Many of these people have been forced into “short sales” and others have been foreclosed on. The reaction of lenders, who many believe are largely responsible for this mess any way, was to suddenly decide that they didn’t really want to lend to anybody with less than 30% down so loans became hard to get.

The Good News

Now there are signs that things are getting better. From June 1st, Fanny Mae scrapped its “Declining Markets” policy which effectively meant that the largest available loans to most people was 90%. Now with 95% loans available again, first-time buyers can qualify for a loan, thus stimulating the market from the bottom.

The increase in conforming loan limits in March is also just starting to have an effect. $417,000 was the previous limit for lower cost conforming loans but now, with the limit at $729,750, buyers can get a first loan up to that figure at a low interest rate, topping it up with a second loan for the balance of financing needed, rather than take out a large, expensive, jumbo loan.

Higher limits for FHA loans are also starting to have an impact. With just 3% down a home buyer, even with less than stellar credit, can qualify to buy with a loan up to $729,750.

The Market Will Recover

All of this is helping to move the real estate market towards recovery. And it will recover. Fully. A new study from the Joint Center For Housing Studies of Harvard University finds the country poised to see an increase in housing demand over the next decade. The reason? Our population is growing.

From 2010 to 2020 the population will grow by an average of more than 1.4 million people per year. That is a lot of growth.

And note that this is a nationwide study. If you look at Danville or San Ramon for example, you will see that we almost always have a buoyant housing market.

Our Market Is Resilient

Even now, with all the talk of doom and gloom, there is less than a 6 month supply of homes for sale based on the latest figures. 3-6 months supply is generally considered a neutral market. Less than 3 months is a sellers’ market and over 6 months is a buyers’ market. You can find a buyers market in Brentwood or Pittsburg or Antioch or even Concord but you won’t find it here. That’s why our prices have stopped plummeting. Sure there are some low priced homes to be found but they are mostly bank owned foreclosures, many of which are in pretty bad shape. An increasing number of the rest are selling above list price and with multiple offers.
All of the above has to be good news for the real estate market and home owners as a whole.

Soon, things will get back to normal with moderate 2-4% annual increases in value backed by sensible lending policies.

But owners Gianni Bartoletti and Luigi Troccoli obviously knew what they were doing. Incontro was an immediate hit with San Ramon foodies and if you want to eat here at the weekend, you better call a couple of days ahead for a reservation. This place is popular.

Incontro has an ambience that equals the best in the area, very reminiscent of a quality restaurant in Europe. This, combined with authentic, well prepared Italian food and attentive but unobtrusive service is the secret of its success.

Sylvia and I recently visited Incontro on a Tuesday evening in June. On entering, we immediately got a feeling that this was a cut above the average San Ramon restaurant. The combination of attractive surrounding with wood paneling and subtle pale yellow walls and a quiet buzz, even though only a few tables were occupied, was very encouraging.

For an appetizer, we shared the house salad - baby spinach with bell pepper, goats cheese, toasted almonds and a balsamic vinaigrette. This was the perfect appetizer and one portion was just about right to share.

Moving on to our main courses, Sylvia had  a flatiron steak with a port wine sauce which came with sweet and sour onions. The texture was firm, rather than chewy and the flavor of everything was superb. I went for the pan seared duck breast which was served with an Italian grape must reduction. Possibly served a little too pink for some people, this is exactly how duck breast should be in my opinion and this is one of the best I have ever tasted. It was absolutely outstanding. We accompanied this with an excellent bottle of Verdicchio from their predominately Italian wine list.

Now as regular readers know, we don’t often do dessert but we made an exception in this case having spotted a Panna Cotta on the dessert menu. Italians seem to understand desserts better than most. For those who don’t know, Panna Cotta is an eggless Italian vanilla custard and in this instance it was served with a wild cherry preserve. This is not an overly sweet dessert but the flavors are just phenomenal. The perfect end to an excellent meal.

Try it and you’ll like it! We will be back. Find out more at their web site at www.IncontroSanRamon.com.

