You may have noticed while we’ve been rebuilding Burbed, the links to other worthwhile websites went away for a few weeks.  I’m happy to report they’ve all been restored.  (Or at least they all should have been restored; let us know if a favorite was eaten by Ceiling Cat.)

Have a look around and see if you find them useful, interesting, informative, or fun.  Also feel free to let us know if there’s a site you love that ought to be included.  Be sure to tell us why Burbed readers would enjoy it.

Feel free to complain about which category your favorite site was misclassified in, too.  It wouldn’t be Burbed without whining!

It’s another weekend in the Real Bay Area, so what better time to discuss anything you want about real estate, or all the sites that went on strike Wednesday, or anything at all. 

Here’s a photo sent in by Burbed reader nomadic to get you started. Photo source here.

Today we have a guest post from Burbed reader Greg Fielding.  Greg has a real estate blog, Bay Area Real Estate Trends, and even though he’s a real estate agent, he is not a Realtard.  If you check out his site, you’ll find it rather free of Now Is The Time To Buy.  For someone who makes a living helping people buy or sell houses, he sure spends a lot of time over on patrick.net.

Greg is based in Contra Costa County, which we haven’t covered enough on this site.  Be sure to let him know if you think his analysis is relevant to the Real Bay Area (if anyone can figure out where it is in 2012).

Anyway, please give Greg a big, warm, RBA welcome to the front page today. 

Tale of Two Markets: Breaking Down Case-Shiller Tiered Indices

Following up on the latest Case-Shiller Home Price Index report for the Bay Area, let’s break down index into top, middle, and lower tiers. The result shows two distinctly different markets since the price lows in the Spring of 2009.

Just as Wall Street has diverged from Main Street, high-end neighborhoods are enjoying a different reality than the rest of us.

The lower and middle-tiers are generally following the same pattern. When the supply of foreclosures was turned off, interest rates dropped, and buyer incentives kicked in, both market segments rallied. Then, when that temporary stimulus was exhausted, they resumed their declines at a paces of roughly 10 percent per year.

However, the top-tier – homes priced above $579,803 – are only declining at a pace of roughly 3-4 percent per year.

Why?

There are lots of possible reasons. Among them, that higher home prices are more directly tied to the stock market, which has performed remarkably well. In April of 2009, the S&P 500 Index was in the 800′s. Today it is at 1,277 – an increase of roughly 50 percent. Also, higher-paying jobs have survived the recession better than lower paying retail-type jobs that are more directly tied to consumer spending and sentiment. Or, that wealthier homeowners with higher-paying jobs were more likely to be able to refinance their homes to avoid foreclosure. And there are probably a dozen other reasons that all contribute to the divergence.

One other note: high-end home prices are holding relatively stable in spite of the reduction in conforming loan limits. Buyers literally need 100K+ more of cash to buy the same high-end home, and they are still doing it. So far, anyway. Honestly, I am shocked by this.

One thing is clear: this circle will square itself at some point. Either the mid and lower-tiers will rally (or stabilize) and the gap will narrow over time. Or, the pillars holding up the high-end will eventually give way and prices will begin to fall at a pace that matches the other tiers.

Written by Greg Fielding. This article originally appeared on Bay Area Real Estate Trends on January 4th.  Republished with permission, nay, encouragement of the author.

If you’re interested in Bay Area real estate, you should be familiar with the Prestige Home Index.  Put together by First Republic Bank, the Prestige Home Index tracks the value of a number of “over $1 million properties” in eight Bay Area counties.  Burbed has a handy link to the index on our blogroll on the right; you’ll find it with the Real Bay Area links.

Earlier this week, the latest quarterly numbers ending September 30th were released.  Let’s take a look at First Republic’s exciting graph with the latest RBA domicile data!

While the index has risen to 437.48 (after dropping from 450 nine months ago, long down from its peak of 533.17 exactly four years ago) the little kick at the very end of the graph shows what could be the second dead cat bounce, or it could show we’ve hit bottom!  Then again, it could just represent a few LinkedIn types jumping into Palo Alto ahead of their stock coming out of the no-trading lock-up zone.

