• 633 ELM ST #209, San Carlos – A 2/2 in Pacific Hacienda, downtown San Carlos is a short walk. Patio faces north-west and looks out on a patio. Second floor unit. Priced at $849,999.
• 602 CHELSEA WY, Redwood City – A 2/1 in a very sought-after complex, Chelsea is has very good lighting and views of the central lake. It feels more like a town house, since its a top floor unit sharing only one wall (think windows on three sides).I like this area of Redwood City since it provides easy commutes (101, 280 and Caltrain) and nearby shopping. Priced at $519,900.

• 24 CHESTNUT ST, San Carlos – Good floorplan on not through street. Priced at $939,000.
• 3079 GOODWIN AV, Redwood City -Good floorplan, though mostly original condition and detached structure in back (personally, I’d make it an office or remove it). Listed $60,000 less than Chestnut.
• Both 1643 SAINT FRANCIS WY and 1643 SAINT FRANCIS WY work well too.
  
• 355 KING ST, Redwood City – King is in Mt. Carmel, one of my favorite neighborhoods. The third bedroom is accessed by a steep staircase, so it works well as a guest bedroom. Remodeled and landscaped. One car garage. A good value if purchased near the $799,450 list price.

• 3869 BRET HARTE DR, Redwood City – Situated in Farm Hill Estates, Bret Harte is completely remodeled (floors, windows, paint, kitchen, baths, landscaping) and requires no work. The living space (living room, dining room, kitchen) has windows on three-sides, nearly all face the Bay (nice views). A huge deck extends the dining room (great for entertaining). The kitchen looks out on the yard (for watching kids play). Three bedrooms up (all large rooms), and a family room / office / full bath down. In other words, there are two, distinct living spaces (up and down). School is Roy Cloud (K-8). Of the listed homes, Bret Harte is the most expensive at $1,269,000.
• 2 WILLIAMS LN, San Carlos – In San Carlos Hills on a cul-de-sac, 2 Williams is a short walk from Arguello Park. A typical rancher, visualize the house in two halves. Looking at the house from the street, four bedrooms make up the left half, and living room / kitchen / family area make up the right half. Most of the home is remodeled (except for the hall bath). The kitchen / family area looks out on the rear yard, which is comprised of an enclosed deck and pool (enclosure makes the yard more kid safe).  Schools are Arundel and Tierra Linda. Bret Harte offers more square footage, a significantly larger yard and views, although Williams is priced at $74,000 less and offers a pool.
• 1643 SAINT FRANCIS WY, San Carlos – Although smaller than the previous two homes, the floorplan flows very well. In my opinion, the home accommodates a two-child family. The home is completed remodeled (very nicely done), and the rear yard is easily accessible from the home. White Oaks elementary is within walking distance. Some consider Saint Francis a busier street as it joins El Camino and Alameda for south San Carlos. Compared to Williams, you get less home in a more sought after neighborhood for $45,000 less.
• 184 CEDAR ST, San Carlos – Located in San Carlos Hills near Belmont, Cedar divides the home by three bedrooms on the left and living / dining / kitchen / family on the right. Nice level yard. Compared to Saint Francis, Cedar offers significantly more square footage (360 square feet) which comes via the master and family room for $54,000 less. Again, Saint Francis is located in the more sought after neighborhood, White Oaks.
• 1056 SAN REMO WY, San Carlos – Although not as updated as the previous homes (though definitely move-in ready), San Remo is in good condition, has large rooms and a good division of space: three bedrooms / two baths up and a half bath / family room down (similar flow to Bret Harte). Located in San Carlos Hills on a cul-de-sac. Back deck has canyon views. Although the lot is large on paper, some of it is down slope. All in all, the yard works well for children. At $949,000, San Remo is significantly more affordable than all the above, yet it offers yard, schools, location and views! Although some may not like the exposed beam ceilings, remodel San Remo and you’ve got a beautiful home.

When presenting a new home to the market of active buyers, its best to expose it to the maximum number of home buyers in the shortest time possible (thereby creating the most interest). Therefore the listing timeline is critical: the home comes online Monday, real estate agents visit it during SAMCAR’s Tuesday Tour, agents show it throughout the week, buyers view it during weekend open houses, and offers are presented either Tuesday or Wednesday (~10 day cycle). In our experience, most agents either expect or are familiar with this timeline. Consequently, it came as a surprise when a handful of the agents preparing to write offers said the timeline was too quick. Wait a sec, you had 10 days!?

