A reader asks:

I’ve recently heard the term “green banks”. What are they, and are there any in our area?

Our reply:

Yes, the New Resource Bank, opening in San Francisco in September, specializes in helping “green” companies and green-interested individuals. See our previous article on Green Housing.

- Kathleen Macdonald

(Editor’s note: we thought all banks were “green” just because of the money. Apparently we were wrong!)

This article was posted yesterday from NewMax.com. Once again, more gloom and doom. What nobody is talking about is the fact that the Fed keeps raising interest rates thus killing the housing boom that the low interest rates fueled for the previous several years. From my point of view, if the Fed really wants to avert the scenario described below, they could just start lowering interest rates again. What am I missing?

- Mick Orton
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It has been well documented that the U.S. housing market is currently in the midst of a downturn.

June brought yet another monthly drop in sales of previously owned homes, and according to The Christian Science Monitor, that number has “fallen in all four major regions of the United States from a year ago, with nationwide sales volume down 9 percent, according to a report released Tuesday by the National Association of Realtors.”

Homebuilders are cutting back on housing starts, rising interest rates and stagnant or lower home prices are stopping people from spending their home equity, and ARM-holders are getting crushed by a sudden spike in mortgage payments.

Meanwhile, the Fed is monitoring the situation carefully to determine whether current housing retrenchment will stay moderate or devolve into a severe situation that could badly damage the economy.

While the Fed has raised rates 17 times to combat inflation, they realized the hikes would eventually affect housing, but Bloomberg’s John M. Berry points out that another development has only just become apparent.

“What has only become evident in recent months is that, perversely, the big decline in housing affordability – due to the combination of double-digit housing price increases year after year and higher mortgage-interest rates – would cause a surge in core inflation,” says Barry.

“Would-be homeowners – either priced out of the market or simply fearful that the value of a home purchased now could fall in coming months – are renting instead. As a result, rents of residences and the so-called owners’ equivalent rent components of the consumer price index have shot up this year.”

Barry goes on to say that these components of the CPI are so critical that when they rose, they accounted for almost two-thirds of the percentage point rise in core CPI for the first six months of 2006.

Federal Reserve Chairman has insisted that the impact of housing on the economy has been “orderly,” and most economists seem to agree. While few see the housing slowdown spurring recession, some do expect that it will slow economic growth considerably.

“Economists at Merrill Lynch, for example, reckon that the dive in homebuilding alone could subtract a percentage point from overall gross domestic product in the third quarter, tugging GDP growth down to perhaps 2.5 percent, annualized, for that quarter,” says the Monitor.

But some are predicting far worse.

“… recession is a real possibility, in the view of Merrill Lynch’s David Rosenberg. After the past 10 peaks in new-home starts by builders, an economy-wide slump has followed seven times. Housing starts, like home sales, peaked last summer.”

Editor’s Note:

Contrary to what Bernanke says, he, the federal government, and politicians love insidious inflation. It is the easiest political way out of the massive private and public debt that hangs over the U.S. economy like an open noose. Go here now.

- Newsmax.com

A reader asks:

Why is view property in San Francisco such a big deal? Some of the prices I’ve seen seem pretty outrageous, especially on properties that are small or have no parking. What are your thoughts?

Our reply:

You’ve heard a picture is worth a thousand words, then a view can be worth a million dollars… sometimes two million. Many people looking to live or invest in San Francisco Real Estate feel that views are really important. Why not? We have a beautiful city so who wouldn’t want to look at it when they wake up in the morning or before they go to bed at night?

Let’s take an example. A condo, 3 bedrooms and 2 baths, selling in the middle of Cow Hollow with no view and no parking would probably sell for about $1,200,000 to $1,400,000 at the time of this writing. At the same time a similar one on Russian Hill with a panoramic view might fetch as much as $2,000,000. What changed? The view!

View properties are more desirable for vacationers too. Check various vacation rental websites like CyberRentals for San Francisco and you will see that the view properties command the higher rates.

