More about Gateway at Millbrae BART project

To update you on the Gateway at Millbrae BART project, on July 14^th the Daily Journal published  another article  on the subject - "116-acre Site Clash Continues: BART Developer Wants to Break Ground, but Millbrae Official Still Remains Critical".

So what arguments remain? Not surprisingly, the City officials worry about the traffic impact while Republic Urban, the developer, worries about losing the time window favorable for developers at the present time. No doubt, the traffic concerns have to be addressed. But I also hope that City officials have a vision for Millbrae’s future. What is it? How does the Gateway project fit this vision? Who will be the residents of Millbrae 20 years from now? What will be the City’s role in the context of its neighbors: Burlingame, San Bruno, but also San Francisco and Silicon Valley? It is unfortunate that we often plan the future based only on what we know best - our past. While reading the comments to the Daily Journal article I found a refreshing exception and it is a comment from a young Millbrae resident, Laurie Tanjuatco.

“I have lived in Millbrae for 19 years and I would love to see this project get built. I know there are traffic concerns but young people like me aren't driving as much anymore. We use car-share, uber, and we bike. We like to walk places and hate being stuck in a car. I want to see this project built - mostly because I want to grab cup of coffee or do some shopping while I'm waiting for BART.”

Laurie understands that one cannot plan the City based exclusively on the past. Maybe it is what Millbrae needs - an input from young adults - on what Millbrae should/could become?  The City of Millbrae officials should be planning and shaping the city for this generation! I know that the time is very scarce, but it is not too late to reach out to Mill High School students and the Peninsula young professionals and ask them to help come up with a vision of the City. Let's see if the Urban Republic proposal supports or could support such vision. No one can predict the future, but we definitely should try to envision the Millbrae of tomorrow. Only then we can really investigate how well the Republic Urban project might support this vision. After all Millbrae is not in a desert, but it is part of SF Peninsula, the most vibrant community in the entire country. Let’s make sure that Millbrae does not stay behind.

Gateway at Millbrae - Urban Republic

Gateway at Millbrae (BART) Project: time to move forward

The approvals for important development projects take time (and they should). The Gateway at Millbrae project is a small part of the much larger 1998 area plan and it predates the Millbrae BART station itself by five years (Curbed SF). Following years of planning and extensive deliberation the Millbrae City Council narrowly approved the policy guidelines for  future development in the 116 acre site near the station on February 9, 2016 (Daily Journal).

Gateway at Millbrae project rendering - Republic Urban

In early April, San Jose developer Republic Urban Properties updated the Millbrae Council on their latest plans for new housing, new office and retail space and a 116-room Marriott hotel (TOD 1). As described at the project website (Republic at Millbrae) the project envisions two phases, TOD #1 and TOD #2. 

The proposed TOD #1 project proposes new mixed-use development on the station properties located immediately west of the Millbrae Station. It proposes construct medium density multi-family residential units for up to 1,325 residents and office space for up to 1,148 employees. The project also includes underground parking and an enclosed galleria retail corridor. The proposed TOD #2 project proposes development for a BART-owned site that is located immediately east of the Millbrae Station.

Millbrae station - view from the above

For more information about the project you can watch the following video.

So, what's next?  The project is slated to be completed by mid-2019, given that there aren't more delays. The Millbrae Planning Commission meeting is supposed to happen in August-September time-frame. Following their recommendation - the City Council will meet to give its approval sometime in the fall of 2016. But, the project might need your help. I was approached to post the link to a petition to Millbrae Mayor Anne Oliva - We Support the Gateway at Millbrae Station. The petition will be delivered to all five Millbrae City Council members. We definitely need transparency from the Millbrae City Council in making this important decision, not only for Millbrae, but for the entire Peninsula.

I personally believe that project should go ahead, of course with public oversight of both, developer and the City of Millbrae City Council.

New CFPB Mortgage Rules As Of October 3, 2015 And How They Can Effect You

Image from the CFPB website

The new CFPB (Consumer Protection Financial Bureau) mortgage disclosure rules are coming to life on October 3, 2015. Their purpose is to protect mortgage consumers better. It is important to know what these new rules are and how they might effect you if you are planning to buy or sell a house in the near future. The new mortgage disclosure forms will be easier to use and more clearly lay out the mortgage terms for home-buyers, But also, it will be taking longer for lenders to fund loans and thus to close home sales.

