I’ve harped alot about the high HOA dues around Foster City over the years and for sure, I think it’s a big issue. I’m not sure I’ve mentioned that those projects in Foster City with low HOA dues have some items of concern as well. Well, maybe not concern…but certainly something that should be understood before buying one of them.

After looking at projects with whopping dues (The Islands comes to mind…$706.00 a month) it seems like a drink of cold water on a blistering hot day to find Winston Square at $175.00 a month. The thing is though, when you live at Winston Square you’ll need to be aware that many of the things that are paid for by other more costly HOAs are not covered at that project. For example, last month I had some buyers interested in a unit on Cortez that had a $10,000 plus pest report featuring damage to the exterior siding as well as dry rot on the roof eaves. These exterior fixes are not covered by the HOA. The seller, or buyer, would need to resolve a situation like that. In this case, this project is really more like a single family house that a traditional townhouse.

While the low dues are certainly attractive, it pays to thoroughly examine the HOA documents to amke sure you know what responsibilities you have as a homeowner. It may not hurt to call the HOA as well just to be safe.

OK, this is sort of a light rant. Not a really big one mind you, but a bit of a rant none the less. It’s a small rant because it’s about large print media and what they do, but since large print media is so seriously in decline that I’m not as fired up as I once would have been. I think that the pounding that newspapers have taken in the last few years has made them junkies for any kind of sensational or fear driven stories that they can create so that somebody (anybody…please!) buys a newspaper. This particular story actually involves the San Francisco Chronicle, but it could certainly and easily involved any of it’s competitors or any other newspaper anywhere else in the country.

Today, actually, the Chron published a story entitled:

Bay Area Condominium Sales, Prices Tanking

Call me zany, but what I was expecting to see when I read this was a story about how Bay Area condo sales and prices were tanking. Silly me! Instead we have a story about one couple and their agent who’ve had a problem purchasing a condo in one specific project in Emeryville. Somehow, relating their experience to the whole “Bay Area” seems a tad overzealous to me. The gist of this story is that because of high foreclosure rates too many HOA dues are being left unpaid and that fact, along with the problems occurring when many projects have a larger percentage of non owner occupied units, lenders are refusing to loan on condos. The result, says the Chron, is that you need all cash to close on them and thus prices are falling through the floor.

Currently, there are 38 active condo/townhouses for sale in Foster City…and 24pending sales. That’s a pretty darn good ratio if you ask me. Of course, none of these properties are experiencing the catastrophe today’s Chron is advocating. I have a condo in escrow myself at Pointe Pacific in Daly City. That project is a wasteland compared to anything in Foster City. It’s a nice project but there’s been an abundance of short sales and foreclosures there in the last few years. The buyer on my listing has 3% down, is getting an FHA loan, is approved and we’re closing next week.

I have no doubt that the experience of these folks in today’s Chron story is true, particularly in the East Bay, but it certainly does not represent the totality of the Bay Area experience. Never mind that the story over reaches just a tad…it’s still worth placement on the sfgate home page with a photo just under their banner. Yikes!

There’s sort of a strange thing going on within the Condo/Townhouse market in Foster City right now. Actually…maybe it’s not really that strange if you think about it? It’s the fact that there are so many units that have been listed for SO long. Of the 41 active units in FC, 14 of them have been on the market for at least 100 days. That fact alone probably identifies, more than anything else, just how different the market is right now vs the boom years. Between 1999 and 2006 everything sold quickly. Now it’s harder.

Of the 14 units mentioned above we’re looking at days on market of 245, 320, 137, 336, 115, 271, 108, 146, 100, 250, 129, 118, 193 and 112. That’s a long time folks. Interestingly, only one of these listings is a short sale. (Short sales naturally tend to be on the market longer that other sales). The short sale in question is at Promontory Point where the monthly dues are a whopping $772.00 a month. Call me zany, but I think those dues are a bigger reason for it’s lengthy DOM than the short sale is. While we’re on this topic, (one that I’ve harped on before here on the blog), no fewer than 10 of the 14 listings have monthly dues higher than $430.00 a month. Actually, the dues on those 10 are $772.00 (we know which one that is!) $435.00 on 3 of them, 2 at $454.00, one at $451.00, one at $488.00, one at $603.00 and one at $717.00. If that wasn’t bad enough, large lump sum assessments are factors on 5 of them as well. Three of the fourteen units are 1 bedroom condos which tend to take awhile to sell in any market.

Interestingly though, 3 other units have low monthly dues. In one case as low as $175.00 a month. I honestly don’t know why they haven’t sold.  Here’s the thing though, there’s still 18 pending sales on condo/townhouses in Foster City. It’s not like the market is totally dead. There’s even a pending sale at The Islands (dues-$603.00), but the list price on this short sale is $499,000. Anything will sell at the right price! All these long listed homes will sell too…eventually. In the meantime, patience is a virtue?

