Wind Up

Back to the home-hunting story:

I let a month go by after the Mateo Avenue condo hit the MLS, and finally put in an official request to tour.  Once again Matt took care of me; we had gotten to know each other pretty well by this point, to the degree that we started to reminisce about the first property I'd seen way back in the previous year.

Before the tour, I'd spent some time walking around the neighborhood at different times of the day and different days of the week.  I was happy with what I had seen - it isn't as fancy as the streets west of Magnolia, but the area was kept up well, there was a good amount of activity on the streets, and overall I got a good vibe off of it.  I wandered farther afield, across the tracks, then back again and around the other streets.  My favorite aspect was still the access - it's a good walk to the train station, and even shorter to Safeway, Trader Joe's, and the excellent public library - but I dug the spot itself as well. 

We learned that a tenant occupied the unit, and waited while she got the kids and headed out, then moved inside.  Yup... definitely a tenant and not the owner.  Even though the tour had been scheduled for a few days, the place was pretty messy, with half-eaten pizza (at nine in the morning?) and croissant all over the kitchen.  Still, by this point I'd gotten pretty good at zeroing in on the important stuff and ignoring the rest.  I'd learned to pay good attention to Matt, too, and picked up on some of his observations as well.

Overall, it was nice - not a dream unit, perhaps, but one that definitely fit everything I'd been looking for, and a lot of stuff that I'd been hoping for.  It had two bedrooms, which is almost impossible at my budget in Millbrae.  It also had two baths - not very useful to me, but the second would be handy if I ever got a roommate or long-term guests.  The kitchen was good - it didn't have a spectacular gas oven like the newer condos I'd seen, but it had plenty of cupboards and counter space, which had been fairly recently renovated.  It had a nice big balcony - the view is of the back of a big-box store, which isn't great, but on the plus side there's a lot of privacy (no windows facing me), a lot of sky (no other buildings nearby), and if you look up a bit, nice partial views of the Millbrae hills and San Francisco Airport. 

I spent more time this go-around than I had on my open house, and Matt and I chatted a bit.  We agreed that the unit was overpriced, but otherwise fine - considering that it was 30 years old, it was in quite good shape. 

I kept on pondering everything, and eventually decided to go for it.  I'd put in a fair offer for what I thought it was worth, and see what happened.  At worst, the sellers would just say "no," and at least I'd know to give up on it.  If that happened, I was ready to restart my home search or just resign myself to renting for another five years - like I said in a previous post, I'd taken a full inventory of the Millbrae condo market, and seen that there just isn't much out there.

Once again, I submitted the offer wizard on the website.  This time Regina got the ticket.  As a side note, the wizard is still a bit mysterious to me.  From my early reading on the Redfin web site, I had been under the impression that when you start an offer, you can choose which agent will represent you.  That never happened with me, though.  I'm guessing that if you had someone who you really wanted to use in particular, you could enter that in the notes field and get them.  I now think that by default they just hand out the requests to whoever is available.

Regina was also good - as with Sean, she contacted the listing agent to find out the seller's situation and figure out what the timeline would be like.  She also sent me a list of comparable properties along with her analysis of the price.  She had a higher price in mind than I did, and with some good reason - her comps included recent condo sales near 280, which I had discounted because of how far away they are, but since most people buy into Millbrae for the school district, it seemed valid to include them.  I pointed out another sale that she hadn't included - one which was quite a bit bigger, but sold for noticeably less, and was closer to this property than the other comps. She agreed that that was a good comp.  I re-ran my numbers taking all the data into account, and settled on a fair price that was about 7% under the seller's listing price.

There were a couple of odd things about this transaction.  One early issue was the disclosures; on previous offers, I had received disclosures early on and been encouraged to review them prior to making an offer.  This time around, Regina urged me to put together the offer prior to receiving the disclosures.  Again, that seemed strange - if there was anything in there that was a turn-off, then I'd be wasting everyone's time by making an offer; and, from the seller's perspective, it seems like they'd want me to know everything I could up front.  If I make an offer for $X, based on all the disclosures, and they accept, then I can't come back later and ask them to take off $Y due to issues that they had disclosed.  On the other hand, if I make an offer for $X without any disclosures, then even after they accept, I can ask them to take off $Y to deal with things that they already knew about; this makes it harder for the seller to compare offers, since different buyers will grade issues differently, and they run the risk of accepting an offer that the buyer will end up backing out of altogether later on.

In any case, I did end up getting the disclosures just prior to when we were going to put in the offer, so I did get a chance to read them.  This should have been a good clue of how the process would continue.  Everyone on the selling side was somewhat removed from the transaction - the listing agent was a part-timer who was helpful but not always quickly responsive; the sellers didn't live in the property; and so on.  I think that if they had been a bit more organized, I could have gotten the disclosures sooner and moved forward more quickly.