Let me start with explaining how the new rules came to life. The mortgage crisis might seem like a distant history to many by now, but many lives have changed forever as its results. The negative consequences of the crisis are the hard reality for countless people who became unwilling pray to predatory lending practices preceding the crisis. The CFPB, was created as a result of Dodd-Frank Wall Street reform that was enacted to law in 2010. The agency was initially proposed by Elizabeth Warren, currently a US Senator from Massachusetts. It is independent and powerful agency with interim affiliation to the US Treasure Department. According to the CFPB website its role is to "promote fairness and transparency for mortgages, credit cads and other consumer financial products and services".

So, what are the new changes we should expect? For over 30 years lenders were required to deliver two different overlapping disclosures to consumers after receiving mortgage applications, Good Faith Estimate and Truth in Lending Disclosure. There will be a new form now replacing these forms providing a summary of key loan terms and estimated loan and closing costs. You can click on the Know Before You Owe link to see form examples and read how the new forms compare to the old ones. The CFPB conducted more than two years of extensive research and testing to find out how to disclose existing laws in a way that consumers understand. Specifically, the new forms are supposed to help consumers better understand loan risk factors (e.g. prepayment penalties, larger than usual payments, etc), short term and long term costs (more easily explaining the total coast of the loan) and monthly payments.

Another assumption behind new forms is that the easier to understand forms will help consumers to compare better competing mortgage offers and shop for closing costs. So, it seems all positive. However, there is unwelcome impact as well. Better experience for home buyers will slow down the overall closing process for Realtors, mortgage lenders and title (escrow) companies (and of course to principals, sellers and buyers). Basically, a typical until now 30 day closing will most likely change to make 45-day closing the new norm. The new rule requires that homebuyers have three business days to review the closing disclosure before signing off on the loan. This change will be further enforced by greater financial penalties for errors forcing lenders to slow down their mortgage lending process  by as much as 15 to 20 days.

So, please expect the 45 day home buying contracts to be new norm starting on October 3, 2015 - the day new regulations will come to life, at least for now.

Cimpler Real Estate has gone mobile!

Cimpler has gone mobile so you can do your home search, share your searches and contact me wherever you are. Just go to the AppStore (iPhone) or Play Store (Android phones) and type "Cimpler Real Estate", install the app and then click Open. You will be taken to the menu of choices allowing you to do home search in the entire Bay Area, share listings with others, contact me (text, call and email) and most importantly, find out how I can help you. If you buy a property with me, you will pay less for a house than if you would buy from an agent charging you a commission. The app is specifically designed to run on mobile phones and not just "responsive" version of the Cimpler website.

Unfortunately, Android phones do not yet support full functionality available on iPhones including explanations of the "Cimpler-Way" method of home buying. So, if you happen to use an Android phone click http://cimpler.com/The-Cimpler-Way on your PC to read the explanation there.

Hoover school construction upheaval - the ruling will not be appealed

In my previous post Burlingame’s Hoover Elementary Upheaval I reported how less than diligent effort on the part of the Burlingame Elementary school district ended up in the judge Marie Weiner's ruling to halt the Hoover school construction. She ordered a fully fledged environmental impact review at the previous hearing. The school district decided not to appeal it, but ask for permission to secure the size before the environmental impact report is conducted. The judge Weiner made no ruling, but is planning to visit the school to see herself what has to be done. She might appoint an independent consultant to see what is necessary to ensure that the buildings are safe. With the full Environmental Review ahead the school would likely open in 2018 at the earliest. You can more about it in the Daily Journal article.

Burlingame’s Hoover Elementary Upheaval

As Burlingame hoped to alleviate its shortage of space in its elementary schools caused by rapidly growing enrollment, the San Mateo County Superior Court Judge Marie Weiner put a halt to this plan and ordered a full environmental impact report. The plan was to reopen the Hoover Elementary closed in 1979. The Burlingame Elementary re-purchased the school in 2010 and planned to open in this year. However, the lawsuit was filed by local residents who worried about the impact of the school on the traffic. The judge ruled that the construction of the Hoover Elementary must be halted until the environmental impact of the school is thoroughly researched. You can read more about the ruling in the Daily Journal article of May 9, 2014.

