Add to Technorati Favorites Roof Magazine: March 2008

Monday, March 31, 2008

The Mystery At The Top Of Telegraph Hill

The weather was so nice yesterday that we took the ferry to San Francisco so we could hike to the top of Telegraph Hill like tourists. We wheezed up the last steps, past the Open House at 333 Greenwich (amazing views, but no parking for $1.65 million, so tell us again how we get the groceries home). We caught our breath while clutching the chain link at 115 Telegraph Hill Blvd.—that weedy, overgrown $4 million parcel that's been for sale for years—and thought once again that there must be an amazing story behind the vacant property with panoramic views of everything between here and Asia. There is:

A little wooden shack once sat on the hill, home to a labor activist named Bill Bailey. Mr. Bailey, eulogized for being a "celebrated San Francisco longshoreman" when he died at age 84, had in his youth organized a legendary local waterfront strike to unionize dock workers. He was the fiery sort of idealist who tore Nazi flags off German ships and who fought fascists in Spain. Then, in the last decades of his life, he lived in a
300-square-foot box that had the best view in the world.

After his death in 1995, the lot's owners got city approval to demolish the house and build four condos on Mr. Bailey's hill. Neighborhood residents decided to save the house and in 1999 got it towed to a Muni lot near Islais Creek.

In the years since, the lot's owners let the permits lapse and the weeds take over. If any view is worth $4 million, it's this one. But the problem is taking advantage of it. As neighborhood resident Peter Dwares said in an interview, "There are a lot of people here on the hill who haven't made it very easy."

[Photo credit: The Volunteer]

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Manhattan real estate: Going down

Ever since the national real estate market started to tank, we've been watching Manhattan. That's partly because we used to live there, partly because we have good friends and family there and partly because New York housing—the high end at least—seemed impervious to the meltdown. That last point would appear to make Manhattan a bellwether of sorts for Marin.

A Bloomberg story today suggests though that even Manhattan is beginning to feel the real-estate crash. Apartment sales are falling, inventory is climbing quickly, and agents are starting to manage the expectations of their clients—especially in the "middle-luxury" category for $3 million to $7 million apartments:

``In 2006 and 2007, they looked at the last 12 months' worth of sales and priced their apartments at 10 percent more,'' [Brown Harris Stevens broker John] Burger said. ``Today they are sitting down with the soon-to-be listing broker and saying `Do you think we can get what they got in '06?'''

[Miller Samuel President Jonathan Miller] estimates the number of deals closed in Manhattan has fallen 6.4 percent and [Gregory J. Heym, chief economist for Terra Holdings LLC] says they have dropped about 4 percent. Neil Binder, co-founder of the Bellmarc Cos., said contracts signed at his firm in January and February were down 20 percent.

Manhattan real estate at the high end, like Marin's, has tripled in value during the past decade.

However, New York's market may well be responding to trouble on Wall Street, with the most financial sector jobs being lost in seven years, Bloomberg reports. By contrast, employment in the Bay Area is brisk, and has yet to flag—especially in Techland. Indeed, our friends at tech companies complain that it's nearly impossible to find talent these days, with the job scene looking a lot like it did back during the late 1990s.

While that didn't end well, we continue to believe that history won't repeat itself in Techland.

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Price Choppers: Marin's Most Motivated Sellers

A friend asked what we were going to write about today and we answered, "Sellers in southern Marin who have dropped their asking prices," and then the friend said, "Is that a joke? Or do people actually do that here?" Short answer is yes, they do. All the time. Long answer is:

GOLF COURSE VIEW: After being on the market less than three weeks, the owners of 10 Country Club Drive in Mill Valley cut the asking price from $3.495 million to $3.195 million, for 3,200 square feet in a sunny location. Best feature: the wraparound deck and outdoor fireplace. Why the price cut? Somebody must have noticed that 72 Cypress, another view house that came on the market the same day, has a much lower asking price -- $2.3 million -- for a slightly bigger house. Granted, Cypress is in shade for much of the day.

ONE YEAR LATER: An "utterly charming, remodeled Sleepy Hollow home on a 27,000 sq ft lot" that went on the market more than a year ago asking $1.25 million is now for sale for $1.239 million. Does this mean the seller might actually be willing to settle for $1.238 million? Would $1.237 million be an insult?

WORTH A LOOK: After nearly two months on the market, 171 Stanford Ave.'s asking price is down from $849k to $795k. Zillow estimates the Mill Valley house is worth $820k and that all its nearest neighbors on the view side of the street are worth more.

[Photo credit: Dreammoods)

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Save 30 Percent on Remodel By Shopping Online

We're no psychics, but we suspected it was time to renovate the bathroom the moment the floor collapsed under the toilet. But who wants to pay $3,219.93 for fixtures? Not us. Luckily, we figured out how to get everything for $2,247.05 instead. Here's how:

First, we went to a retail showroom to figure out what we wanted to buy. We wrote down manufacturers' names and model numbers for every fixture (including such unsexy ancillary items as rough valves, shower arms and connection pipes that also were necessary).

Then we went online to do some comparison shopping. Pay dirt. It turned out we could get the same Kohlers Memoirs toilet (yes, the one with the elongated bowl!) for well below the $488.95 list price if we bought it at a site like ($350, and they charge no sales tax if you live outside NY) or ($337.37, with free shipping on orders over $99).