Well, you learn something new everyday. At least I do! Sometimes. Anyway I heard this story about an issue that’s currently transpired in one of Foster City’s larger townhouse communities and I thought of it as new news. I won’t mention specifically where this place so as not to start World War III, but suffice it to say that it’s a two story townhouse built on a slab foundation. Just in case you’re thinking that narrows it down a tad…you’re wrong. That out’s just about all of the two story townhouses in town.

The townhouse in question was listed for sale and in the inspection it was disclosed that the place has a 4 inch crack on the slab foundation that’s noticeable on the floor downstairs. Obviously, the foundation crack is a structural problem. Here’s my discovery…the HOA takes no responsibility for this type of issue. It’s entirely up to the homeowner to resolve this on their own. In this case, unfortunately, the crack not only effects the unit in question but at least one other unit adjacent to this one. When a contractor looked at the issue it was suggested that if this crack was going to be repaired it would need to be repaired in the adjoining townhouse(s) as well to insure the job was done right. The adjoining homeowner wouldn’t allow access to his place even for an investigation by the contractor. As a result the home had to be sold at a significant discount since there doesn’t seem to be an opportunity to fix the problem and the new buyer is going to have to live with a 4 inch crack on his/her floor until there’s some kind of agreement.

Seems sort of like a huge pain to me. Also seems like a marketing nightmare that I hope I never have to endure! I guess the thing that most surprised me was the fact that the HOA isn’t taking responsibility for this structural problem. If there’s a problem with other exterior structural elements they certainly do. Maybe none of the local HOA’s include foundations in their coverage…I intend to look pretty hard at the fine print in the homeowners docs in the future, that’s for sure. I also wouldn’t hesitate to have an engineer look at any floor element that looks out of level or seems irregular. If a townhouse has a foundation problem, particularly one who’s fix would include another neighboring unit’s cooperation, I sure want to know that going in.

One of the pitfalls about being a realtor and blogging about this business is the fear of getting into trouble by badmouthing somebody’s property or project. I really have tried hard not to do that…and sometimes that hasn’t been easy! At the outset here I want to sincerely say that I think Foster City has the best condo/townhouse projects on the Peninsula. They’re well designed, have great amenities and they’re in a town that has substance.

Here’s the problem, I’ve been concerned for a long time about the impact some of these projects association dues would have on their values. I’m really concerned what will happen when some of these projects begin to incorporate flood insurance into their monthly HOA dues. For the uninitiated, Foster City has projects like Winston Square that has dues of $175.00 a month. Treasure Isle at $255.00 a month, Shell Cove at $299.00 a month and Marina Green at $340.00 a month. There’s a bunch of others in this same category and they’re pretty normal if you ask me.

Then you have Bayfront Court at $435.00, Nantucket Cove at $488.00 and Marina Point at $483.00. You also have Meridian Bay at $546.00, The Islands at $603.00 and Promontory Point at $772.00. In 2005 a unit at Promontory Point sold for $1,551,400. No fewer than 16 units sold for more than $1,049,000 in those years. The most money spent at Promontory Point since 2007 was $880,000 in January of 2009. There’s a unit on the market there right now for $749,947.  I can’t think of a project, community or neighborhood in the Mid Peninsula that’s taken the type of pounding that Promontory Point has taken when it comes to value erosion. Call me zany…but do you suppose those dues have had a negative impact?

How does that translate in the real world? At 4.75% interest $772.00 a month is the equivalent of  $148,000 on a mortgage. It’s $116,000 for the Islands and their $603.00 a month dues. I’ve had many, many clients reject these projects when they found out about these dues. I think it’s understandable.

Again, the question is…what happens when they have to absorb mandatory flood insurance? How much will they go up? I know there are really great people living at these projects and I’m sure there are significant reasons for these dues being this high…it’s just a fact that they’re having a large impact on the project’s overall value.

What’s wrong with this picture? Currently, there are a total of 29 active condo/townhouse listings in Foster City. There are 22 condo/townhouse projects in Foster City, yet of the 29 active listings 11 of them are in only 3 projects…Promontory Point, Meridian Bay and Marina Point. That’s 39%. Conversely, there are currently 35 pending sales in the condo/townhouse category, a ratio that’s at it’s 2009 high by the way. There’s 5 pending sales in those complexes…or slightly under 14%.

Why the disparity, you ask? These are all nice projects and the unit’s in question are by and large in good shape. Average days on the market for these 11 units? 105. Average days on the market for all the others? 74. Why is it then that these nice units are not selling? I suggest it’s because of their high association dues. Promontory Point’s dues are $772.00 a month. Meridian Bay’s are $496.00 and Marina Point’s are $470.00.

