Archive for April, 2011

Our Own Antoine Pirson in the SF Chronicle!

April 13, 2011

Bay Area condominium sales, prices tanking

Taken from Carolyn Said’s article, Chronicle Staff Writer
Sunday, April 10, 2011

Realtor Antoine Pirson (left) shows a condominium to Kalyn Farris in Oakland. Buyers often run into a mortgage barrier because many complexes with high foreclosure rates or owners behind on dues don’t meet lenders’ requirements.

 Times are tough all over in the housing market, but perhaps toughest of all in the world of condominiumsThese individually owned multi-unit complexes are suffering through a perfect storm of circumstances that have undermined values and left remaining homeowners to pick up the slack for defaulting neighbors.

In a vicious cycle, lending restrictions bar potential buyers from getting a mortgage in complexes where too many units are behind on homeowner association dues, are not owner-occupied or are concentrated in one party’s hands. Units in such complexes must sell for all cash, which drives down their price.

Kalyn and Noah Farris are moving from Sacramento and trying to buy an East Bay condo after she got a job as a project manager at Kaiser. They’ve run into the mortgage barrier.

“On the one hand it feels like you’re getting a deal compared with what prices used to be, but you have to eliminate whole buildings as options because they can’t meet the (lending) requirements,” she said. The couple were in contract for an Emeryville condo built in 2006, but four different lenders refused to give them a mortgage because the developer had kept half the units as rentals.

In complexes where mortgages aren’t available, “obviously those prices tank because who has $250,000 cash, for instance, sitting on their night table,” said their real estate agent, Antoine Pirson of Caldecott Properties in Oakland.

Lower values mean more owners are underwater, which increases the chance they’ll walk away from their units – and stop paying their HOA dues. Loss of HOA income means the association must cut back on services, amenities and maintenance, and often must charge remaining owners more to make up the difference.

Mature complexes, where many owners bought years ago and thus have mortgages they can afford, are likely to be in better shape than complexes built and sold in the peak bubble years. But even they can have some issues.

For instance, Debra Britton, president of a homeowners’ association in Pleasant Hill, said her 20-year-old complex “is likely weathering the storm a bit better than most. Because we’re a more mature property we didn’t have a lot of new owners (with possibly more risky financing) or a lot of people who took out large second loans putting them into dire shape.”
Many bankruptcies

Still, the 114-unit property has experienced an unprecedented number of foreclosures and bankruptcies – an average of 5 percent in the past three years versus only one bankruptcy and no foreclosures in the prior two decades.

“If people don’t have a job or are walking away from their property, or the bank is foreclosing, the dues are often the first thing they stop paying,” Britton said. “Additionally, it can take the banks or lending institutions many months or even a year or more to foreclose, which means dues might go unpaid for some period of time.”

To compensate for shortfalls, her HOA imposed a special assessment on all owners in 2009 and 2008. In 2010 a cooler summer reduced its energy expenses and water usage so it didn’t need an extra assessment. This year, it has asked all its service vendors to cut costs by 3 to 5 percent and plans to use some of that savings to help cover anticipated HOA dues delinquencies in 2011.
New units underwater

By contrast, owners at the newer complexes are likely to universally be underwater since prices have plunged since that peak. If they bought with the no-money-down loans common in those frenzied years, then they don’t have much incentive to stay put and are more apt to walk away and let their lender foreclose.

“Foreclosures are definitely having a bigger impact on condos than on houses,” said Andrew LePage, an analyst with DataQuick Information Systems, a research firm in San Diego.

About 17.2 percent of the Bay Area’s 1.8 million homes are condos, according to DataQuick. Meanwhile, about one-quarter of all foreclosures earlier this year were condos, showing the disproportionate impact the downturn has had.

On the plus side for condos, “there’s still big demand out there for cheap housing and the rental market is fairly promising,” LePage said. “There’s a sizable investor appetite (for condos).”

Cecily Tippery, an agent with Coldwell Banker, has seen the upside of condos’ falling values as an investor. She and her husband bought two units in the Contra Loma complex in Antioch, where units sold for $220,000 to $250,000 a few years ago at the market’s peak.

“You can buy for from $22,000 to $45,000, and can rent them out for $850 to $1,000 (a month),” she said. “HOA dues are $350. It’s a better investment than a CD and you can pay for it in a few years.”

It’s not a quick turnaround, though.

“You can’t fix and flip those because the market is so depressed for condos,” Tippery said. “You’ve got to hold on to them. Our plan is to hold for 10 years at least and then see where the market is. It’s a long-term investment.”

DataQuick said that about half of condos in Contra Costa County sold for all cash earlier this year, higher than the statewide average of about one-third selling for cash. In Solano County, all-cash transactions account for about three-quarters of condo sales. In Alameda County it’s about 42 percent.

Owners foreclosed on

The downturn has engendered some new trends, such as condo associations foreclosing on homeowners who don’t pay their HOA dues. In California, condo owners must be more than 12 months behind or $1,800 in arrears on dues before the association can foreclose.