Who is right? School opponents or school supporters? The Hoover school was originally opened in 1931 and closed in 1979. Did neighborhood experienced traffic problems then (weren’t cars much larger then, thus taking more spaceJ)? How about the benefits for the city or the neighborhood? It happened that the Canyon Rd area that would be most affected by the school opening is the area where home prices are lagging in contrast with the remainder of Burlingame where home prices have dramatically increased during the last two years, well above pre-real estate crisis levels. Analyzing the data, one could say that home prices in this area has even stagnated. One might think that the new school could reverse the trend.

There will be many more losers of the recent decision independent of the results of environmental studies. The cost renovations and new equipment of $13 M were supposed to be paid by Measure D, a $56 M bond measure passed by Burlingame voters in November 2012. It seems that the 2012 voting was a better time to disagree with the project. How much money is going to be spent for the litigation? And if at the end, the decision will be made to go ahead and open the school, where will the money to open the school come from? Will we need another bond to pay for it? Independent on the final decision, everyone in Burlingame will lose financially (less or more dependent on the length of the litigation and the final decision). Of course, local residents who filed the lawsuit used their rights to challenge the project. The Burlingame Elementary School District failed in its duty to properly research the school impact on the neighborhood traffic. The District should have responded to neighbors’ concerns about traffic impact and address it in appropriate manner averting a full environmental investigation and its unknown consequences. 

Little Hollywood Neighborhood in San Francisco

Many newcomers to San Francisco has never heard about it. Little Hollywood is a small neighborhood in the southeastern edge of San Francisco. It is centered between Blanken Avenue, Bayshore Boulevard and U.S. Route 101. Little Hollywood Park, one of the local landmarks is located on Lathrop Avenue, and the Bayshore Caltrain station just south of the neighborhood, on Tunnel Avenue. It is well hidden in the plane view.

The Little Hollywood was considered to be a part of the Visitacion Valley until recently, but in 2009 together with a few other neighborhoods (see the map), such as Yerba Buena, Barbary Coast it was elevated to become an “independent neighborhood” of San Francisco.

There is ongoing discussion where its name is coming from. It does not look as anyone knows for sure, but according to Ron Filion, the author of the San Francisco Genealogy  some of the tall tales include: "1. Mae West, the actress, built and lived in a large home there during the 1939 International Exposition; 2. That the developer of Hollywood moved north with his plans and duplicated them there; and 3. That it was once a secret enclave of movie stars.” Choose the one you like!

Little Hollywood definitely has a feel of a separate neighborhood. It really is a quiet oasis of palm trees and Spanish architecture. "One of the biggest problems for the neighborhood appears to have been traffic and parking caused by crowds for the 49ers and Giants game” according to Filion, but this is not going to last. Below, are a few pictures of the Little Hollywood neighborhood, both the old and new and its surroundings.

Old Spanish architecture house

A view towards Hwy 101

Mary Teresa Street

Mary Teresa Street / Megan Drive

Lois Lane

So, if you have not discovered Little Hollywood yet, check it out. San Francisco has big plans for the Candlestick Park area just across the highway 101 and these plans will undoubtedly impact the future of this neighborhood.

The America’s Cup 2013 is Over!

Yes, it is all over and I managed to see the final. I had a probate auction in the SF Court that morning, so it worked out really well for me. I am sharing a few pictures taken during the final race in Marina. I have seen a few races before including the one which the Kiwis won, but it was nullified because they exceeded the 40 min time limit. Kiwis were almost there! Following that, the Oracle team rebuilt the boat (or at least it felt like they did). It neither could sail upwind, nor get on its foils in weak wind before. It can now!  It was fun to watch. But nothing can take credit away from Jim Spithill and the team. The pressure they were under was unbelievable and they managed to wrestle the win. Hats off to them! You would think that everyone in San Francisco would be happy, but look to the today’s headline in the San Francisco Chronicle – "Home team takes the Cup – but is San Francisco eager to host again?" It cites one of the (in)famous San Francisco Supervisors - "I think they (The Oracle's Team) should give San Diego the opportunity to subsidize Larry Ellison's hobby." They even took down the bleachers in Marina during the final race. Go figure! Only in San Francisco…

The Mission District is Changing

Change is good. Usually. The changes taking place in the Mission District are quite fast and dramatic. Every day we can see more and more beautifully renovated homes like the ones below.

Grocery stores as the one below are still relatively easy to find.

New ethnic groups bring cultural and culinary diversity. There are Vietnamese restaurants next to restaurants offering authentic Mexican food and restaurants offering Indian and Pakistani food, such as Pakwan.

