Walnut Creek, Pleasant Hill, Concord and Martinez combined median sold price by month.

This represents a minor drop of about 6% over last year.  Looking at the chart, it’s apparent that it’s trending upward.  That means the bottom has been and gone.

After a summer of noise with the debt ceiling, an agreement was reached last night.  The mortgage market responded with ridiculous rates this morning.  A fixed rate mortgage with Bank of America is at 4.250.  Ridiculous.

So, let’s recap.  Prices are low, but the bottom has been reached.  Money is cheap.  Dirt cheap.  Now is the time to get off the fence.

Well, looking at that, I’m wrong.  But let’s delve into the numbers.  The average sold price was $358,458.  It was driven up by a sale of a monster home Crystal Ranch.  Once that home is removed from the equation October drops down to $351,696 average and $335,000 median sales price.  July popped up due to the sale of a gorgeous custom home on Ridge Drive.  The average over that period was $334,752.  The median home price was $317,500 once that large sale was removed from the equation.   The average for the year was $335,698, the median was $315,950. 

October was still abnormally good for the area which I attribute the less closings.  If you look at the number of closings, it’s way down comparatively to the other months.

The devil is in the details.  The number of solds for a two year period are off 37%, down from 84 in January 2009 to 53 in January 2011.    I can attest that there were not a lot of real estate professionals working last December.  I was able to get four clients into properties that were under priced or had wallowed on the market long enough that the seller’s resolve was broken down.  Some of these numbers reflect inaction in the real estate community.

The long and the short of it is that I believe the markets are basically stablized.  There is nothing in the technical charts that would lead a fundamental analysis to the conclusion that there will be a sharp drop or rise in the future.  I do believe that when applying sound investing principles it will show that it is a good time to get into the real estate market.  As Warren Buffet says “Buy on fear, sell on greed”.  Knowing that, I’d say it’s a good time to buy.

I lost my job in the title business, but not before I studied and passed my real estate license.  I started as a buyer’s agent for a big REO guy.  I have a gift for being in front of the wave.  I found REO work to be soul sucking and after two years moved to a traditional business model.  The point being, I’ve seen a lot over the years.  And I saw this coming.  There’s a part of me that truly hates sales people.  And business.  Because the business model of more sales and more sales is what brought this country to it’s brink.  We forgot that sometimes the best sale is the one you don’t make.  A skilled, ethical Realtor knows the difference.

Unfortunately, we all lost our way from about 2001-2006.  The sales arm whittled away at the standards of the operation and compliance arm and sales were made for the sake of making sales with substandard lending standards.  Next, because the banks were caught flat footed as the market tumbled under the stress of the mortgage meltdown they hired a bunch of under paid under experienced staff who’s primary contribution to the process was the ability to sign their name.  And that’s blown up in their face.

We would like to think that the banks carefully reviewed each file and made rational, informed decisions on each home they took back.  In truth the right hand rarely knew what the left hand was doing and I think if they had someone who could sign with both hands they would have considered that a boon.

I’ve said since day one that any attorney could attack any foreclosure on behalf of the displaced homeowner and prevail.  Yes, I said that every single file has something wrong with it that could cause the foreclosure to be overturned in court.  When I was working for the REO guy we had two pulled back because the homeowner filed litigation.  Both prevailed.  And we were just one little company in one little town in this country.  In both cases the borrower was working on a modification where the bank had lost the documentation numerous times.  Five in one situation, nine in the other.  If it were the insurance business the claim would have been for bad faith the bank’s behavior was so egregious.

The banks have done a horrible job and the latest “robo-signing” scandel is just another example of how bad they really did.  But at the end of the day, in spite of all that’s going on, you still have to pay your mortgage.

Last month I sat in a presentation by Matt Vernon of BofA.  He’s the Executive in charge of REO’s and Short Sales, for the whole bank.  He laid out their go forward plan which was to, in order, modify the loan, if that failed short sale or deed in lieu and only if the borrower was unresponsive or the home was seriously not moving would they resort to foreclosure.  They expect this to be in full swing by Q1 2011. I figured out the answer before Matt was asked.

BofA is the largest consumer banking company in the country.  If they foreclose and act heartlessly today when a borrower is in trouble, that borrower will end all of their banking relationships with BofA and may never return.  BofA would be shutting the door, in an economic downturn, to millions of customers who, in a normal economy, would have never found themselves where they are right now.  Good people in a bad situation.  BofA recognized this and is positioning themselves to be the kinder, gentler big bank.  Why?  Because they want to salvage the banking relationship with minimal damage to their bottom line.  It is better to work out a short sale today and get the loan in three years when the borrower is back on their feet than to behave like a bunch of robberbarons.

