December 2007 Quarterly Newsletter

Volume 2, Issue 4

Nicholas French, Broker Associate, CRS

December 1, 2007

Quarterly Review Inside this issue: Happy Holidays

1

Write Down Your Goals

1

Comic

1

Who Is Catton Properties?

2

Earthquake Insurance – The Value Proposition

2

Home Values Drop Price per Foot

3

Client Testimonial -

3

Happy Holidays I wanted to take this opportunity to thank all of my clients, family and friends for being such a positive and inspiring part of my life. The holidays are typically the time when individuals reflect on the previous year, experiences and ways to improve the coming twelve months. I spend a good deal of time reflecting while running in the evening focusing on how I can improve myself in all aspects of my life including business and health. I must admit that I haven’t run lately; I guess the cold weather is enough of a deterrent, but that hasn’t stopped me from reflecting. I try to show my appreciation through my actions each day and recognize this as another opportunity to share my gratitude. You help me grow both personally and professionally through your friendship, mentorship, and of course your referrals. Thank you for trusting me with your family and friends. I am looking forward to the new year with all the challenges and experiences. I wish your family my very best for wonderful year of happiness and good health.

Write Down Your Goals

Mark & Julie Galbraith

Property Taxes

3

Money Saving Tip

4

Current Neighborhood Statistics

4

Nicholas French Broker Associate, CRS 4906 El Camino Real #2 Los Altos, CA 94022 650 773 8000 (cell) 650 961 2338 (office) 650 961 5238 (fax) [email protected]

We all know that the new year brings dreams of resolutions and goals that typically last a matter of months. Most of you know that I am religious at writing down goals. Every year I consider my short, mid and long term goals, enter them into my blackberry and look at them often throughout the year to check progress. I have found this process to be a very effective way at reaching my goals. A few tips on goal writing: 1) set realistic goals, 2) write them down, 2) short term goals (3-6 months) are important because you feel satisfaction relatively quickly. The others are medium (1-2 years) and long (5-10 years) term goals, 3) Mix it up - have personal, business and maybe a vacation goal. By reviewing your goals you will verify being on track and feel a sense of accomplishment and satisfaction when completed.

Quarterly Review Page 2

Who is Catton Properties? Catton Properties, pronounced CATTON, is named after my family with roots in Los Altos since the 1920’s. Formerly from San Francisco, my family moved to Los Altos as a country escape from the city during the summer months and later becoming home to several generations. I chose Catton Properties when I moved my real estate business from Palo Alto in 2005 in part as respect to my family. My late grandfather was proud to have the name in town. I have been very pleased with my office move as I have become quite active in the Los Altos community on a business and personal level. Catton Properties is becoming a known business in town and I am encouraged about continuing this course.

Earthquake Insurance - The Value Proposition Do you have the bottled water, first-aid kit, and other survival supplies ready? As a Bay Area native it was part of the lifestyle to have an emergency plan in case of the big earthquake. I can recall hearing stories about the 1906 San Francisco Great Earthquake from my late-grandfather discussing the aftermath and how so many families were displaced and the infamous fire-break at Van Ness. I am sure most people agree that it is not a question of if we will have a large earthquake, but when. Recently a few people have asked me about my views on earthquake insurance and the value proposition. I am not an Insurance Agent or an expert in the field by any means, but think that this topic warrants a cost-benefit analysis, so that each family can decide the value independently. The two main options for obtaining this type of policy is to purchase a private company insurance program or go into the pot of the California Earthquake Authority. There is a fine line between the two. When you call your favorite Insurance Agent and think you are buying their policy you may actually be paying into a government program where claims are regulated and paidout on a statewide basis. The premiums and coverage can vary dramatically so it is important to know the product you are purchasing. The government program is statewide; therefore, similar to the post office, some properties are being subsidized by others through standardized pricing. A low risk property may have a higher premium because it is making up for the riskier property’s subsidy. However, if you are in a high-risk area your premium may be cheaper. The independent companies pricing schedule should be based more on risk and payout. I think that the premiums are just smoke for the true costs of earthquake insurance. The main cost associated with the policy is the deductible. This is where it gets fun. Again, the actual cost of the premium is fairly nominal, but is an amount that will in most cases never get back to the individual. In this example the annual premium should range from $1300-1800. This premium is a sizeable profit for a policy that will most likely never pay out. This is important because unlike automobile insurance that pays out frequently the earthquake insurance has a higher probability of not paying out, so the profit, I mean premiums, compound annually while lining the corporate pockets. My sample property is as follows: City: Los Altos, 94022 Size: 2,000 square feet Type: Ranch home Age: 45 years Replacement Cost: $500,000 Deductible: 15% (there is also a 10% option) Unlike our hazard insurance deductible that may be $1,000 or even $2,500, the deductible for earthquake insurance is a percentage of the replacement cost. Yes, you heard me correctly, a percentage of the total replacement cost. If you have earthquake damage in the amount of $50,000 there is no reason to file a claim because you haven’t reached your deductible amount. In this case you may be hoping for severe damage. But in the case of severe community damage, will other government authorities and programs take effect similar to hurricane Katrina? The main costs of earthquake insurance are not realized until a disaster, so the next reasonable question is whether the insurance agency will exist at all after such a disaster. It is important to point out the lengthy list of those circumstances and items that do not warrant the policy, how the policy is paid out and whether a company will be viable at all. We can all do our part to be prepared and analyze the financial security or burden individually. This article is intended to be a starting point for your family. It is important to way the costs and benefits of such a program and how it fits into your family’s situation.