In addition to being hurried, many of the agents chose to wait or offered prices significantly under list price. (In my expert opinion, the home is marketed at or slightly below market value). After further discussion with them, it’s my opinion that the number of short sales / foreclosures in the north Peninsula has changed the mindset of buyers and selling agents alike. Why is that?

1. Short sales take significantly more time than standard transactions to complete. Buyers wait months before the lender even responds to their offer. Impact: Instead of moving quickly, buyers and their agents are used to significantly longer time frames.
2. Because short sales take so long to hear an answer, most buyers walk away in the interim (find another home, etc.). Or, the bank counters their initial offer and the deal falls through. In the meantime, others submit offers, including offers significantly below asking price. These low offers get accepted (partly because banks become more motivated over time to remove bad loans from their books. Impact: more buyers hear these Hail Mary stories and lowball homes (short sale or otherwise).

Whether my analysis is correct or not, I firmly believe short sales radically impact buyer behavior today.

• 160 Barkentine St, Foster City – located in a sought-after part of Foster City with little street traffic and near parks (good for children). The floorplan has good flow (formal living and dining, family room / kitchen). Nice touches, such as the master has a sliding door to the patio and skylights in the hallway. Personally, I spend most of my time in the back of the home where the kitchen, family and yard come together. Recently reduced, I’d expect this one to go quickly.
• 775 14Th Av, Menlo Park – Located in Fair Oaks. Relatively unknown, this neighborhood is bordered by Middlefield on the west, 8th Ave to the north and Marsh to the south. Although the area attends Redwood City schools, the streets are quiet and traffic is minimal. I’d say its an up-and-coming neighborhood, as new homes being built here every month. The home was recently remodeled and flows well. The yard is quite large in both the front, side and rear. The rear yard is most easily accessed by the master, which is nice for privacy. It has no family room.
• 232 Outer Ci, Redwood City – Great sleeping and living spaces. The rooms are large, and the two rear bedrooms are separate from the front two (providing a nice separation from the living area). The home is completely redone, flows well and the family room extends nicely to the patio. Although the side yard is entirely paved and the rear yard small, the front is huge (enclosed by a white picket fence) and a park is directly across the street.
• 3186 La Mesa Dr, San Carlos – located in the hills of San Carlos, the home flows well with a nice division of sleeping space on the left and living space on the right. The living room, dining room, kitchen / family make a circle, which is good for entertaining. Nice rear yard extends the family room. Nice flow, good location. Although perfect as-is, the home can still be remodeled further in my opinion.
• 1500 Tarrytown St, San Mateo – Located in the San Mateo Highlands, this Eichler is very clean and well-laid out (if you like modern or Eichler-ish floorplans, e.g. the house surrounds a courtyard). The rear garden is beautiful. I’d live here.
• 2181 Bunker Hill Dr, San Mateo – Another Eichler located in the San Mateo Highlands. Because its on a large (9,310 SF per MLS) and level lot, contractors will find it particularly appealing.
• 3514 Casanova Dr, San Mateo – Recently remodeled in San Mateo Village.
• 611 W 39Th Av, San Mateo – a 3 bedroom / 1 bath up with a full suite down (which works well as a rental). The upstairs kitchen and baths are mostly original, so the home is perfect for someone looking to add their own personal touches or build equity through improvements. Nice street, views from the front rooms.
• 3215 Upper Lock Av, Belmont – Located in Belmont in the hills (near Hillcrest and Raltson), the home is perched at the top of a steep driveway. Specifically, the location works well because it’s close to Belmont’s top-ranked schools and 92 / 280. The home works well as a 3 bedroom / 2 bath. Personally, I’d convert the carport to a garage, landscape the rear and remove the wall surrounding the fireplace (thereby opening the living room to the dining / kitchen). Its a good canvas for sure.
• 152 Leslie Dr, San Carlos – similar to many of the homes built in San Carlos Hills between 1975 to 1985, the home offers large bedrooms and lots of living space.
• 805 Regent Ct, San Carlos – also located in the San Carlos Hills. I assume the floorplan is modified significantly from its original pattern. The family room and two of the bedrooms offer views of the bay.
• 2682 Thornhill Dr, San Carlos – Thornhill is a street I really like in the San Carlos Foothills. Its quiet, private and close to downtown. I assume the floorplan was modified over the years. At its new price, its a good buy.
• 860 N Claremont St, San Mateo – Didn’t see the inside, but the exterior is charming, and the rear yard is good-sized.
• 2200 Hacienda St, San Mateo – a charming 2 bedroom on the corner of Hacienda and 22nd. Looking at the floorplan, it looks like adding a second-story would be a good investment, although the setbacks and lot size may pose a challenge (verify with the city).