Then again, the above graph is the median value of their high-end home portfolio, which is currently $2,531,042.  Since they neglected to graph the index itself, I’ve thrown one together for you.

Oh, silly me, I didn’t pull the “let’s exaggerate the graph by chopping a whole bunch of numbers off the bottom of the Y axis” trick.  Fine, I can play that game too.

Can anyone figure out which Bay Area county is not represented in the First Republic Prestige Home Index, San Francisco Edition?  My money is on Marin!

In San Francisco, the higher end of the luxury market was active. “Above $5 million, the market is healthy,” said Mary Lou Castellanos of Sotheby’s International Realty. “Smart money is buying now and is taking advantage of lower prices and lower interest rates. At the same time, a growing number of sellers are getting more realistic about price.”

We’ve featured high-end properties before, and prices aren’t always realistic (take a look at both the homes in the zip code series and this collection of Santa Clara County astonishers if you don’t believe us).

This is an Open Thread.

There are several real estate search sites out there that let you peruse homes on the Multiple Listing Service.  Regular Burbed readers may have have noted we’re partial to Redfin.  Zillow gets noticed for their ZEstimate, an automated model that attempts to value most homes in the United States.  Some of our fans like Trulia, as I get the occasional submission pointing to their site.

I just took another look at Sawbuck when I put a recent feature together.  Sawbuck is a Washington DC-based site that partners with local agents in several regions, including the Bay Area.   Until I found their listing information last week, I figured Sawbuck links were just nuisances. Google searches for property addresses pointed to Sawbuck’s very silly videos that were animated frames for MLS photos and information. 

But this time they had a very detailed page on the house I was checking out.  The videos were gone, even when Google pointed to embedded players.  They also had something I haven’t seen on any of the other sites before.

Their pages for each city have a Market Overview, showing how many homes are for sale, the median list and sales price, ho-hum, seen it.  But I hadn’t seen a Market Health Score on a city’s real estate activity before, at least not on a site that links to individual home listings.  Altos Research does something like that called the Market Action Index (MAI), but they’re in the Useless Aggregate Data business.

So how is the market doing in the Real Bay Area?  Let’s have Sawbuck and Altos fight it out, after the break!

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Well, that certainly got your attention.  I’d like to direct you to an excellent, dare I say seminal piece of reporting on the elephant in the California real estate room: Proposition 13.  I’ll quote a few grafs here, but I really would like you to read the entire piece.

California Diminished by 1978 Tax Revolt Shows U.S. in Decline

By Christopher Palmeri, Bloomberg/Businessweek
October 17, 2011, 12:23 AM EDT

Oct. 17 (Bloomberg) — California voters approved Proposition 13 to rein in property taxes that had doubled in 10 years. More than three decades later, that rebellion has mortgaged the state’s future, saddling it with the nation’s highest debt and lowest credit rating.

The measure led to reductions that dropped per-student school spending from seventh to 29th nationally, prompted cities to pursue sprawling retail development to compensate for lost revenue, and pushed the state into budget gridlock, including a $705 million revenue shortfall announced Oct. 10, by requiring two-thirds approval for any tax increase.

“Proposition 13 set up an unfair and dysfunctional two- tiered system of property taxes,” said Kevin Starr, a history professor at the University of Southern California and the author of a series of books on the state. “It choked off a source of revenue, and the lack of that revenue has brought California to the edge.”

The measure, approved in 1978, was the inspiration for an antitax movement that has taken hold of the public discourse in Washington and in state legislatures throughout the country. It caps real estate levies at 1 percent of a property’s most-recent sale price. Before it passed, local governments could raise revenue as they saw fit.

