Specifically, Jackson Center at 1111 Jackson Street in Oakland and Berkeley Tower at 2120 University Ave in Berkeley.

The bank seeks to foreclose a delinquent loan totaling $47.1 million. The affiliate of Portland, Ore.-based Scanlan Kemper Bard, commonly known as SKB, bought the buildings and the vacant lot for $61.5 million in 2007.

Ouch! That means that SKB is willing to right off almost $15 million in invested capital on these deals.

In an article from April 26, 2010 the Contra Costa Times reported that One Concord Center was also in the foreclosure process.

SKB willingly turning over the keys to the property in Oakland and Berkeley means that they do not see a resurgence in value in the near future. Expecting a near term turn around is unrealistic.

3D Architectural Rendering of Vidrio

The Contra Costa Times is reporting Construction to resume on stalled Pittsburg project.

After 18 months of inactivity, construction on a housing and retail project regarded as the centerpiece of Pittsburg’s downtown revitalization could resume next week.

Vidrio as the project was named by developer A.F. Evans has been under construction since 2006. The developer defaulted on the original loan from Union Bank in August of 2008.

A.F. Evans filed Chapter 11 bankruptcy protection in March of 2009. A.F. Evans also developed 901 Jefferson Street in Oakland which went to foreclosure and was bought by Madison Park Financial Co.

The City of Pittsburg began negotiating with Union Bank to buy the debt in October of 2009. Escrow for the sale of the debt was just closed last week.

The Contra Costa Times article says that the City of Pittsburg has already spent $26 million towards this project.

The article indicates that the 75 units are listed for sale at an average price of $152,230 per unit, for a gross sale value of $11.4 million. Less than half the cost of the city’s investment.

This looks to be a costly investment for the City of Pittsburg.

Building adjacent to Baja Fresh being demolished

Building adjacent to Baja Fresh being demolished

The owner of the property, Hall Equities Group, is redeveloping the property at the corner of S. California and Olympic Boulevard. By demolishing the old Warehouse Video store and golf shop, the developer is making room for two new office and retail buildings on the site.

The development is designed with pedestrian access in mind. As well, LCA Architects wanted to expose as much of the property to traffic on Olympic Boulevard as possible.

The property borders Alma Park. Alma Park is Walnut Creek’s “hidden park” located between Olympic Boulevard and Botelho Avenue. It is bounded on three sides by the Ivy Hills Apartments, Regent on the Park Condominiums, and Montecito Condominiums.

Part of the plan is to broaden the entrance to Alma Park in Walnut Creek. Hall Equities owns the property adjacent to Alma Park at 1855 Olympic Boulevard. In a land swap, Hall Equities traded a portion of the 1855 Olympic property for a small portion of Alma Park to make room for the new buildings. The redesigned entrance to Alma Park will enhance views into the park.

Alma Park entrance at the corner of Olympic Boulevard and S. California

Architectural renderings of Centre Place

The City of Walnut Creek website has information relating to the project including architectural renderings, landscape drawings, and views from Alma Park.

During the redevelopment process Baja Fresh is planning to remain open.

]]> http://www.maclennaninvestments.com/2010/01/29/whats-going-on-at-baja-fresh-in-walnut-creek/feed/ 0 http://www.maclennaninvestments.com/2009/12/18/bay-area-real-estate-prices-going-up/?utm_source=rss&utm_medium=rss&utm_campaign=bay-area-real-estate-prices-going-up http://www.maclennaninvestments.com/2009/12/18/bay-area-real-estate-prices-going-up/#comments Fri, 18 Dec 2009 20:38:30 +0000 Peter http://www.maclennaninvestments.com/?p=219 Continue reading →]]> The Contra Costa Times, Contra Costa County’s major newspaper, is reporting today that Higher Bay Area home sales, prices offer hope. It is important to notice the first paragraph of the article.

The Bay Area real estate market continued to show improvement in November due to fewer sales of bargain-priced foreclosed homes and more sales of higher-priced properties.

According to a report released Thursday by MDA DataQuick of San Diego, the median price paid for a home in November was $387,000, an 0.8 percent decrease from October, but up 10.6 percent from November 2008. Last month’s median price was the second consecutive month that saw home prices rise on a year-to-year basis since two years ago. The median is the point at which half of the homes sell for more and half sell for less. [emphasis mine]

The author, Eve Mitchell, astutely notices the reason the median home price, the price at which half of the sales were above and half of the sales were below, rose is due to more high-priced homes selling.

This doesn’t mean housing prices are actually rising, though they could be. It does mean a greater number of homes above the median price have sold in November than in November of 2008.

The article goes on to say,

In Contra Costa County, the median sales price for a home was $290,000 in November, a 9.4 percent gain from a year ago.

“We are really starting to see the high-end loosen up. Obviously, the borrowers have to be well qualified, but we are starting to see more financing.” said Robin Dickson, executive vice president of J. Rockcliff Realtors, an East Bay brokerage.

Another reason that median prices are up from a year ago is that there are fewer short sales and bank-owned foreclosure in the marketplace now, she said.

Still, she would not be surprised to see more foreclosures come into the market next year.