I think their strategy is brilliant.  I think they will use the robosigning scandel as an excuse to implement this new policy.  It’s the time out they needed to catch up.  And while you still have to pay your mortgage, short selling will be much easier.  While the media will make a big deal calling this a “foreclosure moritorium” the truth of the matter is that most of the big banks have suspended foreclosures over the holidays for the last three years.  This is just a different way of ending up at the same place.  This should be the break that a lot of homeowner’s need.  This holiday season may end up a great time to buy a short sale and a better time for drowning homeowners to get out from under the mortgage that’s killing them.

“Is your house on the market?” No. 

“Did you sign a listing agreement?” Only one day.  “Huh?”

I ran the property on the MLS and it was not on the MLS at all.  And I began to wonder “How would he short sale the house if it wasn’t on the market?” 

This out of area agent put this house on an out of area MLS for exactly one day back in July.  What he was doing was advertising the house on craigslist looking for a buyer.  He got one, did a one day listing and asked the bank if they would take the offer.  He was all about double ending the transaction, not doing what was best for the client.   If this guy was ethical or knew what he was doing he would know that banks want to see short sales on the market for a minimum of 10 days.  The “short sale” failed because the bank rejected it.  The family said the bank wanted $600k.  I doubt that was what the bank said.  I know the house is worth $525k.  I work that area.  I know every house that’s sold in the last year off the top of my head, more if I think about it for a moment.  This out of area agent did this family a huge disservice. 

But it gets worse.  I had checked for a Trustee’s Deed since that was all I could do without any of the paper work.  As of last Friday there was none.  On my way to the appointment last Wednesday I asked my title company to do one more check for me.  One of my old friends dated the property down by hand and found the Trustee’s deed recorded on Monday.

I had two choices.  One was to call the homeowners and say “Sorry, I can’t list your property because you don’t own it any more”.  Two was to drive to the appointment and compassionately explain to them that the Trustee’s Deed had recorded and they didn’t own their home any more.  I sat in horrible traffic for an hour to do the latter. 

I could see in the woman’s face that she simply wanted to cry so I tried to move as quickly and simply as I could through the explanation.  Before I went to Keller Williams I worked for one of the biggest REO guys in the area.  I knew what was going to happen next to this family.  I took the time to explain that someone would come to her door and offer her money to move by a certain date.  That offer should be at least the amount of two months rent in her property.  If she had any questions about that process, I would be available to explain it to her. 

I’m not going to make a nickel on any of this.  But it’s the right thing to do.  I just wish the out of area guy had done the right thing.  This family should have been able to short sale this house under HAFA.  It should have been relatively simple.  Yet he got in the middle trying to make a buck for himself and this family has now been foreclosed on.  He is what gives us a bad name.

I’m getting to ride again because Dr. Elkind at Integro got my back fixed in record time. The last time I injured myself like this, I was unable to bend over and tie my shoes for over a week. They couldn’t settle my back down enough to make the adjustments for over a week. I had to sleep on my living room floor because the bed was too painful. I was down for a month. This time I was back on the bike a week later, I deadlifted successfully yesterday, only 14 days after the initial injury. I thank Dr. Elkind and Active Release Technique for the remarkable results. It’s nice to have such a gifted practitioner right in our back yard.

Friday afternoon, I fell asleep on the BART train, missed my stop and ended up at the end of the line in Pittsburg.  While it messed up my Friday plans, it allowed me to see the mountain from out there on Highway 4.  The view coming back from that side is amazing.  It it was a mistake worth making.  I hope the weather continues to hold, it’s just been gorgeous in Contra Costa County.

I was sitting in a bond closing a couple of months ago and the guys were playing with maps.live.com.  Most of them were high powered attorneys and had never seen it.  It’s something their paralegals probably all know about, but they didn’t.  So as the closing was winding down the guys are pulling up their houses and pointing them out to each other.  In bond closings the attorneys are from all over the country.  One guy was from Newport Beach and he was pointing out his house and it’s proximity to Nicolas Cage’s place.  Another was a young gal and she lived in a planned development in Orange County.  Another guy lived around the corner from Warren Buffett.  He told us a story about how he would have his driver take him down on Sunday mornings to pick up the paper, sometimes in his pajamas.  That kind of made him a little Doris Duke-ish to me.  Anyway, if he’s picking up WFB and the like, we’d better be paying attention.  There’s a reason why he’s as wealthy as he is.  And Berkshire Hathaway is trading at $133,400 per share.

I sold a house in downtown Concord in December of 2006.  When I listed it my realtor said “Why would you want to sell now?”  To me the answer was simple.  The market was in decline and if I sold in December 2006, what I picked up next would cost me even less.  As it turned out, I sold a downtown 1253 sq ft. 3/2 in a transitional neighborhood with a pool that was completely remodeled for $555k.  I waited six months and picked up a 1376 sq ft 3/2 in an established neighborhood on a 1/4 acre for $489k and remodeled it for around $25k.  A year earlier this place would have cost me $620k.  I saved on transfer tax, mortgage cost and property taxes.  The answer was “I would sell now because the next place will cost me even less.”  I was right.