Volume 2, Issue 4 Page 3

Home Values Drop - Price per Foot

Property Taxes

As we have discussed in the past few newsletters it is no surprise that a good majority of the nation is suffering from price drops, high inventory and historic foreclosure rates. There is a clear correlation between the appreciation and areas that are struggling; those that went up the greatest in the least amount of time are generally coming down the hardest. The recent Monthly Housing Market Report by New York based Radar Logic Inc shows the most dramatic decline among 25 Metro areas on a monthly index comparing the September 30th previous 28-day period . Why is this important? While many areas are struggling to stay above water our area continues to be a market leader and show amazing resilience. This supports the historic data which indicates that certain areas generally have less impact than others during market corrections. Keep in mind this is only one report focusing on a specific data set, but it is one of many that consistently result in similar findings. We are not addressing whether or not our area will drop in price, but that we appear robust when compared to areas such as Sacramento, San Diego and Las Vegas. This is vital data when considering whether to make that long term investment in a property or properties. With rent rates on the rise you will want to watch the market closely and look for buying opportunities. Data such as this should help you in that decision process. It is far from a call of the market collapsing, but rather a transition in the marketplace. This is where that good location and floor plan go a long way. Even in the hot areas such as Saratoga and Los Altos, over-priced homes in bad locations with poor floor plans aren’t selling as there were six to ten months ago. This is a positive sign. However, those well-priced homes that show well are still flying off the shelves. The real estate market is fluid making it important to analyzing and watch the changes and at some point make that move. I used to hear the saying “paralysis by analysis” when referring to real estate, meaning if you analyze the data indefinitely you will miss opportunities. All of the data will not help unless you take the leap. I will work to continually bring valuable data to your through my newsletters. If you have a specific topic you would like me to address please do not hesitate to let me know. Happy investing!

Monthly Housing Market Report Metro Area Sacramento, CA San Diego, CA Las Vegas, NV Tampa, FL Jacksonville, FL* Miami, FL Detroit, MI Milwaukee, WI Los Angeles, CA Charlotte, NC Seattle, WA St. Louis, MQ New York, NY

$/SF

% Change

$201.24 $296.48 $162.78 $127.81 $119.32 $184.98 $106.78 $117.22 $367.53 $98.49 $226.18 $108.43 $296.43

-14.8% -12.2% -11.0% -10.1% -9.9% -9.5% -6.7% 5.6% -5.5% 5.2% 4.8% -4.4% 3.3%

$/SF Metro Area Washington, DC $227.83 Boston, MA $227.77 Chicago, lL $180.00 Atlanta, GA $98.50 Philadelphia, PA $159.37 Cleveland, OH $92.26 San Francisco, CA $419.49 Denver, CO $142.60 Phoenix, AZ $148.18 Columbus, OH $96.27 Minneapolis, MN $154.58 San Jose, CA $463.14

% Change -3.2% -3.2% -3.2% -2.9% 2.9% -2.8% -2.8% -2.6% -2.5% -1.3% -0.6% 0.2%

Source: http://www.car.org

Client Testimonial We were impressed with Nick right off the bat. He listened to us carefully, patiently showed us all of our options and helped us negotiate the best deal. Now we're happily living in a home that's perfect for our family!

