FALL 2009 NEWSLETTER
RBL, left, with Rick Hyman, crossing the cancer survivor line
at the LiveStrong Fundraiser in San Jose.
TOMORROW, TOMORROW, TOMORROW
I have been putting this newsletter off, again and again and again. The reason is that I was waiting
for some/any change that might be positive. To be honest, not much has changed in the market.
Volume is down and price continues to fall.
Having said this, our practice has thrived. This is a function of a large and diverse client base. The stepup
market is good. Savvy buyers are taking this opportunity to buy a home in an area they never would
have been able to afford in the past. First time entry level is fantastic, with significantly lower prices
and money available. We recently found a livable home on the Midpeninsula for one of our buyers at
$300,000. It is certainly the time to get into the market with the attractive pricing and larger inventory
we are seeing right now. The upper end market is also strong. Buyers still have plenty of assets and
large homes are really looking like a bargain. For example, a property selling for 10 million last year
would sell for 5 - 6 million today. We have had 7 sales in excess of 3 million dollars this year to date.
Climbing the Ligurian Mountains
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My European ride compatriots, from left, Andy
Murray, RBL, Peter Mathews and Eryn Schilling
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Relay for Life Votive Candle Bag
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The middle market is in no man's land. From my point of view this is mainly a banking problem. ALL
borrowers now need to qualify on their income. Asset depletion loans and stated income loans no
longer exist. A borrower must be able to show the ability to make payments using monthly income
from employment. In addition, any loan over $729,000 has additional hoops to jump through. These
tighter banking standards have removed a substantial number of buyers from the marketplace. This has
led to historically high inventory. As I write this 120 homes in Palo Alto are listed for sale, with 202 in Los
Gatos/Monte Sereno and 76 in Los Altos Hills. This means more downward pressure on price as we have
a huge supply.
On the sell side, it all depends upon where you fit in the market. A list price of over 2 million is still difficult.
There are sales for perfect, well-priced homes in that range, with an average of 60 days on the market. In
general, however, there is over a year's worth of inventory on the market today.
There has been good press on the market doing better - as compared to what?? Volume is 30% of two
years ago. Believe it, pricing is off 30% from our high, and will stay this way. When at this level, a small
upward indicator does seem like good news.
With all of the doom and gloom, we are bouncing along on what feels like the bottom. Our day-to-day
current business experience tells us that the bottom price has almost been reached. It may pop down a bit
more in the 4th quarter but not by much. On a small positive note, our corporate clients are hiring, one at
a time. Some companies even have started providing some assistance with the banking dilemma. This has
totally surprised me. Think middle of next year: stability in price, an increase in volume. The demand is
coming out of the woodwork slowly.
There is still DENIAL out there. There has been a complete reset in price structure and it is here to stay. We
may see the old 3 to 6% per year appreciation in the coming years. Slowly clients are readjusting and making
their future plans upon this new price reality. Waiting 2 years will not bring a new BOOM or a return to
the high values we have experienced in the past. Remember, we always have had buyers and sellers. We
still do. Money is the limiting factor. I see no indication that banking is going to free up. In fact, every day
some new regulation makes it a bit more difficult. This has been the case since last September. It feels
like much longer. Each time I have experienced a "downturn" the time frame for reversal is a minimum of
one and a half years. Expect that to be a minimum. It will feel very nice to see a level point.
Diana Sumner, Owen Halliday, RBL and Jaime Chapin
THE OFFICE
The world of 245 Lytton is the best. The collaboration Jaime and I have established with Owen
Halliday and Diana Sumner is working very well. We have been at it for a year. No formal
arrangement, just a big picture. I mentored Owen into the business 5 years ago. He just plain
gets it. They both work very hard, and do what's right. A simple secret to success. Owen was among
the top 100 agents in the company in 2008.
As I noted, our practice keeps chugging along. For the first half of 2009 we are ranked number 6 in
Coldwell Banker. It really is fun, as most agents have not seen anything that resembles an adverse
market. I have seen the movie before, really don't like it, but know it has a happy ending somewhere.
Thus it is not as befuddling to me. I find this a great time to learn, or re-learn the fundamentals of
business, both in my industry and in others. All businesses will be stronger and healthier as a result.
With this change in the market the amount of detail involved in each sale has dramatically increased.
The extra stress and anxiety in the marketplace is higher than I've ever seen. A lot of rapid financial
change has caught many unawares and poorly planned. But I know this correction will be good in the
long run for all. A re-calibration of reality. We have all been so fortunate to live and experience the last
couple of decades of amazing prosperity. We are all still pretty lucky; we just have to pay attention
more to the "budget." I have found that 15-dollar chardonnay can be pretty good.
Jaime continues to be a superstar; we will have our 5-year anniversary in a few months. By now, most
have met and worked with her. She is ever more detailed, people oriented, always a smile, and listens
(even to me once in a while).
Jean and Brendan at 4th of July Lake
HOME
The vegetable garden has captured me with its allure of fresh produce. Carrots, bush beans, "Ronde
de Nice" zucchini and "Cinderella" pumpkins are under my care and thriving. Hand watering and
weeding are great ways to slow down and relax. I've even had dirt under my fingernails - a sure
sign of a true gardener! I had a brief battle with squirrels but we are all now living in harmony. Jean has
continued her focus on good nutrition with homemade whole-grain breads and simple healthy meals.
Ahhh, and cancer. August first was the 2-year anniversary of the diagnosis. We have 3 months to go
for the 2-year "cancer-free" mark. Slowly, I have become more involved with the community: those
surviving, and those currently at war. Remembering and sharing, gathering the information, making
good decisions and then "having the will to survive"!
My participation in the LiveStrong Foundation ride this year actually brought me to tears as I crossed the
survivor line with my cancer mentor Rick Hyman (12 year survivor). Please see the cover photo. I have
been honored at the Relay for Life (thank you Janet Miller and Christy Garcia) and at the Tour de France
finish in Paris with my name on the pavement in the LiveStrong area (thank you Elizabeth Wistrom). The
LiveStrong organization continues to amaze me. Please check it out at livestrong.org.
The highlight of the summer was my annual cycling trip to Nice, France and the Ligurian Mountains of
Italy. Eat, ride hard, eat, and sleep. Nice. I rode well and continue to do so. Jean and I will be off
to celebrate our 18th wedding anniversary next month. We will revisit a favorite camping spot on the
Redwood Coast of California, Patrick's Point, with the next stop in the Trinity Alps to camp and hike.
Thank you to all. Both business and personal life are such collaboration. I can't wait for more as each
day seems to get better.
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