Here’s a few more colorful quotes from this story:

• “You couldn’t invent a crazier system,” [Santa Clara County Assessor Larry] Stone said in a telephone interview.
• “It’s had a profound impact on multiple levels,” said Jean Ross, executive director of the California Budget Project, a nonpartisan research group in Sacramento. “The one that’s underestimated is the shift in decision-making from the local level to the state. All of our public systems have been affected by our seemingly perpetual budget crises.”
• “Prop. 13 has had the unintended effect of favoring commercial property owners at the expense of homeowners,” [Los Angeles Mayor Antonio] Villaraigosa said Aug. 16 at the Sacramento Press Club. “Let’s apply Prop. 13’s protections to homeowners and homeowners alone.”
• “This is a nightmare,” said Mohammad Islam, San Bernardino’s assistant superintendent who has worked in school finance for 22 years. “It’s impossible what the state is doing to us.”

Yet despite all California’s budget woes (as described by Michael Lewis in Vanity Fair), there is no organized movement toward either doing away with, or even modifying Proposition 13 to a homeowners-only tax adjustment.  While presented as a way to keep senior citizens from losing their homes to skyrocketing property taxes, Prop 13 has become a windfall for commercial and corporate property owners instead.

Meanwhile, California’s public school system has declined from seventh in per-pupil spending to 29th according to this article. If you go by this NEA report, it’s 36th. According to this article from KQED, it’s 42nd.  Or 43rd.  Or 46th.  More importantly, education quality has dropped as well.  California ranks 46th of 51 (50 states plus District of Columbia) on test scores in 2003.  This more recent ranking had California come in 30th (but this appears to be a different series of grades).

That NEA report said we’re #3 in prison spending per capita, though!  Woot!

Now, if you don’t think an educated citizenry is an important goal, then you can tell me to shut up already about school funding.  But I suspect most knowledge workers (such as Silicon Valley engineers or San Francisco creative class members) would want our schools to return to their previous high quality, and that means starving them is not in our interest.

Let’s hear from someone else who doesn’t agree with that.  Furthermore, this is someone who writes a San Francisco real estate blog.  Here is his complete takedown of that 2600 word Bloomberg piece.  Ready?

Prop 13 Isn’t Squeezing Anything

Bill Quick, San Francisco Real Estate Blog

The political big spenders absolutely hate Prop 13, because it cut off their unlimited access to the piggy bank of private property taxation.

The truth is, our spending on essentials like education, public safety, and other bottom-line items is not being constricted by Prop 13. It is being choked off by the propensity of governments at both the local and state levels to spend money on tens of thousands of pet projects and pet constituencies, rather than paying for services that voters feel are the most basic. We’re not broke because our state “salary” (taxes) is too low, it’s because we spend way too much on non-essential fripperies.

Wow, I’m speechless from that relentless chain of brilliant logic!  And to be fair, when I called Quick on his heavy use of facts and supporting evidence, he did respond with this:

Enjoyed your sarcasm! I’ll be looking forward to your piece supporting runaway property taxes and booting retired boomers into the street, too. Of course, California’s housing economy is in such great shape that property tax hikes should be just the ticket for rocketing us to even greater heights!

Right.  Because interest rates and inflation are exactly the same as they were in 1978, and property tax assessments are rising faster than college costs.  Then there’s this:

Here’s a bunch of stats on California’s tax and business climate. Short takeaway: We’re in awful shape, with one of the highest overall tax burdens in America.

The bunch of stats are from the Tax Foundation, so I looked into just who they are and what their real motives are.  They’re funded by high-minded humanitarians such as the Koch Foundation (as in Koch Brothers) and ExxonMobil. They obviously have your interests in mind rather than those grabby one percenters!  Would you expect anything less from a group founded by the CEOs of General Motors and Standard Oil other than whether grannies are getting taxed out of their Cayman Island Corporations and have to bunk in their Swiss bank deposits?

Paul Krugman (a know-nothing economist who won a stupid Nobel) accused this group of committing “deliberate fraud” in their evaluation of Obama’s jobs proposal.  This isn’t the first time he’s questioned their methodology, either. But let’s drink to “the tax is too damned high” Kool-aid that the Tax Foundation is pouring.