It is that time of year; if you haven’t already paid your 1st installment of your property taxes they are due by December 10th at midnight. If your bill has a previous owner’s name do not fret, you pay that bill. If you did not receive a bill from the County Assessor in the mail you do not get a free pass visit the County website for a copy (I will be emailing links to our three closest counties). If you mail the payment just make sure you postmark by the 10th. If you have any questions about your tax bill or a supplemental payment please feel free to give me a call or you can call the County directly.

Current Neighborhood Statistics

Money Saving Tip Did you know that as a homeowner you can dispute your property tax increase with the county? If your taxes adjust you can submit a claim to the assessor with justification that your taxes should not be raised (this will not work for your supplemental tax bill after buying a home). You may not always be successful, but it is a worthwhile attempt to save money. During the process you will need comparable sales; you can obtain these from various websites or ask me.

No. of Closed % of List Sales Price

Med Price

Avg Price

Avg DOM

100.57

$1,267,500.00

$1,389,440.00

31

103.58

$1,196,000.00

$1,263,864.00

23

87

99.18

$1,150,800.00

$1,263,571.00

49

78

104.32

$1,785,500.00

$1,897,392.00

32

Q2

124

102.71

$1,757,500.00

$1,911,674.00

33

2007

Q1

59

100.13

$1,643,000.00

$1,732,843.00

65

Los Altos Hills

2007

Q3

20

96.03

$2,448,000.00

$2,769,977.00

74

Los Altos Hills

2007

Q2

37

97.96

$2,705,000.00

$3,156,780.00

91

Los Altos Hills

2007

Q1

27

94.94

$2,249,925.00

$3,191,663.00

148

Los Gatos

2007

Q3

77

98.11

$1,470,000.00

$1,590,200.00

53

Los Gatos

2007

Q2

112

97.09

$1,399,500.00

$1,653,932.00

59

Los Gatos

2007

Q1

72

97.53

$1,475,750.00

$1,572,226.00

71

Menlo Park

2007

Q3

99

100.93

$1,207,000.00

$1,330,007.00

36

Menlo Park

2007

Q2

148

102.32

$1,300,000.00

$1,454,825.00

25

City/Area

Year Qtr

Cupertino

2007

Q3

106

Cupertino

2007

Q2

139

Cupertino

2007

Q1

Los Altos

2007

Q3

Los Altos

2007

Los Altos

Menlo Park

2007

Q1

85

100.92

$1,250,000.00

$1,522,614.00

58

Monte Sereno

2007

Q3

9

96.62

$2,050,000.00

$2,458,055.00

46

Monte Sereno

2007

Q2

8

97.41

$1,924,975.00

$2,086,868.00

29

Monte Sereno

2007

Q1

11

97.56

$1,850,000.00

$1,856,863.00

70

Mountain View

2007

Q3

76

104.40

$1,138,750.00

$1,148,440.00

24

Mountain View

2007

Q2

77

104.70

$1,098,000.00

$1,122,895.00

15

Mountain View

2007

Q1

42

104.27

$ 946,500.00

$1,019,072.00

27

Palo Alto

2007

Q3

113

104.15

$1,638,000.00

$1,912,255.00

23

Palo Alto

2007

Q2

162

104.52

$1,531,500.00

$1,808,937.00

27

Palo Alto

2007

Q1

99

102.47

$1,500,000.00

$1,950,789.00

43

Saratoga

2007

Q3

86

98.40

$1,666,500.00

$1,887,618.00

80

Saratoga

2007

Q2

109

98.48

$1,688,000.00

$1,867,730.00

50

Saratoga

2007

Q1

78

97.69

$1,687,500.00

$1,889,980.00

80

Sunnyvale

2007

Q3

172

102.76

$ 930,000.00

$ 956,583.00

19

Sunnyvale

2007

Q2

205

104.49

$ 930,000.00

$ 946,384.00

21

Sunnyvale

2007

Q1

129

102.58

$ 815,000.00

$ 837,896.00

38

Please Send This Newsletter to My Family and Friends If you know someone who would like to receive this newsletter I would like to send it to them. Please either have them contact me or provide me their contact information and I will make contact. My goal is to have this newsletter add value and be an information source for my clients, family and friends. Please do not hesitate to contact me if I can help you with any real estate questions, strategies or if you are seeking quality representation.