Archive for February, 2012

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The Luxury Insider: The New Magic Word in the High End: “Prestigio”

By Alain Pinel | February 29th, 2012 0 Comments

Today is a special day in the real estate industry. It is Day 1 for “Prestigio”, Intero’s brand new Estates Division and its exclusive menu of global marketing services. After many weeks of intense thinking, studying & selecting, we came up with a program which is second to none in our business, anywhere.

Some may think that it is pretty gutsy for a real estate company to create such a new extensive high end program just coming out of five years of a brutal downturn which severely affected the luxury market.  Yes, it is gutsy. For sure, it is more common these days to cut services to reduce expenses rather than launch an ambitious project with an arsenal of pricey print & online international advertising vehicles as well as impressive marketing tools and state of the art technology.

The reality is: we felt compelled to do it. Business has changed; real estate firms need to change as well to adapt to the migrations and the profiles of new buyers at the top end of the market, not to mention the new ways to do business to best leverage the technology at our disposal. Let’s express this in the following simple way: “we cannot do business as usual in an unusual market”. Yet, not a heck of a lot has happened in the way of significant marketing changes in our industry over the last many years. It was about time.

We, at Intero, want to be relevant and offer the best service possible to today’s homeowners who trust us with the marketing of their exceptional property. We have a no-nonsense approach to marketing and we actually put our advertising commitment black & white on the customized marketing plan we prepare for the sellers, covering each and every month of the listing duration. That includes looking for buyers all over the US & abroad.

Actions, not just words. That’s what sellers need today. They do understand that their opportunity to sell their home is predicated on the listing company’s ability to connect with a maximum of qualified prospective buyers, wherever they may reside or work. We created this new upscale marketing program to deliver on those expectations.

The need created the organ, as we say. Now we are excited at the chance of showing you how the organ will satisfy the needs.

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Intero Insider: Stars Are Aligning for Housing Recovery

By Gino Blefari | February 29th, 2012 1 Comment

Pending home sales reached their highest level in January in nearly two years, according to NAR’s report this week, rounding out a handful of positive news for housing markets in the last week or two.

Pending sales trending upward is an interesting trend to watch considering the recent rise in cancelled contracts. I say this because pending sales at least gives us an indicator of buyer sentiment since many of the failed contracts seem to be due to things that are out of buyers’ control like not securing financing needed to purchase the home or the appraisal coming in below the contract price. With a rise in pending sales, we at least know that buyer intent is on the rise and more folks are trying to buy homes.

NAR’s pending home sales index was up 2% to 97 in January from 95 in December, and is 8% higher than January 2011. The January index is the highest since April 2010, when it reached 111.3 as buyers were in a mad dash to take advantage of the home buyer tax credit.

Other positive happenings for housing:

Improving job market: In January, unemployment hit its lowest level in three years, continuing a five-month streak of improvement. Without jobs, people don’t buy or move so this obviously is a good thing.

Home builders are gaining confidence: Home builder sentiment, tracked by the National Association of Home Builders and Wells Fargo, in February reached its highest level in nearly five years. This basically means that home builders are more confident that market conditions are improving to the point that new home sales will be positively impacted.

Housing stocks are up: The stock market is a far-from-perfect indicator, but it at least gives a reading of how investors are feeling. The nation’s home builder companies have seen share prices increase 60% since October, according to an analysis on Time’s website.

In the Bay Area, we have all the amazing economic trickledown activity from major tech company IPOs – recently game developer Zynga and Facebook’s pending IPO in May – to look forward to in housing. In fact, some of our local markets such as San Francisco have already seen the positive housing news that comes along with that.

Overall, 2012 is looking to be a great year for housing compared to the last five or six. The presidential election likely will also ward off any major controversial policies that could negatively impact the market. With all this in mind, I think we’re looking at our big comeback year. It will be particularly good for certain segments of our local markets and marginally improved at the national level. Not a boom by any means, but we’ll take it!

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The Luxury Insider: The Price Per Square Foot Fallacy

By Alain Pinel | February 22nd, 2012 1 Comment

I never ceased to be amazed at the fact that many Realtors are judging the value of a luxury home on the basis of its square footage. For a bank appraiser or a home builder to think that way, I can understand, it can indeed be part of the valuation methodology, but for Realtors?