Association foreclosures “used to be very, very rare,” said Lisa Esposito, president of Massingham & Associates, a Concord company that manages more than 300 homeowners associations in California. “Homeowner associations now proceed with foreclosing on homeowners who are delinquent because they have a duty to the rest of the (homeowners). Otherwise the homeowner lives there scot-free, uses the pool and tennis courts and amenities. There’s an understandable resentment. Many associations have 10, 20, 30 or 40 percent of owners who are not paying. That leaves the others having to pick up the difference.”

But foreclosing doesn’t bring the association any money, because the primary mortgage holder is first in line. It just gets the bank’s attention to get it to foreclose more quickly, so the unit will get resold to a new owner who will pay dues.

“The foreclosures are to force the lenders to act to stop the bleeding,” Esposito said.
Raising HOA dues

When a bank forecloses on a condo in California, it is not liable for past-due association fees. The shortfalls from defaulting condo owners has led to lots of belt-tightening at condo complexes.

“First, associations will stop funding their reserves” money for long-term repair and maintenance, said David Levy, a partner at Levy, Erlanger & Co., a San Francisco CPA that works for about 2,000 California homeowner associations. “Next, they’ll shut down some of the amenities – a clubhouse or pool if they have it. They’ll mow the lawn less often. If they don’t have the money, they can’t spend it.”

The other strategy is to raise HOA dues or impose special assessments. “That’s not popular, but the alternative isn’t rosy either,” said Esposito. “If this doesn’t get turned around, their property has less value.”

Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2011/04/09/BUHC1IRH7P.DTL&ao=all#ixzz1JQipdCgG

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The 12 Step Program to Real Estate Success (1-4 Unit Investment Properties)

April 11, 2011

When: Tuesday, April 19th
6:00 – 8:00pm

Where: Rockridge Library
5366 College Ave, Oakland, CA 94618

Why: To Make Good Investments!

Presented by:
Antoine Pirson, Broker/Investment Advisor (Caldecott Properties)
and
Ed Diaz, Mortgage Advisor (FirstCal)

Some Topics We Will Discuss:

1. Residential Realtors vs. Commercial Agents
2. Financial / Mortgage Decisions: Ed Diaz
3. Caldecott Properties: Antoine Pirson
4. Why am I doing this?
5. Multi-Unit Properties vs. Single Family Residences
6. Rent vs. Own
7. Short Sales, REO’s + Foreclosures
8. The Economy + GDP
9. Value vs. Cash Flow
10. Investing vs. Flipping
11. Tenant management and screening
12. Sell or Refi?

Invest in your future and come to this event!

RSVP here or email apirson@caldecott.com – hope to see you there!

Antoine E. Pirson
MBA, CCRM, CCIM (candidate)
R.E. Broker and Investment Advisor
5251 Broadway, Oakland, CA 94618
Office: 510.594.2400 x234
www.investmentpropertyfirst.com
Lic #: 01372814

 

Ed Diaz
Mortgage Advisor
Corporate Accounts
ediaz@firstcal.net
Cell: 415.368.1149
Fax: 877.834.6357
Visit me on LinkedIn
NLMS#249808 DRE#01313063

Support Oakland Public Music + Get Free Symphony Tickets!

April 5, 2011

The Business in the Arts Networking Circle (BANC) is a network of local businesses that have joined together with the Oakland East Bay Symphony to promote a lively arts environment and support vital public music education programs.

Caldecott Properties and BANC are proud to support Oakland East Bay Symphony’s Music for Excellence Program. Music for Excellence’s In-School Mentor Program and After-School Program bring music education and enrichment to nearly 2,200 young people in 19 of Oakland’s public schools, providing students in grades 4 – 12 with continuous, sequential instrumental music instruction tuition free.

We hope that you will partner with us as we serve the children and youth of Oakland.

Please click below to learn more about the program and to make a donation:

If you make a contribution by Wednesday, April 13, 11:59pm, you will have the opportunity to enjoy live symphonic music and the world premiere of a work by Scott Amendola.

All donors of $50 – $99 will receive: An invitation for 2 to attend the Thursday, April 14, 7:30pm Rehearsal of Oakland East Bay Symphony’s Concert “The Height of Romanticism.” (A guest list will be held at the 21st Street entrance to the Paramount Theatre, Oakland.)

All donors of $100 – $249 will receive: A pair of tickets to Oakland East Bay Symphony on Friday, April 15, 8:00pm and an invitation to an exclusive post-concert reception with the opportunity to meet the guest artists and Music Director Maestro Michael Morgan. (Tickets will be held at the VIP table at the 21st Street entrance to the Paramount Theatre, Oakland.)

All donors of $250 or more will receive: A pair of premium tickets to Oakland East Bay Symphony on Friday, April 15, 8:00pm and an invitation to an exclusive post-concert reception with the opportunity to meet the guest artists and Music Director Maestro Michael Morgan. (Tickets will be held at the VIP table at the 21st Street entrance to the Paramount Theatre, Oakland.)

The “Height of Romanticism” will feature the new work “Fade To Orange” by bandleader, composer and drummer Scott Amendola, who was named “MVP of the 2009 Bay Area jazz scene by the San Francisco Chronicle. Amendola will be joined by Nels Cline, lead guitarist of the alternative rock band Wilco, and bass player Trevor Dunn. (For more information about the concert: http://www.oebs.org/page/april15.htm).

Thank you for time and generosity!