OK, there’s others that are in that ballpark too…Isle Cove at $525.00 and The Islands at $547.00 yet there’s also places at Winston Square coming in at $245.00 and Marina Green at $308.00. Even City Homes arrives at $349.00. At least with Isle Cove and The Islands you’re most likely looking at a waterfront. The $500.00 a month range sure seems pricey to me…doesn’t it to you? What happens if flood insurance is mandated for these HOA’s? Yikes!

Seriosly, I like these projects. Meridian Bay is gorgeous…heck they all are nice developments! It’s just that the facts of the active listings would sure suggest that the market is not rushing to buy these places..and I don’t believe it has anything to do with the quality of the unit’s or the projects. It has everything to do with high HOA’s

As the rhyme of the ancient mariner concludes…but not a drop to drink. Not quite that bad in Foster City but the City Council last night considered approving a new water rate structure that will escalate the cost of water as more of it is used. The idea is to motivate folks to be more conservation minded in the face of drought conditions state wide. Wasting water could now become a pretty expensive issue under this new plan, but conserving will reduce your total bill.

The interesting issue to me will be the new law’s impact on HOA’s in Foster City and I suspect there will have to be a sincere effort by homeowners in the various projects in town to use water more wisely, or suffer increases in monthly dues…and that’s the last thing some of these projects in town need! Some projects are hovering near or are even over $500.00 a month right now. Here’s a link to a Mercury-News story about this topic from Saturday:

FCWaterRateStory

If I live in a Condo or Townhouse, I don’t need any insurance because I have an Association…..

I am going to make this post relatively brief, which I assure you can be a daunting task for us “Minkey’s!”   If you own a condo or a townhouse (if you rent, see my previous post on renter’s insurance), you should have a separate policy for your unit, i.e. separate from your Association policy.  No, it is not required by the mortgage company, and no, it is generally not required by your Association’s master policy.  It is also not required that we have health insurance, but most of us who can afford it, still have it.  Just like your life is valuable, your investment in your home is just as valuable.

To clear up a few things, I will give you a bird’s eye view of what your Association policy typically covers; the overall structure of the building, such as the roof, the exterior, the siding, walkways, breezeways, often referred to as the “common areas.”  It also would cover the interior and exterior structures of any amenities such as work out rooms, rec rooms or pool areas.

What doesn’t it cover?  You have no coverage for your personal belongings.  You have no coverage for personal liability.  You have no coverage for the interior feature of your home, or improvements or betterments that were made by you or a previous owner.  You have no coverage for guest’s medical expenses if injured in your home.  You have no coverage for additional living expenses should you have to temporarily relocate due to a catastrophe, such as a fire in your unit. 

Generally speaking, an Association policy covers from the studs of the walls out, plus the above mentioned items.  You are responsible for the studs of the walls in, plus the above mentioned items.  I don’t think cost is usually a factor as to why so many customers I consult with don’t have this coverage.  It is usually because it was not something that was required at the loan document signing party as it is during a single family home purchase.  Once in the home, it becomes out of sight out of mind. So,  please make sure you have the protection you need if you are a condo or townhouse owner, as your Association will not be able to help you should a situation arise where you do not carry your own insurance policy!

The Condo/Townhouse segment of the Foster City market is holding it’s own about as well as single family houses over all with 36 active listings and 13 pending sales as of today. The pendings are in the lighter tone above. That ratio has increased a tad since I did this report six weeks ago, when there were 31 active units and 18 pending sales, but it’s interesting to note that a large number of those sales, 10 of 13, sold since May 27. That sort of reflects the same little boost we had with Single Family houses during that same period. Of course these units vary tremendously in size and utility, but I can’t resist highlighting a few that are worth seeing because they’re so darn nice! I would expect to see them sell relatively quickly:

893 Erickson listed by Jan Majeski of Alain Pinel for $879,500. This is one really adorable townhouse at Winston Square. 4 bedrooms, 2.5 baths…and really done nicely! A top drawer remodel, I like this place alot.

1025 Helm listed by Debbie Wong of Prudential for $748,888. This wide waterfront 3 bedroom, 2.5 bath unit at Bayfront Court is also done well and it’s rare to see a waterfront exposure this terrific. Shows really well, it’s a great listing!

4106 Admiralty listed by Guillermo Reyes of Keller Williams for $415,000. I know, I know…the Admiralty has it’s issues, and yes, the refrigerator is in the dinning room, but you don’t see many folks willing to really fix up a one bedroom unit like these folks have. It’s a really cute unit!

Go have a look…tell me if you disagree.