard of run-down old malls and decrepit car lots that pours right into the Mission District and downtown SF, 40 miles north. The boulevard is El Camino Real, or California Route 82, the one-time king’s highway that could be a new corridor of high-rise apartments and HQs and restaurants and museums filling in the long gaps between downtown San Jose and Apple/Google/HP/Yahoo/Intel and Stanford University and San Francisco. With local light rail at street level and express trains overhead or underground, the whole route could be lined with native-landscaped sidewalks dotted with pocket parks and filled on both sides with ground-floor retail, farmers markets and nightlife districts around every station. Caltrain already runs just east of Route 82, and BART already reaches south to Millbrae now.

The above is from a piece in The Awl that notes the large number of young, hip techies who may work in Silicon Valley but definitely don’t want to live in a ginormous, boring suburb.  Yes, there are well-paid people out there who don’t want to spend a million dollars for a sixty year old tract house, or even three thousand a month to merely rent one.  So what would you replace the endless clone houses of San Jose with?  Or would you simply raze most of Redwood City and rebuild Manhattan there?

This is also a great time to whip out this map of the region again, to remind everyone what makes The Bay Area So Special.  Pay careful attention to the region along The Street of Kings.

Thanks very much to Apocryphon at MetaFilter for linking to these sites above.

Here’s a cheery little story just to remind you that you’re all only one abandoned hellhole of a house away from losing Real Bay Area status, and it can happen anywhere!

 

Dumping ground: Burlingame neighbors tire of long-vacant home

January 08, 2013, 05:00 AM By Bill Silverfarb, SM Daily Journal staff

Daily Journal Neighbors want action taken against the owners of a vacant home in Burlingame who have not maintained the property for years. (photos, Bill Silverfarb)

A long-vacant home in Burlingame’s Lyon Hoag neighborhood has turned into dumping ground and neighbors in the area are sick of it.

The home, at 139 Channing Road, sits in the middle of million-dollar homes but neighbors fear their own property values will be negatively impacted by the property — which they say looks like an overrun junk yard.

The listed owners, Michael James O’Brien and John Quillian O’Brien, moved out of the home several years ago after a death in the family and have not maintained the property, neighbors told the Daily Journal.

Bruce Bettencourt, who lives right next door to the house with his wife, has called Burlingame code enforcement at least “100 times” over the years about rats, garbage, junk and overgrown vegetation on the property, he told the Daily Journal.

He has found dead raccoons on the property and fears it has also become a nesting ground for rats.

Dead raccoons plus live rats! Usually we get our housing fun from real estate listings.  But you can learn a lot from reading the news sites as well!  Let’s see what we can find out about this house.

139 Channing Rd
Burlingame, CA 94010
$694,000 Trulia Estimate

1 bed
1 bath
1,000 sqft
Single-Family Home
Public Record
Neighborhood: Lyon Hoag

Listing Details
Description provided by Trulia
This is a Single-Family Home located at 139 Channing Road, Burlingame CA. 139 Channing Rd has 1 bed, 1 bath, and approximately 1,000 square feet. The property has a lot size of 5,750 sqft and was built in 1922. The average list price for similar homes for sale is $3,020,488 and the average sales price for similar recently sold homes is $1,106,052. 139 Channing Rd is in the Lyon Hoag neighborhood in Burlingame, CA. The average list price for Lyon Hoag is $1,035,000.

Public Records for 139 Channing Rd
Official property, sales, and tax information from county (public) records as of 09/2012:

Single Family Residential
1 Bedroom
1 Bathroom
1,000 sqft
Lot Size: 5,750 sqft
Built In 1922
A/C: Central
Heating: Central
Parking: Detached Garage
Parking Spaces: 1
4 Rooms
County: San Mateo
Tax Rate Code Area: 4-001

While you can’t see much from the street, here’s an abandoned car from the view over the back fence.  If you check out the Streetview pictures, you’ll find trash cans in front of the house next door, but we don’t think that’s what the neighbor called the code enforcement office about.