   

Fritz, a Belgian Waffle place is another good example. Not only does it add to the desired variety but its decoration provides eye-candy. Both, the food and decoration are the brain child of the owner and mosaic artist, Santiago. Check it out!

Craftsmen & Wolves and next to it Dandelion Chocolate are part of the change.

Every now and then we still can see the Old Mission. Or is it also new (7 up and not a can of beer in a brown bag)?

But what happens if everything changes and there is nothing more to change? Or if the change will eliminate those behind its character? Will we get used to the new Mission and forget the old one?  Or will we be missing something? 

HOME BUYING METHODS OTHER THAN COMMISSIONS IN CALIFORNIA

Commissions are the most popular way of paying for real estate agent services when purchasing real estate today. Buyers often believe that their agents are free as they are not asked to pay any money upfront to start working with an agent. These services are not free. The commission is included in the price of a house. So, are there other home buying methods one could use? How do they compare to the commissions?

In this post I am focusing on characterizing the following home buying methods: cash back (or discounting) commonly offered by real estate agents, the Redfin method which combines the use of employees with discounting offered by Redfin and professional services offered by lawyers and the independent brokers, such as Cimpler Real Estate.

Cash back (or discounting) has been quite common in the Bay Area for quite some time. It is a variant of the commission method in which the buyer and his/her agent agree for part of the commission to be refunded to the buyer at transaction completion. Its popularity is fueled by large amount of agents competing for clients. Many newly licensed agents are using it to break to the market helped the established agents to fight back discounters by claiming that they provide inferior and incomplete service. The opposite claim that an agent provides full service, so it has to be superior is often just an empty promise.  It certainly means that agent will charge a full commission, but says nothing about the amount of service to be provided or its quality.

The Redfin Method: The key innovation of the Redfin method is its use of real estate licensees as employees and not independent contractors. Anyone who provides home buying and selling services in California has to be licensed by the State of California, so both agents working as independent contractors (most) and Redfin employees are licensed California real estate agents. Additionally, Redfin is a discounter and offers cash back to clients at the completion of home selling or buying transaction.

The key differentiator of the Redfin’s method is that Redfin’s  real estate licensees are employees, therefore not paid commissions but wages. Redfin believes that they can control the quality of the process better by using employees instead independent contractors, so they will have more happy customers. The main question is "will the best professionals surrender their independence for a steady income of companies such as Redfin?" Will a Redfin employee do everything an independent agent would do? Imagine that you are calling both, an independent contractor and employee during the Giants game. The employee might forego his premium by not responding to a client’s call, but independent contractor would risk the entire commission by doing so. It does not take a rocket scientist to figure it out who is going to answer your call! At the same time, there is no doubt that Redfin is in a better position to control the quality of the less skilled agents.

Professional fees for home buying: While they are not offered and used as widely as commissions they provide home buyers with the option to pay less. Professional services are offered by many smaller, independent brokers and by real estate lawyers. The key advantage is that you pay only for service you requested and not for all unpaid services your agent provided for other clients (agents working for commissions perform a lot of work for which they are never paid for as transactions frequently fall through) .

• The Cimpler Way is a fee based method of Cimpler Real Estate. Buyers pay fees only at the completion of a home buying transaction. To make first time buyers comfortable and secure with paying fees Cimpler also offers an all inclusive comprehensive service, similar to a full service in a commission based method.  A very important distinction of the Cimpler Way is that discounts are offered by lowering the price of the house and not as cash back to a buyer. Thus, the buyer not only pays less for the house, but also pays less for other services which cost depends on the house price, such as real estate tax, mortgage, home insurance and down payment. Cimpler offers part of its commission (transaction savings) directly to seller increasing seller’s proceeds.  Cimpler allows buyer, either to choose his/her own real estate agent, or to work with a Cimpler selected agent.

• Using a lawyer (who also has real estate license) for selected services is another choice you have. Please note that California is a state that does not require an attorney for closing of a real estate transactions (some states do require it). The payment methods and fees vary for different lawyers, you might pay per hour or pay a fixed fee per transaction for specific service requested. Per hour charges are usually high and add up very quickly, but if a fee for service method is used, buyer pays much less than if a commission method is used. A lawyer will provide the purchase agreement and help buyers to negotiate the final contract. All other services being part of home buying are performed by buyers. This method is mainly used by experienced buyers, most of the time investors, who can perform many services usually performed by agents.

