Location, Location, Location

That sure is a tired old saw, isn’t it? Supposedly, the three most important elements of real estate investment. One of those beaten to death old phrases that causes a smile on everyone’s face because it’s been around so long and is so familiar. It’s such an old fashioned phrase that it got completely taken for granted around here for the last several years, huh? Guess what? It’s back. In the 2008 market, it’s entirely possible that being in the right location is more important than ever.

A client told me last week that her family was encouraging her to buy in Fremont because there were so many good deals on foreclosures and other homes offered by desparate sellers…she wanted to know my opinion. Since 2002 I sold 6 homes to clients in areas in the East Bay or way south in San Jose…all of whom work in San Mateo County. All but one of them have strongly expressed the desire to move back to the Peninsula…and can’t. At the time, their reason’s seemed perfectly sound. They needed more room than they could find in a house here. They didn’t want to live in a condo. They felt like they could handle the commute. Now they all hate it and what it does to their lives and schedules. I’ve received calls from every one of them inquiring about how they can sell and get back here…and here’s the really painful part, they can’t. At least not right now. In one case, he works in San Carlos and she in Palo Alto and they have 2 kids. They made an offer on a 3 bedroom, 1 bath house in San Carlos in 2005 and didn’t get it in a multiple offer environment. It sold for $655,000. They bought a much larger house in Fremont for $650,000 and we all thought all would be well. He called earlier this year and told me how sick of commuting he was, how he was never home and how hard it was to be a part of his kids school activities…he wanted to sell. His house is now worth between $560,000 and $580,000. The same smaller houses in that San Carlos neighborhood are still in the high $600s or low $700’s. He’s not going anywhere, at least for the time being. This story is strangely similar to all of the other 5 clients who also moved out of this area. They all want to move back and can’t.

Here’s an even worse story. A friend and client of mine moved to Manteca, so he could live in a big 4 bedroom house with a pool, a few years ago and commuted to his job in Hayward every morning. He got up at 3:30AM to be at work by 7:30 and typically would get home about 7:00PM every night. He had a heart attack after about 8 months of that schedule. He’s fine, but Manteca sure doesn’t seem as appealing as it once did.

If you’re thinking about moving to a remote location to get a good deal and you’ll need to commute back here I would encourage you to really think hard about that before you do it. If Foster City, for example, experiences a 5 to 10% reduction of value and Fremont, or Blossom Valley, or Hayward experiences 25 to 30% depreciation…you’ll never get back over to this side of the Bay. It’s smarter to live in a condo in Foster City than to buy a house in the East Bay.

Comments

  1. Very hard to hear (i myself want a house not a condo) but i know that is the reality of bay area home purchasing!
    Mr. Minkey- thank you very much for being a truth teller!! (when a lot of realtors are blowing us smoke)

  2. Jim – question for you. Does an agent have to disclose the information if there was a murder in the house next to the listed property?

  3. Jim Minkey says:

    Well, now THAT’S a great question. I kind of think that the rule of thumb should be “if there’s a question at all…disclose it”. It’s a hard one Michael and it’s the kind of thing a judge would typically decide, but if it was me I would do it.

  4. Our friends were looking at a house in Pleasanton this weekend. The realtor mentioned that there had been a murder in the community but was not specific. Googling afterwards revealed that it was in the house next door and it was very prominent in the news so it would have been hard to believe the realtor did not know it was the house next door.

    My friends have chosen not to continue working with this realtor.

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