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You are here: Home / Archives for East Bay

July 18, 2013 by Peter Maclennan Leave a Comment

Bay Area Apartment Rents Slower Increase

The San Francisco Business Times published an article this week about the slowing growth of Bay Area apartment rents. According to the article apartment rents in San Francisco grew by 9.9% in 2012. Apartment rents in the East Bay increased by 6.9%. A leading apartment advisor predicts that growth will be 3.2% in San Francisco and 3.3% in the East Bay.

Home Ownership and Supply

I believe two factors are contributing to the slow down in rental growth. First, we have seen the residential real estate market take off and a lot of buyers have gotten off the sidelines and are buying homes. This means that a lot of renters are moving to be homeowners. Second, a number of new rental projects are being constructed. Both of these items are increasing the supply and causing rental rates to slow.

Bay Area Apartment Owners

Existing apartment owners have benefited from the increased rents (the exception may be in rent-controlled areas like San Francisco, Oakland, & Berkeley). Cash flow is up and sales of apartments are at record low cap rates.

What does the tapering of rent growth and the increase in interest rates mean? Well, it probably means that the market is reaching the peak of the value cycle. Interest rate increases mean that buyers will have to pay less for properties to cover rising financing costs.

If you have questions about your apartment complex, please give me a call at (925) 385-8798.

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Filed Under: Bay Area Real Estate News, Real Estate Investing Tagged With: Bay Area, Commercial Real Estate Investing, Contra Costa County, East Bay, Investment Property, Real Estate Investing, Rental Property

September 13, 2012 by Peter Maclennan Leave a Comment

Inventory Shortage in Single Family Housing

If you have been attempting to buy a single family home in Contra Costa County as a personal residence or as an investor, you may have noticed that the competition is tough. Homes priced under $350,000 are receiving multiple offers, and some are all cash offers.

For Sale Home Inventory Shortage

Currently, there is an inventory shortage in Contra Costa County. The image below from the August 2012 Report from the Contra Costa Association of Realtors shows the declining supply of homes for sale in Contra Costa County.

Contra Costa Housing Supply

From the chart we can see the downward trend in inventory from the peak in October of 2010. We also see that inventory dropped below 2 months’ supply in February of this year and hasn’t gone above that level.

Causes for the Lack of Inventory

What is causing the lack of inventory?

An article in the Wall St. Journal from September 12, 2012 points to the trend of institutional investors buying foreclosed homes: Firms Flock to Foreclosure Auctions. Firms like Blackrock and Colony Capital have begun buying up large blocks of foreclosed homes at the auction steps in communities across the United States. While private investors generally want a return above 10%, the investment firms are willing to accept lower returns for their institutional investors.

As well, Bloomberg reports that Fannie Mae Sale of Florida Foreclosures Gets 96% of Value. Fannie Mae sold 699 homes in Florida to Pacifica Companies, LLC a San Diego based firm. The homes were valued at $81.5 million and sold for $78.1 million.

Another factor is the number of individuals that are underwater on their mortgage and don’t have the option of selling their home. These home owners would have normally sold and moved up to their next home. However, they don’t have the cash on hand to make a down-payment for the move and the lack of equity in their current home precludes them from selling and moving up.

Buying Real Estate in the Current Environment

So how do you buy a home in the current environment?

  1. Get your financing lined up. It is important to have your down-payment available for your purchase. Also, you need to get a pre-approval letter from your lender. A pre-qualification is not strong enough for most sellers. They want to know that a lender has delved into your finances a little deeper.
  2. Don’t expect to “steal” a property. With the lack of inventory, this is truly a seller’s market. Many properties are receiving multiple offers. Listing agents in the current market are setting a date in the future to review “all offers”. This means that low ball offers will be compared with high price offers at the same time. Which one would you choose?
  3. Write a strong offer based on a reasonable market price. This is part of not expecting to low ball sellers. Your agent should tell you if the property is reasonably priced. A strong offer may be at full price or above asking price. It also might contain a large down payment or a shortened inspection period. A good agent will provide strategies to make your offer more attractive to a seller and competitive to other offers on the table.

In the competitive real estate environment, it is key to have a good real estate agent on your team. If you need help meeting your real estate goals, please feel free to contact me by phone at (925) 385-8798.

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Filed Under: Contra Costa Real Estate, Real Estate Investing Tagged With: Contra Costa County, East Bay, Investment Property, Real Estate Investing

June 17, 2010 by Peter Maclennan Leave a Comment

Buildings in Oakland, Berkeley, and Concord Enter Foreclosure Process

The Contra Costa Times is reporting that More East Bay buildings in mortgage default.

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.

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Filed Under: Bay Area Real Estate News, Contra Costa Real Estate Tagged With: Bay Area, East Bay

February 5, 2010 by Peter Maclennan Leave a Comment

Downtown Pittsburg Project to Resume

Vidrio Mixed Use Development in Pittsburg, CA - Architectural Design

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.

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Filed Under: Bay Area Real Estate News, Contra Costa Real Estate Tagged With: Bay Area, Commercial Real Estate Investing, Contra Costa County, East Bay

January 29, 2010 by Peter Maclennan Leave a Comment

What’s Going On at Baja Fresh in Walnut Creek

Here are some pictures from today of what used to be the building attached to Baja Fresh and Kentucy Fried Chicken in Walnut Creek, California.

Building adjacent to Baja Fresh & KFC being demolished

Building adjacent to Baja Fresh being demolished

Baja Fresh in Walnut Creek

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.

Centre Place in Walnut Creek Landscape Plan

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

Centre Place Development in Walnut Creek, CA

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.

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Filed Under: Bay Area Real Estate News, Contra Costa Real Estate, Walnut Creek Tagged With: Bay Area, Contra Costa County, East Bay, Walnut Creek California

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Maclennan Investment Group, Inc.
3380 Vincent Rd, Ste HUB
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