You’d think that San Mateo County would want their $16,000 in back taxes.  You’d think they’d bring some kind of fines against the owners for abandoning their (live) dogs in the house.  Supposedly John Quillian,  Michael O’Brien’s stepson, recently told the city he’s planning on moving back in.

Why doesn’t the city or county force a sale of this property?.  Not only would that lead to  a new owner cleaning up what’s turning into a health hazard, but it will be good news for the local agencies as well.

139 Channing Road
Burlingame, CA 94010

Owner: MICHAEL JAMES OBRIEN & JOHN QUILLIAN OBRIEN
Land value: $94,608
Building value: $111,812
Total value for property: $206,420
Assessments for tax year: 2009
Last sale: $120,000
Date of last sale: 10/24/1979

Well, maybe a seafood fork.  A possible seafood fork.  Size extra-small.  In 2014.  Maybe.

The third rail of real estate may be getting some modifications, thanks to the new obstruction-proof California Legislature.  Now that both houses have 2/3 Democratic Party members, they could raise taxes without a single Republican vote of support.  But to modify Proposition 13, only an initiative passed by California voters will do.  The difference is that Legislators are now discussing these changes openly, sensing the era of tax cuts is also due for Fork Facetime.

California Democrats signal they want to reform Proposition 13

By Steven Harmon, San Jose Mercury News
Posted: 12/29/2012 01:00:00 PM PST, Updated: 12/29/2012 05:41:17 PM PST

SACRAMENTO — The third rail of California politics may not be as deadly as once thought.

Three and a half decades after the passage of Proposition 13 shook the political landscape in California and sparked a taxpayer revolt across America, voters appear to be warming up to the idea of reforming the initiative as long as protections for homeowners stay intact.

And the apparent sea change in public attitudes, combined with the two-thirds majorities Democrats now hold in both chambers of the Legislature, has emboldened some politicians to take aim at the iconic measure.

“It is time for a fix, because Proposition 13 is broken,” said Assemblyman Tom Ammiano, D-San Francisco, who plans to introduce a bill next year aimed at forcing businesses to pay higher property taxes.

The landmark 1978 measure rolled back property taxes and capped yearly increases until a property is sold, but critics say one of its unintended consequences was shifting more of the Golden State’s property tax burden from businesses to homeowners.

This isn’t the first time we’ve noted the havoc wreaked by Prop 13, and we’re hardly the only ones doing so.

Reforms being discussed include a “split roll” where commercial property is handled differently from residential, and lowering the threshhold for parcel taxes from 66 2/3 to 55 percent.  58 percent of Californians polled supported the split roll concept, where commercial property would be reassessed every 6 or 12 months.  Residential property would continue with assessment at time of sale with a 2% maximum annual increase.  However, 60 percent of those polled still “support” Prop 13.

In addition, Assemblyman Tom Ammiano wishes to address a loophole where corporate-owned property isn’t even reassessed when sold, because more than 50% of ownership must change hands.  Corporations simply constructed shell entities to avoid the 50% trigger despite buying and selling their entire interest in real properties.  For exaple, the E&J Gallo Company bought the 1765 acre Louis M Martini vineyards by having 12 family members buy individual shares, each under the 50 percent trigger.  The property remains assessed at the original low value because of this maneuver.

Even Google, a relatively new corporation, benefits from the complex dance of real estate partnerships, trusts, holding companies, and leases.  Some of their buildings sit on land owned by the pre-Prop 13 owner and his family trust, via a ground lease.  The 13.7 acre tract was assessed at $789,635 in 2009 and would have been worth $41 million without a single structure on it.  State law prevents land reassessment if a lease of over 35 years exists.  The buildings on the land were assessed at $38 million.

Before Prop 13 passed, business and residential property produced about the same share of state revenues, but now residential property generates 70 percent of property taxes.  California has also bid adieu to its excellent state colleges and universities, as well as its various public school systems, since property taxes helped fund the former and were primary support of the latter.