“We know they are out there but the banks are hanging on to them for now,” Dickson said

Foreclosure Crisis Not Over

Mish in Tip of the Iceberg With Luxury Short Sales; Fannie, Citi Suspend Foreclosures for Holiday Season, links to a Bloomberg article that states,

House

Homeowners with mortgages of more than $1 million are defaulting at almost twice the U.S. rate and some are turning to so-called short sales to unload properties as stock-market losses and pay cuts squeeze wealthy borrowers.

If this trend of luxury home defaults continues, expect to see more luxury real estate return to the market as bank-owned REOs. This could continue to lower the median home price.

Bloomberg also reports ‘Shadow Inventory’ of U.S. Homes Climbs, Report Says. (HT: Calculated Risk)

The number of homes that may be in the pipeline for a sale because of foreclosure and delinquency climbed about 55 percent to 1.7 million at the end of September, according to estimates by First American CoreLogic.

Rising Interest Rates Leads to Lower Prices

According to the Chicago Sun-Times, Freddie Mac is reporting the 30-year mortgage rate is up to 4.94% from 4.81% last month. Lower interest rates allow buyers to afford more house, because their monthly payment is lower. If the interest rate continues to rise,  home values may stay flat or fall as borrowers will find it difficult to qualify for higher priced homes.

Conclusion: Prices Not Likely to Rise

While news of a greater number of higher-priced homes selling is positive, it does not indicate that the value of homes is actually rising. As well, with a looming “shadow inventory” and the specter of higher interest rates in the future home prices are not likely to rise in the near future.

(Photo Credit: Modern Northwest House by pnwra)

If you are reading this and you still have equity in your real estate investments, Congratulations! (I apologize if that offends others of you.) You have managed to buy at the right time and have kept your property performing well.

However, at the current time you face an important juncture. What will you do with that equity?

Will you allow your equity to ride? Or will you cash in your chips to play at another table?

What Do You Believe About the Future?

Your decision whether to stay in the properties you currently own or leave for greener pastures will likely be based on your perception of what the future holds.

You are likely to stay in your current properties if you believe that:

• Real estate in California is the best and always goes up;
• You need to drive by a property to “sniff the dirt”;
• Rents and vacancy are stable and will go up;
• Appreciation is not important, only cash flow;
• Inflation is nothing to worry about, I have a fixed rate amortized mortgage; or
• Cap rates won’t go higher.

However, you might be ready to move if you believe that:

• Cap rates are headed up;
• Inflation is coming and interest rates will go up;
• Rents are declining in the near term and vacancy is rising;
• Other states may provide a greater return on my capital; and
• Appreciation is important to you.

The Open Window

If you find your beliefs more closely aligned with the second group, I want to offer you a reason to move your hard earned real estate equity now.

For Multifamily Owners

There is a window now before vacancy peaks, rents bottom, and cap rates rise to sell your Bay Area property and transfer your equity into a property that will appreciate faster than California properties.

Currently, commercial real estate has begun its slide to a new normal. Vacancy is rising and rents are decreasing as companies lay off employees and those laid off move back in with Dad and Mom.

As well, cap rates have begun to increase. As they do so they erode the value of a property as investors consider alternative investment returns. If inflation finds a foothold, interest rates will rise taking cap rates with them.

This leaves a brief window when vacancy hasn’t soared and rents haven’t bottomed to sell your property before inflation takes cap rates higher.

For 1-4 Unit Owners

If you have equity in a single family home, a duplex, a triplex, or a fourplex, now may be the time to move that equity to another property in an area that will provide above average appreciation in the coming years.

It is likely that the value of your rental property will further decline for two reasons.

1. Expect to see rental rates decrease and vacancy increase as more investors purchase single family homes as rentals increasing the supply.
2. As well, California has imposed a temporary moratorium on trustee’s sale. The Contra Costa Times reported that while foreclosure filings are piling up, actual trustee’s sales are slowing. This could mean that another wave of foreclosures is yet to come to market, further driving down prices.

Why Move Now?

Moving your equity now is a chance to preserve your equity and invest in in a location that will offer you above average appreciation in the coming years.

However, moving your equity is not the best option for every individual. You need a personalized investment strategy tailored to your needs, desires, and situation.

If you would like help evaluating your situation and charting a course to retirement freedom, please give us a call at (925) 385-8798.

First, in Circuits to seafood: New tenants plug into empty buildings the Contra Costa Times shares about the new uses for former Circuit City stores.

A Seafood City Asian market is due to a open in a shuttered Circuit City store in Concord, and another retailer is eyeing a closed Circuit City in Fremont, raising hopes that at least a few empty retail buildings in the East Bay could gain a fresh lease on life.

Second, in Bay Area rents decline, fueled by unemployment we learn:

Housing prices aren’t the only thing that’s falling in the Bay Area. So are apartment rents, but not nearly as much as the hard-hit housing market.

Still, the average asking rent in the nine-county Bay Area during the first quarter for apartment buildings with 50 or more units was $1,556, or a 1.4 percent drop from a year ago, said a report released Thursday by Novato-based RealFacts.

The occupancy rate fell 1.7 percent to 94.2 percent. The average rent applies to all rental units, ranging from studios to three-bedroom townhouses.

The loss of jobs – or the fear of losing jobs – is leading to lower occupancy rates that push down rents.

Deciphering the News

It is encouraging to know that some retailers are willing to expand in the current market. Seafood City is a supermarket for the Asian/Filipino communities.

As rents decline and vacancy increases multifamily values will decline as investors underwrite at lower income values.