In the high end, not two homes are the same, even when they are….or they appear to be. Take two identical penthouses in New York, both brand new; same top floor, same square footage, same layout, and same amenities. I guarantee that one is worth more than the other, often a lot more. Perhaps one has a better sun exposure, or a nicer view, or sits next to another beautiful residential building while the other one has a service station for a neighbor, or one is further away from a noisy school yard, etc. Are these two properties identical? Of course not.

I remember looking at fancy real estate while in the South of France, a few years back. One town got my interest, and yours too, probably, given the opportunity: Cannes, the site of the international film festival, stretching beautifully along the crystal blue Mediterranean sea. Right in the middle of “La Croisette”, Heaven’s local version of a boardwalk, there is a nice white building where, every so often, condos are “offered” for sale. I saw one I liked –of course I am easy to please. Third floor, bay windows and a balcony open to the ocean, the harbor full of the most amazing yachts, and a full view of the street action underneath, at the level of Cartier, Hermes, Prada…You see what I mean. That little pad was available for the taking at over $10,000 per square foot. No, I did not buy it. In the back of the building, another condo was unofficially on the market. Bigger and on a higher floor, but the asking price was not even half that of the first. The view was nice but who wants to overlook a pool, a garden and a bunch of rooftops when the alternative –for only twice as much- is a panoramic piece of the Mediterranean?

Square footage is largely irrelevant in the high end. Buyers buy benefits, real or perceived. Bigger is not necessarily better. Depends what you really want, or what you really need. It’s OK to want to live in a 20,000 square foot  home. It might even be pleasurable. But please understand that if & when you decide to sell it, it may fetch only what a nearby property of similar quality but smaller size will obtain in the open market. Size usually needs to serve a purpose to be worth the money it costs to build. For example, you can get your money back and sometimes make a little more if you put a home theater in your home, or a library, or a wine cellar, or an indoor pool, or a racket-ball court and perhaps even a ballroom, why not? However, if you have a huge house just to have huge rooms, square footage could be more a handicap than an added value.

Having said that, if you want a huge home because you like the feel, the space and have no concern about an eventual resale, don’t listen to me. What do I know, for the time being I live in a condo! A nice one though.

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Intero Insider: Save the Mortgage Interest Deduction!

By Gino Blefari | February 22nd, 2012 1 Comment

President Obama’s budget proposal last week attracted more than a few passionate voices from real estate who oppose elements that would limit itemized tax deductions, including the mortgage interest deduction that enables homeowners to deduct part of their mortgage interest from their overall tax bill.

In short, the budget would reduce the value of itemized deductions to 28% for married couples with incomes over $250,000 and individuals with income over $200,000. The current value of deductions could be as high as 33-35%, depending on the tax bracket the household is in. The reason it’s so vehemently opposed by real estate industry groups like the National Association of Realtors is that it’s a vital component to the housing recovery – and it feels like a penalty being put on responsible homeowners.

One of the perks of owning a home has been the ability to deduct a portion of the money paid in mortgage interest each year from an owner’s tax bill. This is part of the reason ownership makes more financial sense than renting for many families over the long-term.

Now feels like the worst possible timing for a change like this. Removing this benefit that is highly regarded by many would-be homeowners as a perk of owning versus renting likely would have a negative impact on the economic recovery.

Also, as NAR points out in a letter opposing the budget proposal, the nation’s homeowners already pay 80-90% of U.S. federal income taxes. Raising taxes on them now could seriously wear down demand, taking home values with it at a critical time for the overall health of the housing market.

Many might argue that the value of the change on the overall economic state of the nation far outweighs that of the individual homeowners who would be affected. But, the fact is that by eroding home values, the nation is affected in the end anyway. In addition, perception is a highly valuable (or dangerous) thing when it comes to real estate markets. Just the very perception that homeownership may have lost some of its luster in the often-cited tax benefits by new buyers has the potential to do damage.

And we can’t afford to lose any momentum in housing demand.

NAR is fighting against this proposed change, and so am I. Let’s save the mortgage interest tax deduction for the nation’s homeowners and incoming buyers. Now is not a good time for a change like this. Obama may not see it, but the deduction is vital to the stability of the nation’s housing markets.

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Luxury Insider: TSUNAMI WARNING!… IT’S OK!