In any case, the disclosures were fine, far less scary than the Palm one.  Bay Area disclosures are fairly long, with a good amount of boilerplate, but still well worth reading.  The seller fills out a long list of questions, mainly yes/no with space for explaining negative answers.  It covers things like structural defects, neighborhood nuisances, odors, and so on.  I learned the details about some recent renovations, which was helpful.  The disclosures also include observations from the listing agent as part of their walk-through.  In my case, there weren't any bombshells here, just a few fairly minor things that we had noticed during my tour - a missing lock on the balcony door, for example.  Nothing seemed like it would seriously ding my offer price, so I gave a thumbs-up, submitted the offer, then crossed my fingers and waited.

Too Slow, Too Loud

By now I was fully plugged in to the Redfin alert system.  Every morning I would receive an email providing an update on the condo market in Millbrae and Burlingame: what properties had hit the market, which had dropped their prices, which had sold and at what price.  This was incredibly useful, as it let me get a feel for the overall trends in the market, even beyond the (very) narrow area I was focusing on.

On a Tuesday morning, I saw a fascinating property hit the list: a small 1-bedroom condo at 88 South Broadway.  I've been aware of this development for years, but hadn't thought that it had any 1-bedrooms.  It was on the smallish size, but extremely well priced.  A little too well priced.  The only way I could imagine explaining the low price was if it was on the first floor facing directly onto El Camino Real.  Still, I was sufficiently intrigued to request a tour.

I put in the tour request on that Tuesday.  I got in touch with Matt, but we weren't able to schedule a showing before Saturday.  When I showed up on Saturday, I found that it was more or less mobbed, with perhaps five or six parties squeezed into this small one-bedroom space, walking around and chatting.  Matt was juggling me and another client.  I really liked what I saw.  The building is almost brand-new, having finished in 2007, and while this unit is less luxurious than most, it was still in great shape and had a really nice-looking kitchen.

So, why the low price?  It was on the ground floor, but was at the back of the complex, facing onto South Broadway.  Privacy was slightly limited, since a walkway came right outside the window.  Matt had also learned from the listing agent that there were some complications with the unit - it was technically a "caretaker's unit," and theoretically intended for occupation by the property manager.  Still, in practice, it could be freely bought and sold; the only restriction was that, if you rented it, you couldn't charge more than a certain amount for rent... I think that the limit was something like $1200 a month, pretty reasonable.  So that helped explain the low price, but still, the restrictions didn't bother me, and this seemed like a once-in-a-lifetime chance to get into the development.

I'd toured the property Saturday.  I started the offer wizard on Saturday night.  Redfin agents have the weekends off, which I do not begrudge them, so I didn't hear from Sean until mid-Monday.  He got in touch with the listing agent.  On Tuesday, I learned that they had already accepted an offer and the property was no longer available.  The next day, I saw it pop up as "Pending" in my email inbox.

That was probably the low point of my relationship with Redfin, although I don't know that it's necessarily their fault.  For this very well-priced property with a lot of interest, getting in a few days earlier would have given me a shot at buying the property.  Now, I don't know what price it ended up selling for, and it's totally possible that a bidding war would have pushed it beyond what I would be willing to pay for a small one-bedroom.  Also, I don't know that a traditional agent would have been able to get me in to see it earlier, or been able to communicate my interest any more quickly to the sellers.  Still, this was a case where Redfin's model seemed to suffer a little.

A little while later I toured a townhouse that was on the Burlingame side.  This was the first townhouse I'd seen, and I have to admit to liking it.  It had an integrated two-car garage, three stories, plenty of space, a balcony... lots of the stuff that I associate with traditional residential houses, but still at a (relatively) affordable price and in a great area.

The catch?  As I had instantly noted on Google Maps, it was next to the train tracks.  I went ahead and toured it since I wasn't sure if this particular unit was next to the tracks or farther back in the complex.  Nope - it was front and center.  I toured it in the morning during commuting hours, and paid attention as two Caltrains rumbled by.  Nope... not happening.  Even with the windows closed, it was quite loud, and while the floor didn't exactly shake, you could still feel the movement.  I gave a sigh, and let that one go.

So, rates jumped up last week. What does that mean?

It's potentially devastating to people who are in the middle of buying or selling a particular property. The impact of higher rates is that a monthly mortgage payment automatically gets higher, so people cannot afford as much as they used to. For buyers, that means that the house at the extreme of what they could afford is now beyond their means. For sellers, it means that a contract might fall through because the seller cannot find a mortgage they can afford; if they haven't signed a contract yet, fewer buyers will be available to buy at their desired price.

