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I have decided to do the update of San Mateo homes every 4 weeks, and the last update is pretty interesting. In 4 weeks there were 126 unique properties totaling 142 listings that are listing less than their last sale price. This is an increase of 50% from the last report in January. Here are some highlights.

Total Count of San Mateo Home Sellers in Trouble for 1/14/2008 to 2/10/2008: 126

Average Time from Last Sale Date: 1.87 Years

Average Annualized Loss: 14.1%

Average Absolute Percentage Loss: 24.8%

Average Size of Home: 1224

Average Price Per Square Foot: $444.42

Biggest Loser: 649 Hurlingame Ave in Redwood City with an annualized loss of 77%

A notable home is this mansion in Hillsbourough, which sold for 7.9 million dollars in 2001, but is now listing for 6.95 million. I guess we are rolling back to 2001? It is a beautiful property from the looks of the pictures. This is the most expensive listing I have found to date.

In the spreadsheet you will see that over 1/4 of the properties have listing prices that are over 25% less than their last sale price. The worst example is a home that is listing for 47.5% less than its last price. It seems that the Goldman Sach’s prediction of Californian homes losing 40% of their value is coming true one house at a time.

I expect that the next report will be even worse as more people try to list their homes for the spring selling season. They will be competing with so many banks and other desperate home sellers who already have their homes on the market. There is quite a bit of news that many homedebtors are just mailing their keys back to their lenders, and that may be a prudent thing to do if it costs even more to carry the home and try to sell it.

Until next time, enjoy!

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Since I was on vacation during the last week of December I decided to combine the two reports into a report of the last four weeks. Not that many new listings came up in the last two weeks of December because a lot of realtors and sellers are on vacation also. So here is a summary of the last four weeks:

Total Count of San Mateo Home Sellers in Trouble for 12/17/2007 to 1/13/2007: 82

Average Time from Last Sale Date: 1.30 Years

Average Annualized Loss: 18.0%

Average Size of Home: 1198

Average Price Per Square Foot: $494

Biggest Loser: 2529 Fordham St, East Palo Alto with an annualized loss of 89%

What is interesting is that 37 out of these 82 troubled properties were listed within the past seven days! Some more properties of interest are below:

15 Kittie Ln, Belmont — This is a good sized Belmont ranch that was last sold for 1.2 million in October, 2006, and is now listed for just under 1 million. Personally I still think it’s overpriced, but in Belmont

701 6th Ave, Redwood City — It smells a little fishy that this tiny and unattractive home last sold for 715k and is now listed for 488.5k. I don’t think it’s a great bargain, but it is the home with the largest absolute percentage loss on the list.

512 Stanford Ave, Redwood City – The Redfin listing says that the home’s square footage is 2500, but the description says it’s great for a first time buyer. That made me kind of suspicious and I looked it up on real-estate.nextag.com, and there it stated the home is actually only 820 square feet. Now a 820 square foot starter home is more believable.

406 Accacia St, Daly City — In a previous report I found the picture of 404 Accacia St extremely funny, and now it seems like its next door neighbor is up for sale. Here are the pictures of these two houses:

633 Hampshire Ave, Redwood City — Finally, this “house” wins the award for the ugliest home in the this report:

The detailed report will be on the statistics page and a new update of homes listed in late October to early November last year will also be included. Stay tuned!

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Today I received an excellent email from a reader of mine and I have permission from him to post his email here. I thought the information is excellent for first time buyers who are interested in condos. It’s funny but my parents were just telling me this weekend that they met a taxi driver who bought a condo in San Mateo and was assessed one of these secret fees for $20,000 or $40,000. San Mateo’s condo fees seem to be extremely expensive and basically I really wouldn’t want to buy a condo here. The reader also attached a picture of the Colina Condos at 1 Appian Way. That address has been on the home sellers in trouble list in the past and it seems that more will flood the market.

Hi Baglady,

I just want to stress the importance of looking carefully into the signing documents when purchasing real estate, especially condos. Often, sellers may try to slide in information about “special assessment fees” hoping the buyer won’t notice. “Special Assessment Fees” are levied by the HOA for repairs that affect the whole complex that the standard monthly HOA fee can’t cover, usually as a result of shoddy construction, bad planning, or mismanagement. The HOA or property management company usually informs owners about these assessment fees a year or so in advance and sometimes set up an installment payment plan, as some of these fees are outrageously large. These assessment fees are a bad sign, as they often indicate possible future problems and therefore, more future fees. And unfortunately, you can’t deduct it off your taxes like a mortgage. It is an out-of-pocket expense. And unfortunately for some condo-owners, they are already financially stretched to the point where they can’t afford this surprise fee, thus forcing them to sell early before the fee hits them, hoping some other poor sucker buyer was
equally as negligent as they were and gloss over the signing documents in haste.