The press continue to spread doom and gloom regarding the housing market, and there is little doubt that in many parts of the country, even many parts of the Bay Area, there is much cause for concern. The problem is that these reports always focus on large areas. It is not very relevant to tell a home owner in San Ramon or Danville how much home prices have eroded in Northern California. Your home is not located in Northern California. It is in a San Ramon or Danville. Even which part of the city can sometimes make a difference.

Real Estate Is Local

This is a phrase that is often quoted by real estate professionals and for very good reason. Take a look at the chart at the foot of the page. This has been generated from accurate data and it clearly shows how sale prices of a typical 4 bedroom 1800 to 2500 square foot home have been affected over the past year. By taking just the typical family home into account we get a much more realistic picture than when we consider overall averages. To make it even more meaningful, rather than just look at the whole of the East Bay, or even the San Ramon Valley, I have broken it down by location. This is the true picture and it could certainly affect your decision to buy or sell sooner, rather than waiting until later.

You will see that I have not covered everywhere here. In Alamo and Pleasant Hill, for example, there is insufficient data to show meaningful results. Other areas have been excluded because they are not in my main service areas. It is immediately apparent that some of our local markets are very resilient compared to others. Certainly some locations have suffered more than others. Average prices have fallen by 16% in east San Ramon for example. Most of the volume here is in Windemere and many of the sales are distress sales - homes that have been foreclosed and then sold by the banks at bargain prices. Banks don’t want to own homes!

In complete contrast to this are areas like Danville, Pleasanton and the west of San Ramon, where, although prices have fallen, the decrease over the past 12 months is only 4-5%. And look at Lamorinda. I have grouped together the towns of Orinda, Moraga and Lafayette because the demographics are similar and in order to have sufficient numbers of sales to provide meaningful results. Over the 12 month period under consideration, Lamorinda values have actually risen slightly. Of course there are fewer distress sales here.

Does This Mean Its A Good Time To Buy Or Sell Now?

So what can we say about these figures? We still don’t have enough data to say that we have “passed the bottom”, although it seems likely that we have done so in some locations, most obviously Lamorinda.

Danville, Pleasanton and the west side of San Ramon also look to be in good shape, particularly taking the relatively small decline in prices there into consideration. Walnut Creek also looks like it may be stabilizing although it would be nice to have a little more data here.
But just consider the actual price reductions again. With such relatively small losses in Pleasanton, Danville and western San Ramon, any further losses are likely to be minimal, so if you want to buy in these areas, why would you wait?

If you are moving within the immediate area, and you are both buying and selling in the same town, with so much choice and low interest rates, now is a great time to do so. I would advise finding a buyer for your home first if possible, as then you know exactly how much you can budget for your next home. Even with no home to sell, if I had been sitting on the fence for the past few months, I would make my move now. Even if prices fall further, any saving in price will most likely be taken up with higher monthly payments as the Fed has indicated that rate cuts are now at an end. There is only one way for rates to go from here.  Also remember that while there is plenty of inventory, sellers are more motivated to accept a lower price for their home. When the supply of homes starts to reduce, you can certainly expect to pay more for your home.

I should perhaps point out, for the benefit of regular readers, that this is a far cry from most of the restaurants I have reviewed. This is not a competitor for the likes of Forbes Mill or Postino, both of which should clearly be categorized as fine dining establishments. Caffé Delle Stelle is somewhat further down the scale than that, but frugality appears to be seen as an approach that many are embracing at the moment, so a more affordable dining experience appears well justified to me. That is not to say that this is in any way “down-market”. In fact it has the feel of a casual neighborhood café, an authentic Italian Trattoria. I find its survival a little surprising being situated, as it is, in what has to be a high rent area in Walnut Creek’s “restaurant row”. But perhaps that is the secret to its success. All around are restaurants with much higher prices while Delle Stelle clearly offers good value.