By Alain Pinel | February 15th, 2012 0 Comments

Have you been watching the Nasdaq lately? Of course you have. So have I, like a hawk, particularly over the last couple of months. What do we see? We see the late 90’s all over again!

2011 was not too bad for the Nasdaq. It played the little train that could, grinding most of the year, an inch at- a -time. The tempo accelerated a bit mid-December and that train now looks like nothing is going to stop it. There is no better bellwether of things to come in the Valley than the Nasdaq. Sure we are still far from the March 2000 peak of 5134 but the uphill direction in which the tech heavy index is headed and the pace at which it is moving make a statement: happy days are ahead.

There are some differences though between, say, 1998 and today. For one, we had plenty of homes to sell back then; today we have little inventory where the demand is hot, particularly on the mid-Peninsula. Also, mortgage money is still hard to get today while it was flowing during the dotcom boom. Finally, the escalation of Bay Area real estate prices in 98, 99 & the first half of 2000 was mirroring almost perfectly the progression of the Nasdaq; today, they are still slow to warm up and the thawing process is likely to be very spotty on the regional map for a while.

The barometer, irrespective of the above concerns, is indicating sunny & dry tomorrows. The “Facebook effect” you might say. Hundreds of employees and paper millionaires are already counting their money, waiting for pay-day. It might take months before the lucky jackpot winners free their cash, but they will, and just as surely, that cash is going to turn a lot of California real estate into gold. We have been there before, when regional tech IPO’s were hitting the market every week in the late 90’s. The Facebook phenomenon is going to change the Bay Area real estate landscape in a hurry.

Yes, the tsunami is coming. We don’t see the wave from shore just yet but we can already hear & feel the vibrations. Other IPO’s are lined up through the year to keep the momentum going. Looks like there is enough on the horizon to bring wealth or at least financial comfort and security to many.

The Silicon Valley, as it is often said, is the land of fear and greed. Greed is winning again. Considering the alternative, it is a very good thing. We may thank for that the genius of local visionaries, from Steve Jobs to Mark Zuckerberg, but also the background actors & directors without whom the Silicon Valley may only be another valley: the VC people. They have been using their brain cells and risking their money for nearly two decades to guarantee that the sun would keep on shining in Northern California and beyond.

In fact, they may be the true engine of growth. Obviously innovation is the necessary ingredient to produce economic success, but, by itself, it is rarely enough to leverage & multiply the opportunities and considerably accelerate & amplify the resulting benefits. By discerning the right ideas and bringing them to market, the VC companies are fueling innovation. In a way, they are “manufacturing” growth. We sincerely appreciate it. After years of bad news, we will happily reap the benefits of their good work.

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Intero Insider: Mandated Down Payments Unfairly Impact Buyers in High-Cost Areas

By Gino Blefari | February 15th, 2012 0 Comments

The issue of mandated down payments is back in the spotlight as a recently released study found that requiring by law a minimum down payment of 20% would have a dramatic, negative short-term impact on the housing market. The study, released by the Center for Responsible Lending at the University of North Carolina, found that implementing such a mandate would push out 60% of would-be home buyers from the market.

As you can imagine, the topic has garnered criticism from both sides. While many say that requiring a minimum down payment would be better for homeowners and the economy as a whole by protecting us from defaults and stemming foreclosures, others say that it unfairly bumps out otherwise qualified home buyers. And the delicate state of the market in many areas would feel an impact from such a move.

What’s my take? I think a “back to basics” approach to housing in general is a good thing. Would-be buyers should be willing to put their own skin in the game so to speak for many reasons. For one, they’ll be starting out their ownership journey on a much better financial foot – namely, they likely won’t be ruined by the first financial curve ball that may come their way. Secondly, the more you put down the better your loan terms so the overall cost of ownership actually does decrease in most instances.

The problem though is high-cost areas like our very own Silicon Valley and the Bay Area in general. Twenty percent is no small feat for most of our local buyers, considering the median cost of a home across the Bay Area is currently around $351,000, according to DataQuick. That’s $70,200 in cash that a buyer would need, which doesn’t even include closing costs – which we’ll estimate would be another $10,000-$12,000. And let’s be realistic: that median price is quite optimistic for most people’s situations. To get a home in a safe and secure neighborhood with good schools, we’re talking much higher for most of our cities.

