An article today in the Yahoo! Finance section stated that SF Bay area home prices plunge 27 percent in June. Well, that’s pretty bad! However, as you read the brief article you’ll notice that they are talking about aggregate numbers from nine Bay area counties and for the combination of single family homes and condo/townhouses. So, as a person looking to buy or sell a property in one of Contra Costa County’s cities, what does this mean to you? Should you automatically assume that this 27% plunge is the exact impact your market has felt?

I hope you immediately answered the above question with a “no.” The numbers below for six different Contra Costa cities will help show the variance in both year-over-year and month-over-month trends from one city to the next. Real Estate is ALWAYS local. This applies to foreclosures as well as prices … you always need to take national and regional news with a grain of salt because it may or may not be reflective of your local market.

If you have questions about any of these numbers, or would like to see them for a different Contra Costa city, please let me know.

Starting on June 1st, Fannie Mae will institute a new, national policy on down payment requirements for conventional, conforming mortgages. As the announcement stated:

Starting June 1, 2008, Fannie Mae will accept up to 97 percent loan-to-value ratios for conventional, conforming mortgages processed through its Desktop Underwriter (DU) automated underwriting system, and 95 percent loan-to-value ratios for loans underwritten outside of DU, in all geographic locations in the United States. The new national down payment policy will supersede the policy the company adopted in December 2007 that required higher down payments in markets where home prices are declining.

What does this mean for you? Well, it will be possible to get better terms on a loan for a new home in Contra Costa County with a smaller down payment. If you’d like, you can read the rest of the announcement on Fannie Mae’s website: Fannie Mae Announces Single National Down Payment Policy; Replaces Policy Regarding Markets Where Home Prices are Declining.

Now, I’m by no means a mortgage expert, but if you are interested in learning more about what your mortgage options are, please give me a call (925.817.8428) or send me an email (Brian@SPARRproperties.com) and I’ll put you in touch with a couple people who are.

Probably not too surprisingly, the April foreclosure numbers in Contra Costa are higher than they were during the record setting month of March. Now, although it is a very unfortunate situation, it has created a wonderful opportunity for investors and other buyers to purchase homes at significantly reduced prices. In fact, I’m working with a number of individuals doing just that right now. So, to help give you an idea of the mindset of many investors, take a look at the recent San Francisco Chronicle article titled Timing may be right for real estate investors. If this is something you or a friend of yours may be interested in, give me a call (925.817.8428) or send me an email (Brian@SPARRproperties.com) and we can discuss it further.

I’m in the process of evaluating different Walnut Creek (and nearby) real estate investment groups in hopes of finding one or two that will provide for the best use of my time.  Although I haven’t had the opportunity to attend meetings at each of these, the following groups are on my list:

• Contra Costa Real Estate Investment Club
  • Contact: Dennis Downing
    Telephone: (925) 933-6663
    When: 2nd Wednesday of each month, 6:30pm to 9:00pm
    Where: Financial Title Company, 1676 N. California Blvd., Ste. 117 (facing plaza), Walnut Creek
• Real Wealth Network East Bay
  • Contact: Scott R. Fuller
    Telephone: (925) 567-6720
    When: 2nd Wednesday of each month, 7:00pm
    Where: Holiday Inn off Main St., Walnut Creek
• Walnut Creek Real Estate Investment Club
  • Contact: Mike Berndt
    Telephone: (510) 435-5609
    When: 3rd Tuesday of each month, 7:00pm
    Where: Lindsay Wildlife Museum, 1931 First Ave., Walnut Creek
• Real Estate Investment Club Dinner Meeting
  • Contact: Beth Winters
    Telephone: (714) 402-9303
    When: TBD
    Where: TBD, Walnut Creek and surrounding areas
• Prosperity in Motion
  • Contact: Robert Upton
    Telephone: (925) 465-9574 (please email)
    When: 3rd Tuesday of each month, 6:30pm Registration, 7:00 Meeting
    Where: Concord Hilton, Concord
• San Ramon Investment Club (SRIC)
  • Contact: Jake Chase
    Telephone: (925) 408-2969
    When: 3rd Wedneseday of each month, 6:30pm networking, 7:00pm meeting
    Where: Residential Pacific Mortgage, 3201 Danville Blvd., Ste. 195, Alamo

If you happen to have attended meetings for any of these groups, I would love to hear about it.  Otherwise, check back over the course of the next few weeks and months to read about my findings.

Happy investing!

Real Estate absorption rates are an indication of how long it would take, at the previous month’s pace, for a market to sell off its entire inventory. This value helps us gain a better understanding of the market in which we are dealing:

• Are we in a buyers or sellers market?
• How are 3 bedroom homes selling in the Palos Verdes neighborhood versus the Saranap neighborhood?
• What impact will we have if we price a home at $605k versus $599?
• If I want the best chance at negotiating a below asking price offer, should I look in Walnut Creek or Pleasant Hill?
• etc.

Absorption rates can, and should, be calculated in a number of ways depending on your interest. At a very high level, you can look at the national, state and county numbers; however, these won’t help you buy or sell a specific property. When you are dealing at the property level, it is important to look at these numbers across price boundaries, property characteristics and local areas. In the table below, I give you the absorption rates for Walnut Creek across some high level price boundaries. Since December is historically a very slow month, I provide the rate based off of the December sold numbers as well as the 2007 average sold numbers.

	Under $500k	$500k - $999k	$1M - $1.499k	$1.5M - $1.999M	Above $2M
December	37 Weeks	28.6 Weeks	39 Weeks	43.3 Weeks	8.6 Weeks
2007 Avg	24.8 Weeks	20.1 Weeks	20.3 Weeks	26 Weeks	16 Weeks

I’ve highlighted the $2M numbers because there really aren’t enough data points in this range to determine a very accurate absorption rate.

If you are buying or selling property, you owe it to yourself to know the absorption rates at a granular level. If you don’t have access to the necessary data to calculate this number yourself, feel free to give me a call and I’d be happy run the calculations.