The ambience, in fact, is very appealing. The space was a restaurant well before Delle Stelle took it over and it is apparent that the budget was spent on the kitchen rather than the dining area. Closely packed tables with plain white tablecloths surround a simple central servery and the whole area has a painted concrete floor. Décor comprises, Italian wine bottles, boxes of dried pasta, giant cans of tomatoes, six-packs of Italian beer and similar items, all arranged in tasteful stacks. It sound strange but it works. There are usually plenty of customers and the restaurant has a definite Buzz, although I believe it is rarely full.

As far as the food goes, it is pretty authentic. There is a wide choice of appetizers including smoked salmon and carpaccio, neither of which would be typical menu items in a mid-price restaurant. There are also quite a few salads.

On being seated, a plate of bread with a bowl of a kind of tapenade, is brought to your table, together with a jug of slightly sparkling water with ice and a slice of orange. This is a nice touch and as is so often the case, I think it s the small things that make the difference.
On this occasion, keeping our fore-mentioned frugality in mind, Sylvia and I headed straight to the entrees, although we did select a bottle of Chardonnay as both an aperitif and to accompany our meal. You have to draw the line somewhere!

I ordered the grilled sole, which was always one of my favorite dishes here in the past. The quality was as good as ever. A generous filet of sole, cooked under the broiler with melted butter, dotted with capers and with a generous squeeze of lemon juice. Wonderful! This was accompanied by mixed squash and soft polenta. A very good well-rounded dish in the Italian tradition.

Sylvia chose another Italian dish, Chicken Saltimbocca. This was also very tasty, and a generous portion. The chicken breasts were smothered with the Saltimbocca sauce and this was accompanied by baby well-roasted potatoes. Neither of us had a dessert, and I don’t recall that their desserts were particularly exciting from when we were regular patrons but we were both well-pleased with our meal.
I should warn wine drinkers that the wine list is both short and predominately Italian. Not a problem if you know your Italian wines but I don’t. The chardonnay we had was Californian though (Salmon Creek, which is the house wine) and it was fine.  Service was a little slow, but we were not in a hurry and we will certainly return.

The press continue to spread doom and gloom regarding the housing market, and there is little doubt that in many parts of the country, even many parts of the Bay Area, there is much cause for concern. The problem is that these reports always focus on large areas. It is not very relevant to tell a home owner in San Ramon or Danville how much home prices have eroded in Northern California. Your home is not located in Northern California. It is in a specific city. Sometimes even which part of the city makes a difference.

Real Estate Is Local
This is a phrase that is often quoted by real estate professionals and for very good reason. Take a look at the chart at the foot of the page. This has been generated from accurate data that clearly shows how sale prices of a typical 4 bedroom 1800 to 2500 square foot home have been affected over the past year. By taking just the typical family home into account we get a much more realistic picture than when we consider overall averages. To make it even more meaningful, rather than just look at the whole of the East Bay, or even the San Ramon Valley, I have broken it down by city. The figures make interesting reading. They may even affect your decision to buy or sell now, rather than waiting until later.It is immediately apparent that many of our local markets are very resilient compared to many others.
Certainly parts of our area have suffered more than others. Average prices have fallen by 16% in east San Ramon for example. Most of the volume here is in Windemere and many of the sales are distress sales - homes that have been foreclosed and then sold by the banks at bargain prices. Banks don’t want to own homes!In complete contrast to this are areas like Danville, Pleasanton and the rest of San Ramon, where, although prices have fallen, the decrease over the past 12 months is only 4-5%.
And look at Lamorinda. I have grouped together the towns of Orinda, Moraga and Lafayette because the demographics are similar and in order to have sufficient numbers of sales to provide meaningful results. Over the 12 month period under consideration, Lamorinda values have actually risen. Of course there are far fewer distress sales in this area.
So what can we predict from these figures? We still don’t have enough data to say that we have “passed the bottom”, although it seems likely that we have done so in some locations, most obviously Lamorinda.Danville, Pleasanton and the west side of San Ramon also look to be in good shape, particularly taking the relatively small decline in prices there into consideration. Walnut Creek also looks like it may be stabilizing although it would be nice to have a little more data here.Is It A Good Time To Buy Or Sell Now?
If you are moving within the immediate area, and you are both buying and selling, now is a great time to do so. I would advise finding a buyer for your home first if possible, as then you know exactly how much you can budget for your next home, but there is plenty of choice out there and interest rates are low. If you don’t have a home to sell, it is also a great time to buy. The likelihood of home prices falling further is slim, and even if they do, any gains you make will most likely be taken up with higher interest rates. The Fed has indicated that rate cuts are at an end and there is only one way for rates to go from here.  Also remember that while there is plenty of inventory, sellers are more motivated to accept a lower price for their home. When the supply starts to reduce, you can expect to pay more for your home.