It’s a lot cheaper than actually fixing things.

I read a lot of real estate sites in order to bring you Burbed-worthy features.  Recently, I found an agent’s special “Astonishing Homes” page that looked absolutely scrumptious.  Plenty of seven and even eight-figure high-end properties on acres of land with great schools.

Now I know absolutely nothing about this particular agent, but all these homes were on MLS. Member agents can detail any MLS listings in their region, and Sophia Delacotte put together a webpage with nicer luxury properties for people to get some real estate pr0n action.  But something was amiss when I took a closer look at the actual listings.

With ten different houses, that’s ten front facades and ten sets of details.  I have all that waiting for you inside, but before you join me, make your prediction how many of these ten estate properties:

• Sold (pending within 7 days)
• Sold (pending within 30 days)
• Sold in a longer timeframe
• Are still active on MLS
• Had their listing withdrawn
• Had a price reduction at some point

For “bunus” yucks, guess how many of these ten estate homes have marble columns.

Got your guesses ready?  Good.  Now, let’s see these Astonishing Homes and find out if you’re as Astonished as I was.

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Occupy Wall Street is finishing up its fourth week in Zucotti Park (if they weren’t evicted yesterday), near Wall Street in Manhattan.  The massive protest against Wall Street excess has spun off Occupy movements across the United States, including our very own Occupy San Jose movement on the steps of City Hall. 

And that  in turn spread to, I kid you not, Occupy Palo Alto.  The very definition of the one percent has supporters of the other 99, or at least the 99 found the right location, location, location for the one.

Occupy Wall Street comes to Palo Alto

By Jason Green, Daily News Staff Writer
Posted: 10/13/2011 06:09:44 AM PDT, Updated: 10/13/2011 06:09:51 AM PDT

Photos by Kirstina Sangsahachart/ Daily News

Some 150 people gathered Wednesday evening in front of a Palo Alto bank to lend their support to the growing Occupy Wall Street movement that has zeroed in on corporate greed and rampant unemployment.

Organized by the Peninsula Peace and Justice Center, the rally in front of the Bank of America on El Camino Real was one of several that took place across the Bay Area on Wednesday.

"This is an upwelling of frustration, a deep-seated desire for substantive change and a keen awareness of just how unfair and unequal our country has become," said the center’s director, Paul George, as protesters sang and waved signs at passing cars. "I expect to see these kinds of demonstrations happening weekly, daily."

As with the demonstrations in San Francisco and San Jose, the Palo Alto rally was held in front of a bank that received a federal bailout but foreclosed on jobless homeowners. "They got $45 billion in bailout money," George said, motioning to the Bank of America behind him, "and they continue to evict people from their homes."

One reason the movement has caught on has been the 99 percent message.  Signs from the Occupy groups tell their stories, and the Tumblr blog We Are the 99 Percent allows anyone to send in a photo with their tale of financial fallout.  (Click the image at left for a larger view.) And there are so many of these stories.  The enormity of misery and how so many people ended up near-destitute in these tales is what sustains both the demonstrations and those who add in their stories to the blog.

Even in the Real Bay Area, where It’s Special Here, people are living paycheck to paycheck.  We’ve discussed some of these ideas on Burbed before, such as the banks’ failure to foreclose on expensive homes, the huge amount of shadow inventory keeping home prices high, and the requirement for two incomes in order to buy even adequate housing.  Now rents are shooting up in both San Francisco and Silicon Valley.

For the most part, people who follow a real estate blog do so because they plan to buy or sell property at some point.  They are most likely in a better financial position than the typical resident.  So given that most of us are doing better than average (We Are the Top 50%), and that with incomes and home prices near the top of the entire country (We are the 1%), how are you feeling about your own financial prospects? 