Do your research and choose the method that suits your needs best. This post was prepared using the “Cimpler Advisory for the CA Home Buyers”. The Advisory helps buyers to take better advantage of resources available on the internet to learn how to buy a house and how and when to choose an agent. Most importantly the Advisory also shows how to distinguish between any real estate agent and someone who really is a “real estate professional”. If you are interested to receive the entire copy of the Advisory, please contact the author.

America’s Cup – Races # 6 and #7

Race #6 -  Oracle still ahead of Kiwis

The America's Cup race # 6 on September 12 started well for the Oracle team as it was on the lead for first two legs of the race. Unfortunately, as soon as they started to tack upwind, the Kiwis took the lead and never looked back. Kiwis won the race # 7 an hour later as well and need just 3 more wins to capture the Cup now (Oracle would have to win 10 - see below). It looks as the Cup will be over soon…

Hopefully the Oracle Team can extend the races and the visual pleasure that comes with watching these year boats (catamarans). It would be real shame if it is all over on Sunday. These boats are quite amazing - very fast and definitely worth to see. 

To give you an idea how fast they are, here are some statistics from the race #7:

Race 7 Performance Data

·         Course: 5 Legs/10.14 nautical miles

·         Elapsed Time: ETNZ – 24:48, OTUSA – 25:54

·         Delta: ETNZ +1:06

·         Total distance sailed: ETNZ – 11.6 NM, OTUSA – 12.0 NM

·         Average Speed: ETNZ – 28.32 knots (32 mph), OTUSA – 27.86 knots (32 mph)

·         Top Speed: ETNZ – 44.73 knots (51 mph), OTUSA – 41.00 knots (47 mph)

·         Windspeed: Average – 16.3 knots, Peak – 17.8 knots

Can you imagine? With the maximum wind speed of 17.8 knots or 20.4 miles an hour the Kiwi boat reached the speed of 44.73 knots or 51 mph! This is quite amazing. You should see it! Here are a few more pictures from today’s race!

Kiwis and Team US acknowledging fans following the race # 6

The new and old Bay Bridge in the race background

If you still have not done so, I hope that you will find some time and see at least one the remaining races. Check the America's Cup schedule and mark your calendar!

America’s Cup Final schedule (first to 9 points wins) - per Americas's Cup website:

• Saturday, Sept. 14: Final Race 8 (1:15 pm PT), Final Race 9 (2:15 pm PT)
• Sunday, Sept. 15: Final Race 10 (1:15 pm PT), Final Race 11* (2:15 pm PT)
• Monday, Sept. 16: Final Race 12* (1:15 pm PT)
• Tuesday, Sept. 17: Final Race 13* (1:15 pm PT), Final Race 14* (2:15 pm PT)
• Wednesday, Sept. 18: Reserve Day
• Thursday, Sept. 19: Final Race 15* (1:15 pm PT), Final Race 16* (2:15 pm PT)
• Friday, Sept. 20: Reserve Day
• Saturday, Sept. 21: Final Race 17* (1:15 pm PT)
• Sunday, Sept. 22: Reserve Day
• Monday, Sept. 23: Reserve Day
  (*If necessary. Note: By order of the International Jury and pursuant to Protocol Article 15.4(d)(iv), ORACLE TEAM USA shall be penalized one point for each of the first two races of the Match in which they would otherwise score a point.)

Japanese Garden in San Mateo

I am sure that you have seen the Japanese Garden in the Golden Gate Park. But have you seen the Japanese Garden in San Mateo? I would give a 50/50 bet that you have not been there even if you live in San Mateo! So, it is your chance. The Labor Day weekend is upon us and your options are limited because of the Bay Bridge closing and the Rim Fire blocking of the Hwy 120 to Yosemite. OK, so you will not do much hiking in the San Mateo Japanese Garden, but if you don’t mind a leisurely stroll in beautiful surroundings before or after your Holiday lunch or just meditating or resting, it might be worthwhile to spend some time there. The garden was designed by Nagao Sakurai - Chief Gardener at the Imperial Palace in Tokyo. It is open from 10:00 AM to 4 PM on weekdays and from 11:00 AM to 4:00 PM on Saturdays and Sundays.

Teahouse

Per article in SF Gate of March 3^rd, 2011:

“Don't miss these tea garden attractions: Walk up the rock and concrete steps to the azumaya, a delicate gazebo. Here you can view a map that lists all the plants in the garden. The wooden chashitsu, or teahouse, offers a bench where you can relax and view the pond and gardens.”