I initially built JustSanRamonHomes.com some years ago, using a very simple HTML editor, Arachnophilia. Lacking a “Template” feature, I used SSI to import the necessary repetitive HTML for a Header and Menu bar. When I switched to using DreamWeaver, which is in my opinion, the best web site development environment around, this caused major headaches due to incompatibity.

Now, all of my web sites can be updated in DreamWeaver. I have also taken out pages that were getting negligible traffic and improved many other pages. Both of these sites now provide the user with a quality experience. I would love to hear your comments:

www.JustSanRamonHomes.com - www.BernardGibbons.com.  

Let’s suppose you have a home that was worth $800,000 2 years ago. A move up then to a $1.2m home would have cost you an additional $400,000.

If we assume that home prices have fallen 20% in the last 2 years, your $800,000 home is now only worth $640,000. Fortunately for you, that $1.2m home has also dropped in value - to $960,000. So moving up to that same home would cost you only $320,000, saving you $80,000 in extra mortgage costs. Yes it’s true that you have to sell your home for 20% less than you could possibly have sold it for 2 years ago but so what? Those times are gone. You can still move up to the same home you could have then, only now it will cost you less money. Moving up in a down market is a great thing to do.

If you are currently renting, or perhaps a first-time buyer, it could also make a lot of sense to buy now, rather than wait until later.

There is no doubt that there are many potential buyers who are currently sitting on the fence and “waiting for the market to bottom out” in the belief that this is what serves their best interests, but in reality, this is probably not such a great idea.

First of all, how do you know when the market has bottomed out? The answer is, only after we have passed it and prices are on the rise. Most of the economists feel that we either at, or very near to, the bottom any way.

Also bear in mind that interest rates are now amazingly low. The only way they are going from here is up. And let’s face it, the most important number you should be looking at is your monthly mortgage payment. That is a lot more relevant than the price you pay for your home.
If you buy in today’s market, you have the benefit that there are a large number of homes from which to choose, including some bargain priced bank-owned ones. And sellers, in general are very motivated. If you buy after the bottom, when house prices are on the rise, you face increased competition and the possibility of multiple offers.

There is a further tangible benefit you may want to consider regardless of your circumstances. Suppose you wait until prices are rising again, maybe another 4-6 months. Moving house is not generally just an investment like buying stocks and shares. By buying now, you actually get to live in your new home faster and enjoy it. Life is not just about saving every dollar you can. Time is the one commodity you can never have more of!

Parties Jointly Announce Settlement of SROG’s Lawsuit Against the City of San Ramon, Challenging the City’s Approval of the San Ramon City Center Project

The City of San Ramon, Sunset Development Company, and San Ramon for Open Government (“SROG”) jointly announced the settlement of SROG’s lawsuit against the City, challenging its approval of the San Ramon City Center Project and the accompanying Environmental Impact Report.  The City Center Project, which was unanimously approved by the City Council in December, will feature a new City Hall, library, transit center and police headquarters, along with residential living, office space, retail, and entertainment components.  The settlement agreement will also result in SROG dropping two referendum petitions it has been circulating to challenge development agreement amendments for the Project. 