Over the long term, it tends to even out. Eventually, sellers need to drop their prices to attract buyers. Buyers end up with the same properties, paying the same monthly amounts, just with more going to interest and less to principal.

In my personal situation, one thing I've noted and complained about is that condo interest rates are always higher than traditional single family home rates. This past week seems to confirm that the rates move at the same time and in in about the same amount for both types of mortgage (both 30 year fixed, 20% down). Provident Credit Union, a local outfit in the Bay Area, features a really nifty online mortgage tool; one of the things they offer, that I've signed up for, is email notifications of the current rate for a type of mortgage you're interested in. For more than a month now my desired one has been a steady 5.25%; last Friday, it was 5.75%. (Update: As of June 9th, it's jumped to 6.125%! Ouch!)

Off mortgage, on to property:

I'm increasingly interested in the Millbrae area. If prices continue to fall, I think that's probably where I'll wind up. I've visited a few times on weeknights and weekends, and it feels right to me... there's a good scale to their downtown, large enough for variety and an interesting walk, but not too dense or overwhelming. Being close to the Millbrae BART/Caltrain station would help with the commute. The weather seems to be quite nice - I have the advantage of nearly a year's worth of observation on my daily Caltrain ride, and I can see that it tends to be quite sunny, especially compared to the section of the peninsula immediately north.

Current downsides that I see: Again, expense is huge; there have been some significant reductions in condo prices lately, but I think there's probably more movement to go. Demographically, it's a bit older than I would prefer. And, possibly on a related note, I don't see a lot of people walking around the residential part of town - there's lots of good foot traffic on Broadway, and the parks look fairly busy, but almost nothing once you get up into the hills. (Which, to be fair, may itself be the reason why - it may feel less like a neighborhood stroll than scaling a mountain. I love slopes, but many people don't.) Oh, and every time I've been there it's been quite windy, which doesn't exactly bother me but is interesting.

So, we'll see how that goes. Right now I have alerts set up at Zillow to email me when new condos are put on the market or sold. I'm currently looking at the area west of El Camino and within about a mile or so of the station; this includes both Millbrae and the northern part of Burlingame, though Burlingame can make Millbrae almost look cheap. I also have RSS feeds into Craigslist's real estate section, which also provides some insight into what's in the market.

So far, the thing that I've noticed the most is how few properties are moving. There are several units at 555 Palm that have been on sale for months, one of them for at least six months, and have been through a $100k price drop but still haven't sold. The cheapest option seems to be 300 Murchison (Windwater Mills, formerly an apartment complex known as Avalon), but I'm not crazy about the location - it's close to the high school, and even when I visit on weekends the traffic feels really heavy there; plus there's some pretty disturbing reviews online about living there. There are two new condo developments, 88 South Broadway and Park Broadway; as far as I can tell, they've hardly sold anything for months. Park Broadway has slashed prices; 88 South may have cut them, but it's hard to tell, since their web site is extremely out of date.

There's another property, originally called Belamor and now Millbrae Paradise (a name I like far less), which is scheduled to go on the market in August. We'll see how that affects things - I imagine that, unless the housing market has decisively turned around, it will probably drive down the other prices.

So, that's that. Fun times!

Location Cubed

Now: Before I so rudely interrupted myself, I believe I was going to write about the areas I'm considering?

First, some general background, which I alluded to in my inaugural post.

I suppose I can roughly divide my location desires into two categories, business and pleasure.  Business-wise, I mainly hope to live somewhere that minimizes my commute time, both now and in the future.  Since I already spend about 3.5 hours every day commuting, it would be hard to pick a location that would be much worse in that regard.  I do want to find a place close enough to work proper or to public transit so that I don't need to rely on an automobile.

Planning for future commutes requires a bit more crystal ball gazing.  I currently work in San Francisco's SOMA neighborhood.  My previous job was in Los Gatos, at the very southern tip of Silicon Valley.  Odds are very likely that any future job would be located somewhere between those two extremes.  My particular focus - mobile software engineering - seems to be most active in San Francisco, the Peninsula, and Silicon Valley.  Less likely but still possible would be a location in the East Bay - Oakland/Emeryville being the biggest contenders, followed by Walnut Creek, followed by the Fremont area.

Again, it's impossible to know what the future holds, but fortunately I can rely on transit to get me at least to the general area of most places.  It's more a question of time and minimizing transfers to determine what would be a pleasant commute and what would be merely possible.

Finally, on the personal front.  Part of this comes down to location: again, I want to minimize the time required to reach places I want to visit.  Here, I put a premium on being able to walk places.  The big things for me here are grocery stores, farmers' markets, libraries, and trails.  I would also dig being able to visit a commercial area, maybe with things like bookstores, restaurants, and a gaming store.  And since I go hiking almost every weekend, the shorter of a drive to the mountains, the happier I'll be.