This is why I think a blanket minimum down payment mandate is potentially dangerous. It could seriously polarize the market in high-cost areas, leaving many otherwise qualified would-be home buyers out in the cold. And that just doesn’t feel right.

In addition, a lower down payment doesn’t always translate to loan defaults and foreclosures. How else could you explain the existence and longevity in the FHA loan program, which enables qualified buyers to buy with much less cash down?

Thankfully, while the standards for the bill that would put this mandate in place will be heavily debated over the next year, we’re not likely to see anything implemented in 2012. We can thank the election for that as politicians historically have shied away from such hot-button housing policies that have the potential to polarize voters.

I do expect this will be talked about though, and it’s not going to just go away. But if you’re in the market to buy a home in a high-cost area and don’t have the 20% in cash, you can consider it another reason to move quickly!

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Tom Dallas, Nationally Renowned Realtor, Joins Intero Real Estate Services’ New Woodside location.

By Teressa Francis | February 10th, 2012 0 Comments

Woodside, California office set to open in February

Tom Dallas, the San Francisco Peninsula real estate icon, is teaming up with Intero Real Estate Services to kick off their new Woodside office set to launch at the end of February.  Alongside real estate partner, David Kelsey, Tom will be getting down to business in his home town where if you don’t know Tom, Tom knows you.  Don’t be surprised if you run into him at Roberts Market or enjoying breakfast at Buck’s or The Bakery. With a passion for art and a deep appreciation of fine architecture, he is excited to get down to business in your neighborhood.

Tom joins Intero with 31 years of experience and over $2 Billion in career sales.  A resident of the Peninsula since 1952, he specializes in the select high-end markets of Woodside, Atherton, Portola Valley, and Menlo Park. “In such a dynamic real estate market, I’m thrilled to be aligning with a company that has the momentum to keep up and to be back with my friend and mentor Alain Pinel.”  Tom said in a statement today.

In 2000, out of 80,000 agents, he was named the #1 Coldwell Banker agent worldwide and represented the year’s two largest sales in both Woodside ($52,500,000 and $24,500,000) and Atherton ($45,000,000 and $30,000,000).  These amazing achievements define the most successful year of any agent in the history of California real estate.  “To have a Realtor with such a legendary background joining the Intero team is really energizing.” says Gino Blefari, President and CEO of Intero Real Estate Service, Inc. “As one of the #1 agents in the world; Tom’s expertise in the high-end market is extremely beneficial to Intero’s growth and expansion into the luxury market.”

Intero Woodside office located at:

1580 Canada Lane

Woodside, CA 94062

About the Intero® brand

Founded in 2002, Intero Real Estate Services, Inc. has quickly become one of the premier real estate brands in the U.S.  In 2004, Intero Franchise Services Inc. began franchising and currently is operating in many of the western states.  In 2009, Intero International Franchise Services, LLC embarked on developing territories in Asia Pacific, Europe, Middle East, Africa, and the Americas.  The companies are private and headquartered in California’s Silicon Valley.

Contact:

Teressa Francis

+1 408 342 3010

tfrancis@interorealestate.com

##

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The Luxury Insider: Luxury Homes, Yes, But Where?

By Alain Pinel | February 8th, 2012 1 Comment

Between 11pm and 5am, when I don’t have anything better to do, I sometimes fantasize about what home I would buy, in what town and in which country, if I did not have to worry about such trivial financial concerns as paying my bills & feeding my family.  Judging by the success of “voyeur programs” like HGTV’s “Selling New York”, “Selling LA” & “House Hunters International”, I may not be alone in dreaming wide-awake.

Dreaming about buying a luxury home can be exhausting. First, you have to think about where you would like to live: Location…Location…Location… Paris comes to mind but San Francisco would not be bad either, not to mention New York, Rome, Barcelona, Rio de Janeiro… And of course exotic places would be in the mix: The Maldives?  The Seychelles Islands?  Bora Bora?  Maui?  Nantucket? ….Tough to decide, don’t you think?  We may have to buy more than one place after all, one in the city, one on the beach somewhere in the Pacific or the Indian Ocean, and perhaps one in the countryside.  OK, now, what are we going to live in?

Nice dream, right? Well, a lot of people are actually living that dream rather than… dreaming about it. The world has never been so small.  It makes no difference for thousands and thousands of people whether they live in a luxury top floor condo in a Manhattan high rise or a beachfront mansion in Santa Barbara or even a villa in Tuscany.  With the ease of travel and an internet connection, you can now run your business from anywhere you happen to be on the map.  When money is no object, you just have to choose where you want to wake up in the morning.