Feel free to grouse about money-grubbing state officials or the unfairness of our tax code.

Marin County psychiatrist disciplined over alleged real-estate talks with patient

By Gary Klien, Marin Independent Journal

Posted: 12/03/2012 02:07:01 PM PST, Updated: 12/03/2012 02:07:02 PM PST

MARIN COUNTY — A Kentfield psychiatrist was reprimanded by state regulators on allegations he used a patient’s therapy sessions to talk about the real estate business, the state medical board said.

Dr. Stephen Merritt Raffle was “grossly negligent” and committed “multiple boundary violations” by discussing his business experience and referring the patient to real estate lawyers and lenders, according to a filing by Linda Whitney, executive director of the board.

The board also alleged that Raffle failed to create or maintain therapy records over a period of more than three years, covering about 78 sessions.

Raffle was ordered to take courses in “professional boundaries,” medical record keeping and professionalism, the state board said. If he fails to complete the programs, he will have to end his practice.

Disciplined for talking real estate instead of the usual sex and violence? This counselor had his client’s financial health in mind! That has to be more important than discussing dreams about being chased by a giant cigar. And so what if he didn’t maintain records? We know a lot of real estate agents who aren’t all that great with paperwork either.

This is also your weekend open thread, so tell us how you feel about that.

We sure hope so.  You survived the end of the world yesterday, didn’t you? (Those not surviving the end of the world, please stop interrupting.)  Now we’ve found a piece on Trulia on the numerology of home sales. 

This means you can continue your lucky lifestyle, thanks to Trulia’s research.  It turns out that a lot of home sellers put their favorite “lucky numbers” in their asking prices.

So what’s wrong with this pie chart at right?  Too many nines and fives, yet not enough eights, that’s what.  Everyone knows that eights are lucky.  Well, everyone in the Real Bay Area knows that.  The lucky numbers in the rest of the country say otherwise.

This consolidated map suggests that there aren’t any particular lucky numbers in the Midwest, the Plains, the Rocky Mountains or the Pacific Northwest, just a countrywide avoidance of the number 13 in prices.  And here’s some more on 8 as a lucky number.

We took a spot-check of the asking prices in Cupertino, right now, over a million dollars (which is pretty much all of them).

We came up with one 1, one 2, one 6, three 9s, seven 5s, and a whopping ten 8s.    We just had to make a pie chart out of that.  Until today, we had no idea that donuts were a subset of pie.

If we then take the sub-million houses, we get an additional one 1, four 5s and two 8s.

We then compare with similarly sized cities (at least as to number of sales over a million) with rather different demographics.  San Rafael is majority white, and Oakland, while one of the most racially diverse cities, has a higher percentage of blacks than many other areas.

Whoa. There’s 4s in Oakland, which is a very unlucky number in Cupertino.  All three cities have a strongly marked preference for 5 over 9, while nationally it’s the other way by almost 2 to 1.

We welcome your reasoning on why this would be, or anything else you wish to bring up in this Weekend-after-the-end-of-the-world Open Thread.

Let’s say you built a super expensive, fancy-schmancy custom one-of-a-kind house on a spectacular view lot and had a bunch of designers each decorate a different room in the place to make it Extra Super Mega Special. Then you ran a charity fundraiser by calling it a Designer Showcase and listed the place for $45 million.  And of course you list it with Sotheby’s.

And yet, let’s say this drop-dead-gorgeous spec palace did not find a buyer for $45 million (or, we assume, anywhere near that vicinity) when it was first listed this February.  What do you do?

You could cut the price ten million or so.  And it looks like that was tried as well, as the most recent price last week is $35.88M.  And yet, the house is still sitting there, all lonely on its double lot and intense blue skies obtained with the finest Photoshop filters.  What’s the next step to avoiding serious financial fail?

In this case, the solution (or at least the next attempt at avoiding a catastrophe) is to put the house up for auction.  The starting price will be $25 million.  At least one website actually states this is going to result in the home selling for last February’s price.