Pond

The pond is marvelous anyway you look at it.

Shinden

“The shinden, a small shrine behind a bamboo fence, was given to San Mateo by its Japanese sister city, Toyonaka, to celebrate the garden's 25th anniversary in 1991. Most hidden of all is a diminutive five-level granite pagoda, which you come upon near a waterfall. It's a perfect place to sit on the large boulders and meditate” – SF Gate, March 3^rd, 2011.

And if you are into Japanese gardens, please check the ones in Hayward and Saratoga as well (check See California for more information on Japanese Gardens in the Bay Area).

Is The House Market On The Peninsula Cooling Off?

If you followed my earlier posts regarding brisk home sales on the Peninsula in the earlier part of the year including Burlingame, San Mateo and Menlo Park you might wonder if the market has continued its upward trend since the interest rates increased by 1% during in June. In short, the rates have stabilized since. The number of investors and the number of homes being listed by sellers reduced. The consensus among professionals is that good listings (read: new, remodeled or at least well prepared for sale homes) are still selling well, however, those with just paint slapped on the walls and clattered with seller belongings definitely see the drop in demand. And how about prices? Again, the general impression is that price increases we observed since the end of last year tempered of. But is this true?

To verify these observations I asked friends from Local Vector to provide us with several graphs illustrating changes that took place since the beginning of June in three cities in San Mateo County I was writing earlier this year about - Burlingame, San Mateo and Menlo Park. The first graph presents the number of homes sold each month from the beginning of the year in these cities.

Fig. 1 Number of homes sold in Burlingame, San Mateo and Menlo Park since the beginning of the year (Courtesy of Local Vector)

As you can see, the amount of transactions has dipped in San Mateo and Menlo Park in June and the trend continued in July. Only 24 homes were sold in Burlingame in July (down from 31 in June), confirming the cooling of the market there as well.

But the market continues to be brisk. Homes continue to sell fast as one can see at the graph in Fig. 2 illustrating the number of the Days On the Market (DOM) for these three cities.

Fig 2. Average Days on the Market from the beginning of the year (Courtesy of Local Vector)

While the number of transactions is much smaller, the DOM continues to be very short for all three locations. Fig 3 displays the number of listings sold at above Listed Price (asking price).

Fig. 3. Listings sold above the Listing Price (Courtesy of Local Vector)

The number of homes sold above the Listing Price decreased in Burlingame and Menlo Park, but continues to increase in San Mateo. The last graph shown in Fig 4 presents the changes in the price per square foot.

Fig. 4. Sale Price Per square Foot (Courtesy of Local Vector)

While prices in Menlo Park and San Mateo seem to be leveling of, prices in Burlingame continue their steep increase.

To summarize, what we observe is certainly not a downturn. Homes are selling fast, but the number of transactions dropped.  A smaller number of investors keeps potential seller away from selling again and this in turns keeps demand almost as high as before.

IS IT BETTER TO INVEST IN SAN FRANCISCO OR BURLINGAME?

 

Co-Author: Ilya Dorfman (Local Vector)

Recent real estate crisis hit San Francisco hard, but it did not take long for prices there to bounce back. This remarkable market bounce back helped to strengthen perception among investors and lenders alike that San Francisco is a great place to invest. Prices in the entire Bay Area followed, but especially on the SF Peninsula market, along the 101 Expy corridor. Burlingame in particular, with immediate proximity to SFO Airport and 20 min away from San Francisco is in high demand, due to its location and excellent schools. Burlingame is considered to be the third most desirable City to live in Northern California after San Francisco and Palo Alto. So, we were quite surprised when we found out that one of the lenders we were working with expressed reluctance to do business in Burlingame.

We set to prove that Burlingame is as good a location for investors as San Francisco. First we analyzed the year over year price changes in 3 locations: Burlingame, San Francisco and San Mateo County.

Fig 1 - % of house value change from previous year

As you can see, the green curve representing Burlingame's residential price changes from 2007 tracks the blue line representing San Francisco quite closely. But there is something nicer about the green curve: the year to year changes are not as rapid (the angles are not as sharp) as in the case of San Francisco. However, the percentage of the change of Burlingame properties at the end of 2009 was slightly smaller in San Francisco (7%) than the one in Burlingame (8%).