What do you think about them now that a number of economists are admitting that yes indeed, we are in a full-blown Depression?  The drop in homeownership rates suggests a Depression as well.  Do you feel you’re the “rich” “they” want to tax, or do you consider yourself “middle class”?  Does “middle class” even make sense in an economy as atypical as ours, where a sixty year old tract house on 6000 square feet can sell for over $800,000?  Or a two-income family taking home more than $200K a year has little disposable income after paying for living expenses?  Or as someone recently asked on patrick.net, if you lost your job today, in how many months would you be homeless?

Here’s what happens when you head over to a site called apiscores.com: you get a map with little pins representing how well each school scores on the California API.  It’s all sunshine and rainbows!  At least the pin legend uses a rainbow, where 1, the lowest ranking, is really bad apple red, and 10, the highest, is the purest purple.

I don’t know what they’re doing with that light blue for rank 6 (they should have used something more like teal or at least aqua), and the dark purple they used is more suggestive of blue (and a lower score) than the light purple.  So given that whoever made the map didn’t spend enough time playing with the Color Wheel during Art Class (which has been cut to raise API scores), let’s have a look and see who’s in the Real Bay Area (RBA) and who isn’t.  Remember, the deeper the purple, the larger the college fund balances!  And the redder, the deader (at least in real estate terms).

Whoa, check out that swath that runs northwest through southeast alongside I-280.  Does that area look familiar?  It should.

Obviously there’s more to being in the RBA than just having top school scores (you also need to be score top sushi and get to the GooglePlex in a reasonable amount of time), but it’s nice to have confirmation that this map was onto something.  Admittedly this RBA map used purple the way the school score map used green, as a mixdown.  But the core RBA comes through on both:

Anyway, zoom in on your neighborhood and check out what color your neighborhood schools are.  The more you embiggen the map, the more pins pop up, so if you can’t find a particular school, you may have to zoom in some more or not show as many school types.

This is a Weekend Open Thread.

Burbed readers are a fascinating bunch.  One of them has put together some Bay Area-specific buying calculators, and wants you, the Burbed readership, to have a look.  Since you’re all so hard to please and think everything out there sucks, this is your opportunity to ask the author to make it suck less.

Please welcome Burbed reader PKamp3 and the Don’t Quit Your Day Job blog, introducing lots of boring math, charts, and stats.  Some of you should just go back to sleep, while others should start a second pot of coffee and get ready to dig on in.

Here’s an article I wrote with 2 RBA calculators attached. I wrote it kind of in a Burbed mindframe: “who the hell can afford RBA prices”?

Here’s a preview:

2362 LAURA Ln, Mountain View, CA 94043
$634,950

I can tell you before you click the link… using my default assumptions:(20% DP, 4.5% Interest, 30 Year Mortgage, 31% front end DTI.  You can change everything there.)  43% of Bay Area Households have the income to make the payment.  That’s 746,463, in the RBA 4… since I count Alameda County.

Might be interesting… now that I wrote the code I’m having fun looking at listings and running the numbers.  Maybe you can help come up with better house-hunter ranks?  I don’t want to spoil it, but based on home prices the rank changes.

Given how willing PKamp3 seems to be in helping make this tool more useful, please play with it and complain at length in the comments below.  I’ve already groused about the inability to put a cash amount rather than a percentage amount in the down payment, and noted that Alameda County’s presence in the dataset pretty much poisons the well of “Inner Bay Area” buyers.  It might be “Inner” but it’s not particularly Real.

Some of the limitations are due to what’s available.  Some cities have been removed from the dataset.  I felt that the RBA should be limited to San Francisco, San Mateo, and Santa Clara counties, with the possible addition of Marin.  Alameda County?  That’s a fine joke someone is playing on us.  Once those losers are removed, then we can talk about limiting the universe some more.  I would assume San Francisco residents probably don’t want to buy this crapbox in Mountain View, but you never know.

Head on over to the calculator and let us know what you think of this tool and how useless it is it could be improved.  Plug in some other home values and assumptions and see how many buyers you’re up against.  So, what do you think?  Do you see a use for this?  Or are you going back to sleep?