Parking, especially in hard to park areas like Russian Hill, Telegraph Hill and Pacific Heights, can effect the value of a condominium by as much as 20%. We sold a beautifully remodeled condo on Russian Hill for $740,000 without parking. If it had included parking, the selling price would have probably been in the high $800′s or even $900,000+.

- Janis Stone

This article was posted today from NewMax.com. While we do not subscribe to the gloom and doom scenario for San Francisco Real Estate, it is true there has been a correction from the frenzied market of a year ago.

Note the liberal use of the words “could” and “would” in this story indicating that this is a forecast, not actually what has happened or is happening. Here’s what they are saying.

- Mick Orton
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The National Association of Realtors yesterday announced that home prices could start to fall nationwide in the coming months for the first time in a decade, reports USA Today.

They made the announcement on the heels of reporting that existing home sales tumbled in June, for the eighth time in 10 months. The NAR also said that the number of homes for sale reached its highest point since 1997.

David Lereah, NAR chief economist, tells USA Today that he expects “price numbers to start deteriorating.”

In some markets, prices are already falling. Prices of condos nationwide have fallen 2.1 percent in a year. Single-family home prices increased just 1.1 percent from last year. “Prices got too high in some local markets,” Lereah said. “So you’re seeing two things occur: Investors are leaving quickly, and regular home buyers are staying on the sidelines.”

As a result, there’s a 6.8-month supply of single-family homes and an eight-month supply of condos, according to the NAR. Compared to a year ago, existing home sales are down 8.9 percent.

“Markets which have been the hottest are quite likely to see home price declines,” John Ryding, an economist at Bear Stearns, tells USA Today. “In those markets, you could see declines for the year.”

In the West, which includes hot housing markets California, Nevada, and Arizona, sales of existing homes fell 17.1 percent in a year. The California Association of Realtors announced that home sales plunged 26 percent in a year and are off 20 percent for 2006.

“Affordability has probably hit a record low,” Robert Kleinhenz, deputy chief economist for CAR, tells USA Today.

In the Northeast, another hot housing region, sales fell 9.8 percent. The Midwest experienced a 6.2 percent decline in sales, and sales in the South fell 5.5 percent.

The Washington Post reports that home prices in the Washington, D.C. area are falling in certain areas for the first time in five years.

Peter Morici, an economist at the University of Maryland, tells the Post “prices could drop 10 percent by the end of the year, and perhaps by 20 percent ‘by the time it’s all over.’”

Editor’s Note:

Real-estate expert and Yale professor Dr. Robert Shiller says that housing prices nationwide could fall by as much as 40% over the next few years. In this exclusive interview, find out how the five ways to protect yourself and profit from the coming real estate crisis. Go here now.

- NewsMax.com

A reader asks:

Recently one of my friends had his house on the market. They had a buyer in contract who pulled the plug and decided not to buy at the last minute. It went to arbitration and a considerable amount of money was given to the seller. I was surprised to hear that the broker took some of this money as commission. Is this legal and ethical?

Our reply:

Yes it is legal and ethical if it is specified in the listing and/or purchase contract. The listing agreement and the purchase agreement are legal documents that should specify who receives liquidated damages in the case of a default of the buyer. Just as the seller was damaged by the breach of contract of the buyer so was the listing agent who spent time and money marketing the property and brought a buyer that put up money as a deposit. So both the seller and the listing agent are entitled to damages from the breach of the contract of the buyer. However the agent that represented the buyer is not entitled to receive damages from the deposit.

- Janis Stone

A reader asks:

What does “common garden” mean for a condominium I am thinking about purchasing?

Our reply:

A with any “common area”, it means that everyone in the condo association can use it, and no one has exclusive rights to it. It also means that the cost of maintaining the garden is a common area expense and is included in your HOA dues.

- Janis Stone

Sales fell for third straight month in June; nearly flat prices make double-digit gains seem like a distant memory.

NEW YORK (CNNMoney.com) — It’s official – even the nation’s leading group of real estate agents now says it’s a buyer’s market in housing, as a soaring supply of homes for sale means nearly flat prices and longer waits for sellers.

The news came in the National Association of Realtors’ report for June, which showed that home sales fell to the slowest pace since January while price gains were the smallest in over a decade.