Fig 2 compares the year to year residential price change in San Francisco and Burlingame to this in the entire San Mateo County (orange line).

Fig 2 - % of value change from previous year for SF, Burlingame and SM County

The overall San Mateo County value drop in 2009 compared to the drop in Burlingame and San Francisco was significantly greater. The change for Burlingame and San Francisco is approximately half of the change in San Mateo County.

Based on this simple analysis one can easily observe that the quality and safety of investment in residential real estate in San Francisco and Burlingame are remarkably comparable. And how about the future? Obviously, we don’t have data for that! But we are very encouraged by increases of the quality of life measures in Burlingame such as a significant growth of the API index of its schools. Assuming that quality of life is reflected by demand, please  note a sharp increase in the value of sold price per square foot in Burlingame in 2012, but especially in 2013 as shown in Fig 3.

Fig 3 – Sold price per square foot

Investors definitely should take notice of Burlingame, if they have not done so already.

Menlo Park Downtown – the Hottest Neighborhood on the Peninsula?

A small downtown area of Menlo Park (referred to in MLS as the area #304) tucked between El Camino Real on the East, Valparaiso Ave on the North, Stanford Shopping Center on the South and Johnson St, Arbor Rd. and Fremont St on the West might be the hottest neighborhood not just in Menlo Park, but on the entire Peninsula. Prices keep moving up and following brisk sales in 2012, the inventory in 2013 dried out. 

There were signs of the Downtown area heating up already in 2012.  In the early part of that year before May 30, 2012 only 7 homes sold. Some sold prices exceeded the listed prices, but only by a few thousand dollars or a small fraction of a percent.  Then on May 30, 2012 two transactions closed, one for a small 750 sq. f. house on a 5800 sq. f. lot at 455 Yale Rd for $976k or $1,301 per sq. f. and another for a slightly larger 1260 sq.f.  house at 1330 Hoover for $1.261 M on a 900 sq. f. lot or $ 1001 per sq.f.  The latter sold $312k or 33%(!) over the asking price. This changed everything. The boom in the Menlo Park downtown had begun. Through the end of the year another thirty homes sold bringing the total for the year to thirty seven.  The number of days on the market (DOM) went down and sold prices started to significantly exceed the asking prices.

The trend continued in 2013, but inventory disappeared, which exacerbated the demand. 90% of the homes in this area sold above listed prices. Due to the lack of inventory only ten homes were sold in 2013 through June 21, five are pending and two are active. One of the active properties is a house with a roof partially missing described in MLS as a "townhouse in the making".  It is offered for $1.8 M and is supposed to be ready later this year. So, what happened to the inventory?

It is really real estate economics 101. The area 304 is shared by both, residences and businesses of the Menlo Park downtown. There are many modest residential homes in this area that were built 60 to 70 years ago. Many of them deteriorated due to lack of adequate maintenance, a process magnified by a recent real estate crisis, and the price of land kept growing due to successful neighbors. This area is surrounded by Stanford University from the South, Menlo College and Menlo Park from the North and Sand Hill Road, notable for its concentration of venture capital companies, from the West. And of course, there is the Facebook HQ.

Facebook moved to Menlo Park from Palo Alto in February 2011(to buildings previously occupied by Sun Microsystems). The Facebook HQ is 4 miles away in a straight line from the Menlo Park Downtown. It is difficult to overstate its impact on demand for condos, townhouses and homes in this area. If one would attempt to find a single event behind a local boom – the current boom started one year after Facebook moved its HQ to Menlo Park. Demand for real estate is so high that many owners who cannot afford the cost of improvements or remodeling have only one alternative to maximize the gain – wait for the price of the land to go even higher. So, the inventory dried out.

It is exciting development for developers in this area and future owners, but not always by those who either are displaced by the rapid change of fortunes of this small area.

This handsome 60 years old, 1200 sq.f. house is located on Hoover St (R 3 zone) on approx. 5700 sq. f. lot. The only way to bring this property to the going $2 M range is to either totally remodel it and add another floor or to tear it down to make room for an entirely new construction.

Menlo Park Downtown street scene. Owners waiting for an offer?

So, what will happen next? As new development will be replacing older properties, prices of land will continue moving up. More homes will be remodeled and sold or bought by investors to tear down and make room for development of new homes and condos. As land to redevelop becomes undeveloped, demand will be increasing in the adjacent areas of Menlo Park, Redwood City and East Palo Alto.