If you’d like to hear more of my thoughts on any of these propertieis, then just let me know. Property Details:

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152 LESLIE DR, San Carlos 94070 (San Carlos) $1,298,000 Beds: 5 bed(s) Baths: 3 bath(s) DOM: 22 CDOM: 22 MLS: 80825748 Property Overview Detached Single Family (Class 1) Bed/Bath: 5 / 3 SqFt: 2,520 Yr Built / Age: 1975 / 33 years Assoc Fee: Lot: 9,920 sq ft Pricing/Dates List Price: $1,298,000 Sale Price: Sale Date: COE Date: OffMktDate: Excellent value for an updated home in the highly sought after area of the San Carlos Hills. This spacious home offers 5 bedrooms and 3 full baths on 2 levels with improvements throughout! The just remodeled kitchen offers gorgeous granite slab counters, breakfast bar and recessed halogen lights. Newer roof, windows, furnace, water heater, rear deck, the list goes on and on… Listed By Eddie Azzopardi, Realty World-Homesellers.Com

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232 OUTER CI, Redwood City 94062 (Redwood City) $1,225,000 Beds: 4 bed(s) Baths: 2 1/2 bath(s) DOM: 56 CDOM: 205 MLS: 80818888 Property Overview Detached Single Family (Class 1) Bed/Bath: 4 / 2 1/2 SqFt: 2,078 Yr Built / Age: 1939 / 69 years Assoc Fee: Lot: 6,580 sq ft Pricing/Dates List Price: $1,225,000 Sale Price: Sale Date: COE Date: OffMktDate: MOTIVATED SELLER! MOVE-IN CONDITION! Large home- 4 bedrooms.2.5 bath-Beautifully appointed with luxury amenities and custom finishes. Family Room/Formal Dining Room, Living Room w/fireplace, spacious Chef’s Kitchen with high-end appliances, Dining area, Large Master Suite with walk-in closets and spacious spa bath, private patio off master, 3 add’l bdrms 2 car garage. Listed By Kristin Cashin, Cashin Company

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3186 LA MESA DR, San Carlos 94070 (San Carlos) $1,225,000 Beds: 4 bed(s) Baths: 2 bath(s) DOM: 12 CDOM: 12 MLS: 80828029 Property Overview Detached Single Family (Class 1) Bed/Bath: 4 / 2 SqFt: 1,900 Yr Built / Age: 1969 / 39 years Assoc Fee: Lot: 6,500 sq ft Pricing/Dates List Price: $1,225,000 Sale Price: Sale Date: COE Date: OffMktDate: With its extraordinary landscaping of colorful plants and shrubs, natural rock accents, Japanese maples, lush trees and a dramatic entry this meticulously maintained, four-bedroom home sparkles with curb appeal. Inside, family and guests are welcomed into elegant, yet comfortable living spaces brimming with exuberant natural light where verdant views can be enjoyed from nearly every room. Listed By Cynthia Smith, Alain Pinel Realtors

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805 REGENT CT, San Carlos 94070 (San Carlos) $1,149,000 Beds: 3 bed(s) Baths: 2 1/2 bath(s) DOM: 68 CDOM: 68 MLS: 80816610 Property Overview Detached Single Family (Class 1) Bed/Bath: 3 / 2 1/2 SqFt: 2,160 Yr Built / Age: 1972 / 36 years Assoc Fee: Lot: 11,230 sq ft Pricing/Dates List Price: $1,149,000 Sale Price: Sale Date: COE Date: OffMktDate: Charming 2 story home on quiet cul-de-sac in desirable San Carlos hills. Large private lot w/ big side yard potential (property extends past side fence). New eat-in kitchen includes custom Midland Cabinets & professional appliances from Wolf, SubZero & Miele. Other kitchen features are slab granite, a second prep sink, wine storage & a cozy nook. Large separate family room has bay views. Listed By Margot Lockwood, Coldwell Banker-Woodside

