Diane Kennedy is the author of the Rich Dad book, “Loopholes of the Rich: How the Rich Legally Make More Money and Pay Less Tax”, has a website dedicated to the ever changing tax laws and how to take advantage of them. She is bullish on real estate as an investment. Here are excerpts from her latest newsletter:

I’ve been investing in real estate for 24 years. I’ve seen the ups and downs of the market and I’ve made some bad investments, but most of them have turned out great – as long as I was prepared to stay through the bad times.

There’s been a lot of talk lately about the downturn in real estate. Have real estate values gone down where you live? In today’s email, I’m going to cover three possible strategies to survive a real estate downturn.

• Don’t sell

How serious is the problem really? Has the home you live in, the property you are renting out or the property you bought as a fix and flip gone down in value? Well, if you weren’t planning to sell right away, why would it matter? Hang on until the market comes back. Historically, in the bigger picture, most real estate markets have ALWAYS come back…

• Run Your Investments Like a Business.

I’m going to talk about some strategies that are worst case only. Remember that real estate is nothing more than a product. If you’re good at a business and know how to thoroughly research a product and its market, you can sell toasters or you can sell a house. It’s all the same. Of course, not too many people rent toasters and toasters don’t appreciate and that’s why real estate is such an easy business for so many people to jump into. That’s also why there are so many catastrophic failures. It’s too easy to make money in real estate, if the market is going hot, even if the investor does everything wrong. They have forgotten (or never knew) the fundamentals of business…

• Keep Your Eyes On the Real Goal

No matter what type of business or investments you have, you need to have fundamental skills. That’s what Strategy #2 was all about…

- Diane Kennedy

* Go to her website and sign up for the FREE newsletter!

Read what Rick Turley, new President of Coldwell Banker, San Francisco/Peninsula said in his latest weekly report:

It’s very interesting to review the past several weeks’ market reports and notice the geographical migration of low inventory concerns throughout the Bay Area. Several weeks ago the communities further east and north were largely commenting on lack of sales activity – listed properties not moving. The same week, San Francisco and the Peninsula were starting to comment on the lack of new properties coming to the marketplace. Notice this week that sales activity is picking up in the north and east bays, while San Francisco and Peninsula offices are genuinely concerned about the shortage of inventory.

In Pleasanton, our office reports that 67 new homes came on the market during the week, and 63 homes went pending. Inventory in the Danville market has dropped below a three month supply. Coastal inventory in Half Moon Bay is down dramatically. Palo Alto reports that 65% of all of their offers are multiple offers. Menlo Park cries “We’re starving for houses to sell.” Burlingame reports multiple pre-emptive offers at a $3M price-point listing. That being said, there are some properties in both San Francisco and the Peninsula in the $2.5M+ range which aren’t flying off the shelves, indicating that a sensitive list price is still key.

Of the more than 485 open houses held by our offices, all were well attended. In San Francisco an approx. 950 sq ft home w/o dining room in Bernal Heights had more than 300 visitors. By mid-week, it sold for more than 20% over its $699,000 LP with 13 offers. Another San Francisco home in the Westwood Highlands district had 43 disclosure packets out and 21 offers submitted after only 4 days of showings.

Listing inventory overall was reported as being steady by 16 offices, increasing by 6 and decreasing by 10. Sales activity reportedly increased in 7 offices, decreased in 4, and was steady for 18 offices. Of the offices reporting, there were more than 200 ratified offers.

There is a lot of buzz indicating that sellers are waiting for late spring before putting their homes on the market. Hopefully, those sellers aren’t looking at the media headlines and thinking they’re indicative of a bad time to list. The buyers are out there…waiting for something to buy!

- Rick Turley

* For an e-mail alert when this report is updated, send a note to info@SFResidence.com with “weekly market report” in the subject line.

Yahoo Travel says:

“This picturesque stretch of Lombard Street has eight angles along a single block. They twist at very acute angles, making for very slow going if you are in a car, though, oddly enough, cars were the reason for designing the street this way back in 1922, the idea being that this design would make it easier for them to negotiate the steep 16-percent grade. The drive is usually bumper-to-bumper and in the summertime, there is almost always a line of cars waiting to take the drive down, so a stroll is a good option, especially when the hydrangeas along the sidewalk are in bloom.”

Lombard and Hyde StreetsSan Francisco, CA 94109

+1 415 391 2000 (Tourist Information)

Open 24 Hours

Neighborhood: Russian Hill

- Mick Orton

Foster Weeks publishes a weekly mortgage update which is updated every Monday morning.

…As the financial markets are closed on Monday in observance of Presidents Day, I hope you enjoy the special article below on Daylight Savings – including the whole scoop on the new change for 2007…

…In any event, Daylight Saving Time (DST) will be springing a bit further this year. Back in 2005, Congress enacted the Energy Policy Act, which will extend DST by one month – beginning earlier in the spring and lasting later into the fall – beginning on March 11th and ending on November 4th… Read more.