Back ten years ago or so, a friend of mine, head of international for a major US hi tech firm, did not care to work at headquarters.  He was told that it was OK with the executive team if he chose to live elsewhere.  And so he did, he found himself a nice pad on the French Riviera.  It could be worse.

Amazing how the world has changed over the last 15 years in the high end.  Many Bay Area residents who, back then, were contemplating purchasing a weekend home in Carmel or the wine country, are now considering looking for a flat overlooking La Seine, a chalet in Aspen, a townhouse in Hawaii or perhaps a far-away beach front retreat on a man-made island in Dubai.  At the same time, a host of wealthy foreigners are buying right and left in the US, happy to make a good deal and keep away from the political/economic tribulations in their home country.  Without the European demand, Miami might still be a depressed real estate market.  Cash buyers from India, Russia and China are now coming in waves into the Bay Area looking for huge homes with what they perceive as a very affordable price tag.

Just last week, I met a topflight Indian businessman who told me he knew of a small naked residential lot in New Delhi offered at $2,000 a square foot!  Keep these stories in mind when determining whether to pay what you think is a lot of money for a beautiful home somewhere in the US.  Believe it or not, our prices at the top end of the ladder are not so high anymore.  Other similar world cities aligned their prices on ours long ago since they were catering to the same exact buyers.

Our prices, today, may in fact be low and getting lower relative to the “competition”:  other similar homes in a “comparable” town in Europe, Asia or the Middle East.  Yes, our luxury real estate is a good deal considering new international standards.  Perhaps we are due for a raise and with what looks like a mini-bubble in the making on the West Coast; we may very well get it.

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Intero Insider: Facebook’s IPO and the American Dream

By Gino Blefari | February 8th, 2012 0 Comments

By now, you’ve heard all about Facebook’s S-1 filing last week – the social networking site’s first steps toward what is expected to be a $5 billion IPO. It’s a fascinating story, and something we’re sure to hear a lot more about over the next three months leading up to the actual offering.

There is also a fascinating real estate story about to unfold. No, not the kind of story in which agents start to find wild success selling homes via Facebook. But the real kind: young Internet minds work hard to build a raving success, take the company public, and get wildly rich in the process. And what’s the inevitable next step? They buy real estate.

That’s right. Our very own Silicon Valley, which is already flush with brilliant tech minds who’ve found amazing success in their careers, is about to be flooded with even more young success stories thanks to Facebook’s IPO. The rippling effect of the wealth about to be made by Mark Zuckerberg and 3,000 Facebook employees on the local economy is expected to spark a jump in real estate sales and also boost the local economy overall for many years.

This is how we know that Americans – regardless of background, age, or current economic standing – still have a healthy appetite for owning their own homes. It’s among the first things we all do when we realize success in our careers.

News stories may have you believe that many Americans are over owning a home – that the wounds of foreclosure, financial hardship and upside down home values have created a huge disconnect in what was once the American Dream. But I’m here to tell you that it’s simply not true, and Facebook is my case in point.

Watch for evidence that the American Dream is alive and well in our local real estate market after this IPO hits Wall Street in May (and leading up to then, too).

This is why I don’t panic when personal finance gurus start to talk about shifting values among America’s young – that our kids are more interested in renting than buying. Because it’s simply not true. Give them success and a healthy income and they will buy a home.

I’m excited to see this generation of dot-coms growing and sustaining, defying the slow growth trend that’s happening in almost every other sector. This is exactly the type of positive news we need right now. Let’s embrace it!

Eight years ago, a young Zuckerberg took a chance and came out to Silicon Valley one summer while enrolled at Harvard. That chance is now paying off, and our local economy is lucky to be a part of it.

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The Luxury Market and Facebook’s IPO

By Teressa Francis | February 2nd, 2012 0 Comments

Last night, The Business Journal posted articles about some of the exciting changes happening in Luxury Real Estate and the effect of Facebook’s IPO on the market.  Who did they ask for expert advice; Intero Real Estate Services.  Check out what we had to say.

Facebook ripple effect projected on Silicon Valley homes

Silicon Valley luxury home market flat in 2011

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