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1500 TARRYTOWN ST, San Mateo 94402 (San Mateo) $1,089,000 Beds: 4 bed(s) Baths: 2 bath(s) DOM: 9 CDOM: 9 MLS: 80828492 Property Overview Detached Single Family (Class 1) Bed/Bath: 4 / 2 SqFt: 1,800 Yr Built / Age: 1959 / 49 years Assoc Fee: Lot: 12,320 sq ft Pricing/Dates List Price: $1,089,000 Sale Price: Sale Date: COE Date: OffMktDate: A PRIVATE RETREAT!! LIGHT AND BRIGHT ATRIUM MODEL ON SECLUDED & WELL LANDSCAPED 12,000+ SF CORNER LOT. 4 BEDROOMS WITH UPDATED BATHROOMS, AND FAMILY ROOM. LIVING ROOM WITH FIREPLACE WHICH OPENS TO REAR PATIO. SERENE REAR YARD W/PAVER PATIO AND BEAUTIFUL MATURE FOLAGE. LOCATED CLOSE TO SCHOOL & REC. CENTER W/POOL, TENNIS, PLAY AREA & GYM. A MUST SEE! Listed By Erica Damelio, Alain Pinel Realtors

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2181 BUNKER HILL DR, San Mateo 94402 (San Mateo) $1,048,888 Beds: 4 bed(s) Baths: 2 bath(s) DOM: 8 CDOM: 8 MLS: 80828749 Property Overview Detached Single Family (Class 1) Bed/Bath: 4 / 2 SqFt: 1,970 Yr Built / Age: 1958 / 50 years Assoc Fee: Lot: 9,310 sq ft Pricing/Dates List Price: $1,048,888 Sale Price: Sale Date: COE Date: OffMktDate: This spacious and expanded Highlands Eichler home is situated on a large level lot. Home offers the family the ability to grow. Ideal four bedroom home with two bath, family room, living room, and dinning area perfect to entertain. Well designed floor plan that has been expanded. Good size home that need updating. A must see for the Highlands fan. Sellers are motivated. Listed By Alex Palen, Alain Pinel Realtors

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160 BARKENTINE ST, Foster City 94404 (Foster City) $1,025,000 Beds: 4 bed(s) Baths: 2 bath(s) DOM: 18 CDOM: 18 MLS: 80826754 Property Overview Detached Single Family (Class 1) Bed/Bath: 4 / 2 SqFt: 1,900 Yr Built / Age: 1968 / 40 years Assoc Fee: Lot: 6,270 sq ft Pricing/Dates List Price: $1,025,000 Sale Price: Sale Date: COE Date: OffMktDate: First Time on the market in 35 years! Sought after one story Kay 559 home, Great flowing floorplan. Eat-in kitchen leading to family room and access to large backyard. Great Walk-in Pantry. Remodeled baths, gleaming hardwood floors, all new windows, new carpet, new fences, beautiful garden/backyard. Listed By Bob Lahl, RE/MAX Today

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2682 THORNHILL DR, San Carlos 94070 (San Carlos) $995,000 Beds: 4 bed(s) Baths: 3 bath(s) DOM: 54 CDOM: 54 MLS: 80819339 Property Overview Detached Single Family (Class 1) Bed/Bath: 4 / 3 SqFt: 1,970 Yr Built / Age: 1925 / 83 years Assoc Fee: Lot: 5,650 sq ft Pricing/Dates List Price: $995,000 Sale Price: Sale Date: COE Date: OffMktDate: Enjoy the quiet street in desirable San Carlos neighborhood. Unique floor plan for privacy, great for home office, extended family visits, use the upstairs as the complete master suite with nursery or second office. Great kitchen with large eating area easily accommodates 6 chairs, breakfast bar overlooks family room and wet bar, family room with sliding door to private sunny decking & patio… Listed By Olivia Edwards, McGuire Real Estate

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3514 CASANOVA DR, San Mateo 94403 (San Mateo) $995,000 Beds: 4 bed(s) Baths: 2 bath(s) DOM: 15 CDOM: 15 MLS: 80827202 Property Overview Detached Single Family (Class 1) Bed/Bath: 4 / 2 SqFt: 1,800 Yr Built / Age: 1948 / 60 years Assoc Fee: Lot: 5,000 sq ft Pricing/Dates List Price: $995,000 Sale Price: Sale Date: COE Date: OffMktDate: Beautifully rebuilt from the ground up! 4 bedroom, 2 full bath home with a great floor plan, lots of light, and endless details throughout. Kitchen has all new appliances, granite counter tops, and chic white cabinets. Hardwood floors, recessed lighting, marble fireplace with custom mantle, & more! Master bedroom has a beautiful bathroom, walk-in closet, and private entrance to backyard. Listed By Stacy Clark, Coldwell Banker-Burlingame