Here’s an example I saw earlier this year. The condos at Pointe Pacific at the top of San Bruno Mountain in Daly City had an assessment fee levied because the location of the condos was a poor decision. Pointe Pacific is on the side of the mountain, battered by rain and wind moreso than another condo complex no more than a block away. This
results in the buildings at Pointe Pacific requiring more repairs. The special assessment fee: approximately $15,000 per household. Even worse, this was not the first time its happened. Just about 5-7 years ago, the HOA levied a similar fee. So you can probably bet there will be another fee in another few years, after the current fee.

Its even worse when the HOA neglects the repairs as they snowball into a huge financial disaster in the long run. Probably the worst example of “Special Assessment Fees” gone awry is the one CURRENTLY HAPPENING at Colina Condos on 1 Appian Way (cross street Gellert) in South San Francisco. I know several people who have bought condos there. Apparently, the condos were poorly built as the original builder went bankrupt halfway through the construction process. The whole complex requires approximately $13.5 million to repair the run-down buildings. The HOA meetings are shouting matches and whole HOA board has quit in horrified disgust. The property management company has abandoned the complex. The only hope left is for the city of SSF to take over and help solve the process, something many of the homeowners are hotly debating. The ship is sailing in the dark with nobody at the helm, so to speak.

The average estimated cost per household for Colina Condos: $70,000. Yes, you heard right. $70,000 out-of-pocket repair costs for condos going for about $400k on the market.

Even worse, you may need to temporarily move when they finally do get the repairs going (and possibly spend even more money on renting a temporary place), as the condos have some deep structural integrity problems. (Some people have water-logged walls, others have collapsed bathrooms.) So, as you can imagine, many new condo owners with no equity can’t afford it and may need to sell. This will probably result in a bunch of impatient, panicked sellers putting those condos on the market all at once, driving value down further. They are hoping for a miracle of miracles: that someone else will be dumb enough to buy their lemon condo and lift the load off their shoulders.

Lessons to be learned: 1. Read all the signing documents carefully. 2. Don’t buy crappy condos. It is of such importance, I hope you publish this email on your main webpage.

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The winter isn’t very chilly in San Mateo, but the real estate market is almost frozen. Surprisingly these two weeks there were more listings than the last two weeks and I managed to find about 240 new listings, and of these 18.3% qualify as homes in trouble. Lets take a look:

Total Count of San Mateo Home Sellers in Trouble for 12/2/2007 to 12/16/2007: 44

Average Time from Last Sale Date: 1.52 Years

Average Annualized Loss: 14.9%

Average Size of Home: 1173

Average Price Per Square Foot: $492

Biggest Loser: 2491 Rowntree way with an annualized loss of 60%

It seems that a lot of these homes are REOs or short sales and the banks are getting anxious to get rid of them. Anyway, data on these homes are available at the statistics page. The average price per square foot is still extremely high. Since this new data is not extremely interesting I decided to look back at some of the older reports. I examined the approximately 150 homes from the first two reports listed here and here and the findings are quite interesting.

Update of Homes Listed in Report #1 and Report #2 Including Homes Listed Up to 10/21/2007

Total Number of Homes: 144

Homes Still on Market: 100

• Price Increased: 3
• Price Further Reduced: 53
• Price Stayed the Same: 44

Homes Off the Market: 44

• Sold: 9
• No New Sales Information/Withdrawn: 35

It is interesting to see that three homes actually increased their listing prices because these homes have been on the market for months. What makes them think that raising their price would make their home sell? The home at 123 Fey in Burlingame was relisted so it doesn’t seem like it has been on the market for that long and it increased its price by 1000.

The good news is that a majority of sellers are coming to their senses and reducing their prices more. Some of the biggest reductions are $100,000 or more. Some examples are:

• 3550 Carter Dr #139, 480,000 in October to 380,000 today
• 3570 Oak Knoll Dr, 889900 in October to 789900 today
• 1363 Windmere, 649,000 in October to 499000 today

It was surprising to me that only 9 of these homes have sold for sure. At this rate it would take another 10 months or so to sell the remaining 100, and more homes are being listed every day. Of these 9, only one went for more than asking price, the other eight homes sold for anywhere from 2% to 10% less than asking! So if you like any of these distressed homes it doesn’t hurt to ask for more of a discount because it seems very tough to sell them. Since October 21st I have recorded almost two hundred of these distressed properties and at the snail pace they are selling I estimate there are 300+ of these home sellers in trouble in San Mateo right now. I think we’re nowhere near the bottom. I find it funny that Redfin has a real estate tip that says “wait for foreclosures in your neighborhood is off the market, and then sell your home”. In our current situation we would have to wait a very long time for all of these properties to get off the market.

Anyway, the raw data and past issues are available at the statistics page. The next issue will appear in 2008 since I will be on vacation. Enjoy!

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We’re heading into the winter doldrums of real estate and these two weeks I examined 218 properties that were up for sale in San Mateo County. Of these, 28 qualify as home sellers in trouble. Here are some highlights. Continue reading →

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