In terms of just living in the place itself, I'm hoping for something relatively quiet - I don't expect silence, but neither do I want to front on Highway 101.  Sunshine is great.  This is a region of microclimates, and a few blocks can easily separate regular fog from frequent sun.

Okay.  With all that background in place, here's the big-picture breakdown of places I'm considering.

General region: San Francisco
Particular areas/neighborhoods: SOMA, the Mission, the Richmond, Hayes Valley, Noe Valley, Potrero Hill
Summary: Living in an urban center, of what may be my favorite city in the world.
Advantages: Perks of urban living.  I could easily live without owning a car.  My commute to my current work would be incredibly easy.  There are some surprisingly good deals on new condos.  Weather in the eastern neighborhoods is usually pretty good.  All major Bay Area transit systems run here, often including the fastest options.
Disadvantages: The affordable neighborhoods also feel pretty marginal, with very visible indigency.  This is the extreme northwest of my employment region, so future jobs would likely require an extended commute.  While I love the city, I wouldn't take as much advantage of it as others - I'm more likely to hang out in my living room than hop between coffee shops.
Conclusion: Still the dream, but may not be worth the premium in price.  I'm increasingly drawn to the idea of living somewhere where I can easily access The City without actually living there.

General region: The Peninsula (San Mateo County)
Particular cities: Daly City, San Bruno, Millbrae, Burlingame, San Mateo
Summary: Smack dab between SF and SV.  This area feels conventionally suburban, but has the goodness of California and great access.
Advantages: Very quick travel to SF.  Southern section is generally sunny.  Low crime and high quality of life.  Good Caltrain throughout, and BART in the northern section.  Fairly decent range of prices, generally cheaper further north.  Santa Cruz Mountains (really hills this far north) and the Pacific Ocean.  Good commuting times to most areas I would work.
Disadvantages: Northern section is among the foggiest/cloudiest in the Bay Area.  E-X-P-E-N-S-I-V-E - especially so for housing, where it has been least affected by the downturn, but also in regular costs.  Commute times would be the worst for the East Bay.
Conclusion: If I can swing the price, I'd love to live here.  That's a really big "if", though.

General region: South Bay / Silicon Valley
Particular cities: Mountain View, San Jose, Campbell
Summary: My stomping grounds of nearly four years.  If it wasn't for my present job, I probably wouldn't hesitate to remain here.
Advantages: More affordable than SF or SM.  Excellent weather.  High density of major tech employers.  Good transit options - Caltrain now, and BART coming soon (access to East Bay) and high speed rail in a decade or so (quick access to SF and points south).  Access to great hiking in Santa Cruz and Diablo ranges.  Familiarity with the area.  Friends in the area.
Disadvantages: Long commute to SF.  Far enough away from SF that it's impractical to visit for fun - other than work, I only make it there on special occasions, and it takes a lot of commitment in time to do so.  The most suburban-feeling area.
Conclusion: A tempting option, and will get more tempting once BART is running.  Because of my immediate employment situation, this is probably a non-starter, with the possible exception of a place within walking distance of the Diridon station.

General region: East Bay
Particular cities: Oakland (Piedmont Avenue, Montclair, Rockridge, Temescal), Berkeley, Fremont
Summary: Relaxed and easy living on the other side of the bridge.
Advantages: By far the cheapest of the four regions; steals available in marginal regions, and the best areas are still reasonable.  Friends in the area.  Great hiking in the Diablo range.  Generally good weather.  Good transit to SF and other areas in the East Bay.  Great cultural activities around UC Berkeley.  Culture seems pretty friendly and upbeat.
Disadvantages: Inconvenient access to the Peninsula and Silicon Valley - commute would be easy at first, but painful if I shifted later.  Oakland has a lot of problems, and the political situation there is pretty depressing right now.
Conclusion: When I first started looking at getting a condo a few years ago, this was the only region that looked at all affordable.  It's good to have more options.  If I was confident in remaining in SF or the East Bay for work, I'd take advantage of the great deals out there.  As it is, I'll probably focus my search westward, as long as it's reasonable to do so.

I've been doing occasional "walking tours" through various neighborhoods for the past half-year or so, specifically thinking about how it would feel to live in each area, and also been mulling in general about the various tradeoffs.  My current inclination is to focus on the Peninsula.  It feels like it has the best chances of offering a great work/play combination.  I really love the idea of being able to scoot up to the city on nights and weekends to attend concerts, plays, book readings, etc.; and doing this would physically position me well for likely future employment.  Depending on where I end up, my current commute could be as short as 20 minutes each way - not bad at all!  Price will be the limiting factor here, but if current personal and broader trends continue, I may be able to squeeze into something.  Stay tuned for more!