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611 W 39TH AV, San Mateo 94403 (San Mateo) $859,000 Beds: 4 bed(s) Baths: 2 bath(s) DOM: 33 CDOM: 33 MLS: 80823695 Property Overview Detached Single Family (Class 1) Bed/Bath: 4 / 2 SqFt: 1,650 Yr Built / Age: 1949 / 59 years Assoc Fee: Lot: 5,200 sq ft Pricing/Dates List Price: $859,000 Sale Price: Sale Date: COE Date: OffMktDate: AMAZING VIEWS! CHARMING HOME WITH LOTS OF LOVE! Listed By Thomas Huff, Cashin Company

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3215 UPPER LOCK AV, Belmont 94002 (Belmont) $849,988 Beds: 3 bed(s) Baths: 2 bath(s) DOM: 8 CDOM: 8 MLS: 80828710 Property Overview Detached Single Family (Class 1) Bed/Bath: 3 / 2 SqFt: 1,500 Yr Built / Age: 1964 / 44 years Assoc Fee: Lot: 7,579 sq ft Pricing/Dates List Price: $849,988 Sale Price: Sale Date: COE Date: OffMktDate: Perched atop a commanding, sheltered knoll with a private road leading to the home (and a mostly level yrd), the Upper Lock home is that rare opportunity to own a unique – one of a kind property in a spectacular location! Lovely views, sun-filled windows, fresh int paint, new cpts, a great flr plan & more! Sheltered & private, this is a “do not miss”! Open Sun 1-4 Listed By Philip Watson, Prudential California Realty

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775 14TH AV, Menlo Park 94025 (Menlo Park) $849,000 Beds: 4 bed(s) Baths: 2 bath(s) DOM: 26 CDOM: 26 MLS: 80825170 Property Overview Detached Single Family (Class 1) Bed/Bath: 4 / 2 SqFt: 1,477 Yr Built / Age: 1946 / 62 years Assoc Fee: Lot: 6,206 sq ft Pricing/Dates List Price: $849,000 Sale Price: Sale Date: COE Date: OffMktDate: 150K PRICE REDUCTION. Short sale, subject to lender’s approval. Beautiful Fair Oaks home that has been recently remodeled from top to bottom and expanded. Amenities include a wonderful new kitchen with stainlees appliances % granite counters, separate dining room, spacious living room with fireplace,air conditioning, large master suite with tub % separate shower. Wonderful landscaped fenced yard. Listed By Silvia Mirabal, Coldwell Banker-Menlo Park Santa Cruz

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860 N CLAREMONT ST, San Mateo 94401 (San Mateo) $825,000 Beds: 3 bed(s) Baths: 1 1/2 bath(s) DOM: 67 CDOM: 67 MLS: 80817043 Property Overview Detached Single Family (Class 1) Bed/Bath: 3 / 1 1/2 SqFt: 1,670 Yr Built / Age: 1929 / 79 years Assoc Fee: Lot: 6,762 sq ft Pricing/Dates List Price: $825,000 Sale Price: Sale Date: COE Date: OffMktDate: GRAND OLD DAME! What a great buy. Pending sale fell thur. Solid construction. Original condition. Spacious rooms and Large lot. French Drs. from Living room into Formal dining room. Kitchen nook with built-in china cabinet. Patio and barbecue area. One-car detached garage. Automatic sprinklers in front Open Aug. 24, 2008 2:00 to 4:00pm Listed By Rose Hocker, Intero Real Estate Services

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2200 HACIENDA ST, San Mateo 94403 (San Mateo) $785,000 Beds: 2 bed(s) Baths: 1 bath(s) DOM: 3 CDOM: 3 MLS: 80829715 Property Overview Detached Single Family (Class 1) Bed/Bath: 2 / 1 SqFt: 1,190 Yr Built / Age: 1939 / 69 years Assoc Fee: Lot: 4,950 sq ft Pricing/Dates List Price: $785,000 Sale Price: Sale Date: COE Date: OffMktDate: Fabulous home with old world charm. Spacious living areas and two good sized bedrooms on a wonderful corner lot. Situated on a tree-lined street in desirable Beresford Manor in San Mateo. Gleeming hardwood floors, architectural details and charm abound in this lovely home just perfect for 1st time buyers. Great schools, close to 25th Avenue shops and seasonal farmers market. Hurry in today. Listed By Guillermo Reyes, Prudential California Realty

• Home prices in San Mateo County, for the most part, held their value (or experienced the softest declines)
• Palo Alto increased in value, not surprisingly (whether its schools, Facebook or just downtown love, Palo Alto is hot). Surprisingly, Los Altos, Cupertino, parts of Mountain View, Saratoga and Los Gatos ALSO increased in value (from my personal experience I found this hard to believe)
• The areas that experienced the steepest declines (17% to 23%) in San Mateo County are the following: north county (Daly City, South San Francisco, and San Bruno), San Mateo’s Shoreview area, and the east regions of Redwood City, Menlo Park and Palo Alto

Enjoy!