Alas, we missed the preview yesterday afternoon.  But the auction will be on December 30th, giving you plenty of time to contact the right people and get yourself in on the fun.

Redfin won’t disclose the address, but we sure will: 425 Belvedere Ave, Belvedere.  You’re welcome.

Click the image at right to see the home’s brochure and many more pictures in tones of sapphire and sunset.  You can also drool all over the home’s website if the brochure isn’t enough house porn for you.

So, is the market bubble over already, or did the home builders simply overreach with a $45 million ask?  What do you expect the place to fetch at auction?  Is the opening $25 million minimum sufficient to move this mess?

CNN/Money has another one of their Most/Least/Best/Worst/Good/Evil slideshows that could have been presented as a table, but then they'd get ten fewer click-throughs. This time it's one of our favorite regional competitions, for 10 Least Affordable Cities for buying. Actually it's Least Affordable Metros, but it sounds better if they call them cities, even if a couple of them are known locales for multiple Portals to Hell and very few yachts or polo ponies.

10 least affordable cities to buy a home

BY LES CHRISTIE @CNNMONEY – LAST UPDATED NOVEMBER 29 2012 02:02 PM ET

Looking to buy a home? You may want to skip these places. Prices are either so high or incomes so low that many families can't afford to buy homes here, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index.

Anyway, we lost to New York City again, which is just so unfair. This isn't even an SF to Manhattan comparison, so we should have kicked serious butt here. However, California totally owns the Least Coast as far as leaderboard spots, and Washington DC didn't even qualify. We present the results in one easy list, so you don't have to click through their annoying one-city-at-a-time-gee-who-could-be-next-and-if-this-was-so-exciting-why-didn't-they-put-it-in-reverse-order-Top-Ten-List-style?

1. New York, where 28.5% of homes are affordible. They seemed impressed by $1100 a square foot, too. But they didn't define the boundaries of any of these metro areas, so of course we can (and will) complain we were cheated on geographical grounds. We doubt this was an apples-to-Big-Apples comparison.
2. San Francisco, 31.4%. The piece laments it's unaffordable all over, because nearby communities are also expensive. Nearby high-priced places such as Sausalito, Berkeley, and… wait for it… Daly City. We swear we are not making this up.
3. Santa Ana, 43.5%. I kid you not. Perhaps the nearby beach towns are pulling up its results. And Disneyland. Because Santa Ana is not what comes to mind when we think “delightful but so unaffordable California real estate.”
4. Los Angeles, 44.1%. Because “bunus” hydrocarbons and ozone raise home prices. Seriously, when did LA rediscover the bubbly?
5. Bridgeport, Connecticut, 44.2%. Look, if you have to tell us what state the metro is in, maybe it isn't really worth mentioning. Just sayin'.
6. San Jose, 46.2%. Above is the lovely photo they used to feature the Capital of Silicon Valley, probably because the Quetzlcoatl statue made the photog drop a perfectly good camera. Not one other metro had a freeway interchange featured. Not even Los Angeles, which loves its freeways so much they get definite articles. We suspect they're also putting their thumb on the scale by adding in San Benito County.
7. Honolulu, 48.8%. Houses cost more because of good weather, expensive shipping, and hotel jobs pay squat. But they get a photo with palm trees.
8. San Diego, 54.6%. Here the filler text spends more time lamenting the glory days of 6% affordability during the last bubble. Well screw you, because we're already on our next one.
9. Newark, 55.3%. No, not that one, in New Jersey. Although Newark itself is cheap. It's la-di-da luxury locales like Hoboken and Jersey City that cost the big bucks. We're sure it's a complete coincidence that NJ made the list even though the feature author's surname is Christie.
10. El Paso, 61.7%.This is an honest case of low overall incomes ($41.7K) as opposed to expensive housing ($141K).

Let us know if you find any of these results surprising, or what you plan to do to ensure we never lose to New York or LA or The OC ever again.. Or mention anything you want, because this is Your Weekend Open Thread.