- Foster Weeks

The Outer Sunset/West Portal as described on the SFResidence neighborhood guide:

“The Outer, Central & Inner Sunset operates like a city within a city with its tidy streets, excellent schools, and family owned businesses. The fogginess of this district hasn’t discouraged the 40,000 students, young professionals, and middle-class families from nesting and/or embracing this quiet and mellow suburb.”

SFGate says, “Although this southwestern corner of the city is often ignored in guidebooks, you’ll find there’s lots to explore including a neighborhood caught in a ’50s time warp and dozens of multi-ethnic businesses.” Read more here.

For more information on other neighborhoods and street maps visit our website.

- Mick Orton

Previous Neighborhoods

We own a condominium in Tahoe City which we rent to others through LMI Realty. It is close to several of the ski areas; Alpine Meadows, Squaw, Diamond Peak and Homewood among others.

Are you a skier? If you are, you will be happy to know that Alpine just reported today 2 feet of new snow over the last few days with more possibly on the way Monday or Tuesday. Just in time for ski week!

If you need a place to stay, call the folks at LMI (530) 581-4100. Our 3 bedroom, 2 bath 1st floor condo in St. Francis Lakeside will be available after February 25th.

- Mick Orton

Our office at TRI Coldwell Banker at 1699 Van Ness in San Francisco is one of the premier offices in the City and has the market share numbers to prove it. We have some of the top agents selling real estate in the San Francisco Bay Area. As a result, our office posts some impressive numbers.

Once again, last week there were many more ratified deals than new listings, indicating a shrinking inventory. In one week we had 3 times as many deals made than we did new listings. As we have said before, this indicates a surge in buying which will probably drive prices higher. We are seeing more and more properties end up in multiple offer situations. Agents are again getting comfortable with setting offer dates anywhere from 10 days to 2 weeks after putting their property on the market. This is another indication that sellers feel the San Francisco real estate stagnation has passed. Judging by the number of sales, so do buyers. Here are the numbers for last week:

2/14/07

• 5 new listings (average price $1,867,600)
• 15 ratified sales (pending) (average ratified price $1,022,692)
• 3 closed sales (sold) (average closed price $1,155,000)
• 1 reduced ($929,000)

- Mick Orton

Neighborhood: SOMA

Read what Rick Turley, new President of Coldwell Banker, San Francisco/Peninsula said in his latest weekly report:

Last weekend’s Super Bowl seemed to have little or no impact on the more than 350 Open Homes our agents provided throughout the San Francisco Bay region. Reports of 148 attendees on a North Bay listing, and over 300 for the weekend at a Menlo Park Open House were not met with surprise. In densely populated areas such as San Francisco’s Noe Valley, it was back to the old days of cars double parked up and down the narrow streets as Buyers scrambled to see the few new listings introduced to the market this past week.

It’s perfectly clear that what’s “not right” with this current market is not enough inventory. We are hearing the same lament in all our offices – from Palo Alto in the South to the Marina District of San Francisco in the North. It appears our offices in North Bay and East Bay share the same concerns. Of the offices that reported declining sales this week, it seems they are the same offices reporting decreasing inventory. You can’t sell it if you don’t have it.- Rick Turley

* For an e-mail alert when this report is updated, send a note to info@SFResidence.com with “weekly market report” in the subject line.

Multiple offers are ruling the day again. Consider our Woodside office, perhaps harder hit in the “adjusting” market of 2006 due to the price point of their inventory. This week they reported 8 sales, of which 50% were in multiple offers. Six months ago it seemed Woodside was very far away from multiple offers being the norm again anytime soon. Burlingame reported multiple offers this week from the $700K price point to a recent listing they introduced at $3M. San Francisco agents are back to asking what the “offer date” is of a new listing, where it’s plain to see that nearly 50% of all sales are going into multiple offers in the City. It’s too soon to see if this is a “blip” or a trend – but in the meanwhile, the best Valentine’s present any Bay Area homebuyer could receive would be for more Sellers to get their homes on the market.

Foster Weeks publishes a weekly mortgage update which is updated every Monday morning.

…Foreign buyers who seek a safe, high rate of return on their money love our US Bonds – and their continued investment in our Bond market has helped keep Bond prices high, and therefore, home loan interest rates low. Based on the good result of the auctions, Bond prices and home loan rates improved throughout the week, but then lost some ground on Friday to end the week right back where they started.

So what happened Friday? First, some Traders saw prices as topping out, and decided to sell and take their profits. Additionally, there were several Fed officials on tour, including St. Louis Fed President William Poole. Poole mentioned increased defaults in home loans to risky borrowers, and said that rates may rise as a result. The talk of rising home loan rates was enough to spook Traders ahead of the weekend – and many decided to take even more chips off the table.
The Fed Chairman himself was on the speaking circuit, and an interesting comment Mr. Bernanke made had to do with the increasing differential between earnings of a four year college grad, vs. a high school grad with no college experience. A college graduate made 75% more than their high school graduate counterparts last year – a trend that has been increasing for many years…

- Foster Weeks