“This economy remains too weak to stem the monthly loss in jobs,” said Gad Levanon, senior economist at The Conference Board. “Unless the labor market turns around soon, unemployment could pass 6 percent in early 2009 — and The Conference Board’s Employment Trends Index isn’t signaling any such improvement around the corner.”

What does this mean for our housing market? A few things:

• Home buyers continue to remain spooked and sit on the fence. Less buyers in the market, less demand for available homes. And we all know what that means.
• Our market is unique because the supply of homes if fixed (or inelastic in economics parlance). When supply exceeds demand, as it did in Sacramento,  prices crash. In the Peninsula market, this situation is unlikely because the supply of homes is low (and stays low). As long as buyers are able to afford more, prices go up. Consider the average incomes of cities through Silicon Valley (ranging from $90K to $190K).  However, if buyers are unable to afford homes at their current price levels, then prices go down. So… how much home can you afford if you’re unemployed? While our employment market may remain strong, there will be effects and ultimate ripples into our local real estate market.

Read the full article: higher unemployment rate to come.

Increased mortgage applications suggests one or two (or none) of the following:

1. Buyers are getting off the fence and actively purchasing (or trying to purchase)
2. Credit may be easier to come by (upon which, people previously unable to obtain loans may now qualify)

Credit applications reached all time lows with the credit crunch and economic woes and all. So with everything in mind, I’d say increases in loan applications are good. And by the way, if you didn’t already know, most banks are requiring significantly more money down (upwards of 25%, which on a $1,5M home, is a lot of dough). Fortunately, rates are still very favorable. Final side note: 20% down, prior to the past five years of myopic greed, was the minimum down payment in most situations. Let’s remove the blinders and remember that.

“Nay!” say the nation’s renters, who claim the plan is another example of the government unfairly favoring home ownership:

“We think (the new deduction) is terrible policy,” said James Arbury, senior vice president for government affairs of the National Multi Housing Council, the country’s principal trade group for rental property developers, owners and managers. “It actually makes things worse, rather than better” by sweetening the pot further for ownership while ignoring tenants – the vast majority of whom are also non-itemizers.

Additional Notes:

• The House version sets the maximum write-off at $350 a year for single taxpayers and $700 for married joint filers, whereas the Senate version ups the write-off to $500 and $1,000 respectively. The San Francisco Chronicle suggests the Senate version will likely prevail.
• Although the bill is intended as a one-year economic relief measure, tax experts believe it will become a permanent tax code feature.

For the full article, read it here: proposed tax deduction could benefit many homeowners.

Recently a buying frenzy began for what many investors consider a good deal. Consider the housing auction that took place weeks ago at the San Mateo County Fairgrounds. Many investors bought properties at great discounts, such as $100,000 less than what similar properties fetched last year. Yet ask yourself, “Does great discount equate to good buy?” As you ponder the question, consider: the price dropped $100K in one year. Or perhaps I can phrase it another way: the price dropped $100K in one year.

Buying a home at a $100K discount: good buy or not? Hopefully you’re thinking no, it isn’t. If a property dropped $100K in only a few years or less, then the area obviously doesn’t hold values well. In fact the area is likely experiencing a market correction (as opposed to market cooling). When homes depreciate at double-digit rates, technically the market is correcting. In most correcting markets, economists predict continuing corrections throughout 2009 and possibly into 2010. So what is $100K discounted from last years prices may be bought at a $200K discount next year.

Over the last six to seven years, nearly all Northern California markets experienced high single and double digit growth. Areas traditionally considered slow growth markets exploded with high growth. Consequently the same markets implode with high depreciation. On the flip side, consider Burlingame, Menlo Park or Palo Alto. Were these good buys before 2000? If good buy means steady appreciation over time, then yes. The growth in these markets either flattened or cooled. Many still experience appreciation, only the numbers are much smaller.

Before buying in any area, ask yourself: was it a good buy before 2000? If yes, then expect steady appreciation over time. If the answer is no, then expect at least two years of depreciation or more.

See next week’s follow-up: When buying in a correcting market makes sense.