Here are three reasons you should not buy a house/condo if you are in this stage of life:

Real Estate Ties You Down

You decide to buy a nice little home in Walnut Creek, CA. Your career starts to take off. A headhunter contacts you with your dream job in Boston. You would love to take it, but what do you do with your home? Do you sell it? Can you sell it? Do you rent it? Do you want to be a landlord on a home in California while you are in Boston?

As one radio host said, “Owning real estate is placing a stake in the ground.” It is a financial obligation that can limit your options and limits your freedom.

Your Spouse Won’t Like It

Let’s say you buy that little two bedroom house in Walnut Creek. One day while walking your dog in the Dog Park, you see the most beautiful creature on two legs. Your whirlwind romance leads to a proposal and wedding plans.

As you begin making plans for life after marriage, you are deciding on where to live. Your spouse begins to point out the deficiencies in your first house. It only has two bedrooms, where are you going to put Jack and Jill when they come along? The kitchen is too small. The bathroom only has one sink. Where are the in-laws going to stay when they visit? Why did you paint the kitchen that shade of blue?

Your options are to remodel or to sell your existing house and buy something new. Do you really want this hassle while planning a wedding?

Odds are that the person you marry won’t have the exact tastes that you do. The house you thought was ideal, is not their ideal. It is a much better decision to buy something together that you both enjoy.

It is Not the Wisest Financial Choice

Imagine a young farmer. He just bought his first plot of land. He needs to plant his fields for the harvest and he needs to build his first house. However, he only has enough capital (money) available to do one or the other. Should he buy seed for his fields or buy lumber to build the home? Which would you choose?

Hopefully, you chose the seed. Seed provides more income for the coming years. Seeds will allow the farmer to have a future in the farming business. Lumber may have provided shelter, but it didn’t produce any lasting return to the farmer.

In many ways buying a single family house is like a farmer buying lumber. It provides shelter, but the long-term benefit is mitigated.

There is another answer that makes sense for a young professional. If you would like to hear more about this solution call me at (925) 385-8798.

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)

When you walk by yourself before the hustle and bustle of the day it is amazing what you notice.

Comings …

Walking past the new Cheesecake Factory I realized what a good decision was made by the city leadership to bring Cheesecake Factory to Walnut Creek. As I idled past the outdoor seating, men were spraying down the patio. The chairs were stacked on the tables. The ground was dark with the water on the stone patio.

The fountains in front of the Cheesecake Factory were babbling as water cascaded down their sides. The flame at the top danced in the wind.

It reminded me of Disneyland before the crowds arrive. Things are still fresh. The cafes are clean before the lunch crowds. It is as if you are walking into an alternate reality where messes aren’t made and people always get along.

I also noticed that the old Bombay store had a sign announcing that it had been leased. That must make the propertyowners very happy.

Of course, Neiman Marcus is still in process of coming to the old David M. Bryan location.

and Goings

The Chocolate Cafe is now closed. It must be hard to compete with a national coffee chain and a national dessert restaurant a block away even though you are 30 yards from the theater’ entrance.

Johnny Rockets’ old store is still closed on Mt. Diablo Boulevard. The tables and chairs are still inside but the sign out front has been removed.

A banner hanging from the Longs’ Drug store welcomed Elephant Pharmacy customers. The Elephant Pharmacy filed bankruptcy a few months ago, and has likely vacated their store.

Character of a City

While the shops and retailers in downtown Walnut Creek may change with time, the character of Walnut Creek does not have to change.

The character of a city is shaped by the character of the people that choose to live in a city, more than the character of the retailers in that city.

As long as honest, hard working, family loving, school supporting, community focused people continue to call Walnut Creek “home”, we won’t have to worry about Walnut Creek changing from the place we have come to love.

I think I will continue my Saturday morning walks, if only to get a better sense of the city I call “Home”.