The industry group said sales of existing homes fell to an annual rate of 6.62 million in June, compared with a 6.71 million pace in May. Economists surveyed by Briefing.com had forecast sales would slow to a 6.60 million rate.

June was the third straight month of declines, leaving sales 9 percent below year-ago levels, the group said. Moreover, the weakness was widespread, with sales falling in each of the four regions of the country.

The median home price did edge up to $231,000 from $229,000 in May.

But that marked only a 0.9 percent increase from a year earlier – the smallest year-over-year gain in home prices since May 1995.

As recently as October, prices had jumped a record 16.8 percent from a year earlier due to tight supplies and bidding wars among buyers.

“The change in price performance is directly tied to housing inventories – a year ago we had a lean supply of homes and a seller’s market, with monthly home sales at an all-time record high,” David Lereah, chief economist for the group, said in a statement.

“Sellers have recognized that they need to be more competitive in their pricing given the rise in housing inventories,” he added.
The inventory of homes on the market is now at 3.7 million, up a whopping 39 percent from a year ago, or a 6.8-month supply at the current sales pace, up from a 4.4-month supply in June 2005.

The Realtors statement said the market has shifted to a “buyer’s market,” which it said is good news for those shopping for a home even if it posed a problem for those looking to sell.
“People who were discouraged by the bidding wars that were so common over the last few years are finding more choices now,” said Thomas Stevens, a Realtor from Vienna, Va., who is president of the group.

Regionally, existing home sales in the Northeast saw the biggest decline, followed by the South.
Sales in the South fell 2.3 percent from May to a annual pace of 2.57 million, which was 5.5 percent below the rate a year earlier. The median price slipped to $191,000, down 0.5 percent from a year earlier.

Northeast sales slid 3.5 percent from the prior month and were 9.8 percent below a year ago. The median price in the Northeast was $298,000, up 7.2 percent from June 2005.

Sales in the Midwest were unchanged from a month earlier and down 6.2 percent from a year ago. The median price in the Midwest was $175,000, 1.7 percent below June 2005.

Existing-home sales in the West were also unchanged from May but sank 17.1 from June 2005. The median price in the West was $342,000, the same as a year ago.

- Chris Isidore, CNNMoney.com senior writer

Even Barry Bonds can’t beat the housing market in the San Francisco Bay Area. Andrew Morbitzer decided to auction the #715 home run ball of Barry Bonds to pay off some debt and purchase a new home!

“Bills from his recent wedding to wife Megan and their desire to enter the pricey Bay Area housing market — median home price in June: $644,000 — trumped thoughts of keeping the ball,” says AP sports writer Gregg Bell in an online article.

Apparently the ball will be auctioned on eBay and bids may be made through August 3 at 3 PM, Eastern Daylight Time.

- Mick Orton

A reader asks:

How easy is it to replace the windows in my condominium?

Our reply:

In most condos you have to refer to the CC&R’s to find out the answer since there are stipulations as to what will need HOA approval. Usually you can replace them if they are the same and they don’t change the exterior look of the condo. So if you want to replace the single pane with double-paned (to make your unit quieter) and they look the same it is probably ok.

You might check with the other condo owners and see if they would also like to get new windows. If you can get a group together you might even get a better deal on the cost. Even better, it might be a common area expense for the HOA, and the cost can be shared among all of the owners.

- Janis Stone

Coldwell Banker is proudly joining forces with Habitat for Humanity in our annual fundraising raffle. Now through September 1, 2006 our Sales Associates are joining forces in an effort to raise more than $500,000 for Habitat for Humanity, bringing our total funds raised in the last eight years to a remarkable $1.7 million.

Tickets for the raffle are just $2 and all monies raised benefit local Habitat for Humanity chapters. Stop by your local Coldwell Banker office today to help make the dream of home ownership a reality for one local family in need. Or you may contact us at (415) 229-1259 and speak to Christine Serventi.

You may also contact Kacie Ricker at (925) 275-3085 for questions relating to Coldwell Banker Northern California’s support of Habitat for Humanity. For more information from the website, click this link.

- TRI Coldwell Banker, Van Ness Office, San Francisco