SROG had sued the City alleging that the approval violated the California Environmental Quality Act and the City’s 2020 General Plan.  The settlement calls for Sunset and the City to make a number of changes to the project, including: reducing the heights of the project’s tallest buildings to no more than ninety feet (resulting in reducing the office buildings from seven to six stories), reducing the condominium buildings adjoining the Iron Horse Trail to a maximum of seven stories, and taking several steps to reduce the project’s traffic and air quality impacts. 

The project changes also include reducing the project’s total office space and associated parking by almost fifteen percent, expanding the three-year trial free shuttle program to cover both the City Center and the rest of Bishop Ranch, scheduling express shuttle buses to and from BART for both AM and PM commute hours.  In addition, the City and Sunset will support a pedestrian/bicycle-accessible flyover crossing busy Bollinger Canyon Road at the Iron Horse Trail.

The settlement also requires all City Center buildings to be “LEED – Silver” certified – a high level “green building” standard that promotes sustainability and will reduce the project’s environmental footprint.

Along with the project changes, the settlement commits the City to moving forward with enacting a local ordinance requiring that any future buildings outside of City Center in excess of five stories go on the ballot for voter approval.

SROG spokesperson Jim Gibbon stated, “We were concerned that this project, while desirable in some respects, was going to overload city streets, block out regional views, and set a bad precedent for the future.  While the changes that Sunset and the City have agreed to do not fully address all the issues that prompted the lawsuit and the referendum petitions, we think that the changes do make it a much better project.”

Sunset’s President, Alex Mehran, is pleased that the project will move forward on schedule.  “We have always felt we have proposed a project that the citizens of San Ramon want to see happen.  We’re pleased that this settlement will allow the project to move forward on schedule and San Ramon will realize its longstanding goal of having a downtown.”

San Ramon Mayor H. Abram Wilson echoed the City’s satisfaction with the settlement.  “We think this settlement is a win for everyone concerned, especially the people of San Ramon, who will get the City Center they have wanted for so long.”

This is a summary of the Taxpayer Relief Act of 1997 (Section 121) which repealed and replaced the tax deferral provisions contained within Section 1034 of the Internal Revenue Code.

Generally, a Taxpayer can sell real property held and used as his or her primary residence and exclude from gross income up to $250,000 in capital gain taxes if the Taxpayer is single and up to $500,000 in capital gain taxes if the Taxpayer is married and filing a joint income tax return.  The Taxpayer is required to have lived in the real property as his or her primary residence for at least 24 months out of the last 60 months (two out of the last five years). 

Note that the 24 months do not need to be consecutive and there are certain exceptions to the 24 month requirement when a change of employment, health, or some other unforeseen circumstances has occurred.

Section 121 is effective for dispositions of real property held as a primary residence after May 7, 1997.  Taxpayers can complete a 121 exclusion no more than once every two years.

Taxpayers should carefully monitor the amount of “built-up” capital gain in their primary residence and may want to seriously consider selling their primary residence before the capital gain tax liability exceeds the $250,000 or $500,000 limitation.  The Taxpayer’s capital gain tax liability in excess of these exclusion limitations will be taxable.  A sale of the primary residence would preserve the tax free exclusion of the capital gain and would allow the Taxpayer to acquire another primary residence and start all over again.

Special legal, tax and financial planning is needed in circumstances where a Taxpayer already has a significant capital gain tax liability in excess of the $250,000 or $500,000 exclusion limitation.  For example, the primary residence could be converted to rental or investment property and then sold as part of a 1031 exchange after it has been rented for a sufficient amount of time in order to demonstrate the Taxpayer’s intent to hold the property as rental or investment property.  This would allow the Taxpayer to dispose of his or her primary residence, defer all of the capital gain tax liability, and diversify and allocate the capital gain tax liability pro-ratably over a number of rental properties clearing the way for further financial, tax and estate planning opportunities.

The tax liability calculation is not so simple when  divorce or the death of a spouse occurs during the period of home ownership. If you have any doubts about how any capital gains you make will affect your tax liability, you are strongly recommended to discuss the implications with your tax advisor.