A few clicks of the mouse later, we'd saved $972.88, 30 percent less than if we'd ordered from the showroom. Plus, we avoided whatever heinous surcharge the contractor would have tacked onto the order when he placed it for us.

Downside? If we had to do it over again, we would prepare the neighbors better for the sight of our new toilet, awaiting installation, for all those weeks. Next time we'll definitely put a potted fern in the elongated bowl while it sits on the front porch.

[Photo credit: Gardening-Guy]

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Saturday, March 29, 2008

Our Picks: New Listings You Should See This Weekend

We sorted through this week's four dozen new southern Marin listings—priced from $875,000 for three bedrooms on the outskirts of Mill Valley, to $4.85 million for panoramic views in Belvedere—to come up with a list of the ones you should see this weekend:

BEST $1.46M TEAR DOWN: You wouldn't guess it from the street, but this unassuming corner lot at 5 Hillcrest in Mill Valley boasts terrific southwestern views of everything you want to see from here to the Headlands. The other thing you'll get for your $1.46 million is a walk-to-town location.

BEST LITTLE HOUSE: Somebody was smart enough to figure out how to take advantage of every single one of the 1,249 square feet at 19 Park in Mill Valley. This teensy $1.129m house on the edge of the family-fueled Sycamore Park neighborhood feels ship-shape; but be warned, the third bedroom is so small that it was necessary to put up a sign that says "Twin bed will fit along this wall." (Open from 1 p.m. to 4 p.m. Sunday)

HOW THEY USED TO BUILD HOUSES: We're a sucker for a gracious, curved stairway, and 1715 Lincoln Ave. in San Rafael ($1.395 million) has one that managed to survive against the odds and the remodelers. 3BR, 2B and we can't help but wonder what happened to the original clawfoot tub.

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Friday, March 28, 2008

Weekend Reading: How to buy a foreclosed home on the courthouse steps

(Ed: We know a journalist who’s decided that the mortgage meltdown represents a great opportunity to get into real estate—in Northern California. He thinks it’s such a great opportunity, in fact, that he quit his day job to get into this. He agreed to file occasional posts charting his progress.)

I’ve been spending a lot of time on PropertyShark trying to find a deal on any decent house that was in foreclosure. Propertyshark not only tells you what’s been foreclosed, it tells you when and where the house is being auctioned. Recently, I saw something that looked interesting—a house in Piedmont was being foreclosed for $420 grand.

I drove by to take a look at the house. It was in the flats of Piedmont, at the bottom of the hill—the less nice part of town. Still, because the school district is so great here, everything is expensive. Any lot alone would be well worth $420,000.

The house was a small, blue stucco home; the shrubs around it were overgrown, so it was hard to really see what was going on. You’re not allowed to go in—all you can do is drive by. This house was definitely still occupied. You could see though the shrubs that a dog was sitting in the front window. I thought about whether I could buy the house, then rent it back to the tenants. Maybe a lease-to-buy option.

On the appointed day, I went to the courthouse in Alameda. Houses are auctioned off there, literally on the front steps, every day at noon, and again at 12:30 p.m. The only difference between the auctions, except for the auctioneers, was different groups of homes were being sold off.

The buyers remained the same. I've since returned a few times and can say that every day, a crowd of regulars—a dozen people or so—assembles. Most of them are pros, know each other and are friendly even though they bid against each other. Most of them also wear Bluetooth headsets in their ears so they can talk to investors during the bidding.

One curious thing, from a sociological perspective: the bidding usually ends up with some Asian guys on one side bidding against everyone else. The “everyone else,” in this case, is an ethnically diverse group of people—white guys, an African American woman, a few Latinos and some dudes from the Middle East. But when a particular home is hotly contested, invariably the Asian guys bet against the rest. I asked one of the regulars why this was and he shrugged. “We all know each other. That’s pretty much the way it works.”

He said most of the people that gather here are pros who buy the homes, evict the people who live there—the bank basically assigns that ugly task to the new buyer—fix them up and flip them. Sometimes they rent them out.

When the bidding starts, it’s actually very tedious. The auctioneer has to read off a bunch of legal mumbo jumbo very fast; that alone takes an endless minute. Then he starts the bidding process. The floor—where the bidding starts—is always the mortgage amount owed to the bank.

The vast majority of the homes didn’t sell, which surprised me. Every now and then someone would bid on one, and the Asian guys would jump in, and there would be a little excitement. But most of the homes didn’t sell. The house was no longer worth the amount owed to the bank. What the pros are hunting is diamonds in the rough.

That, apparently, described the Piedmont house: As soon as the auctioneer put it on the block, a bunch of people started bidding. It quickly got to $600,000, when I and just about everyone else, dropped out. A white guy and an Asian guy hung tough. Now the pace slowed to a miserable, endless crawl, as the bids moved in thousand-dollar increments. Every time it got to “Going once! Going twice!...” the other guy would add a thousand. Then the action would pause as information was relayed into Blueteeth. It took 20 minutes or so to get to the final bid—the Asian guy got it for just over $620,000.

The pros know what they’re doing and tend to be pretty conservative.

One interesting thing was how you pay for one of these houses. The bank will only take cash—as if anyone would carry that much around—or cashier’s checks. Cashier’s checks have to be made out to precisely the right amount. But since you never know what you’ll be paying until you clinch the bid, how does that work? Easy: The pros carry wads of cashier’s checks, made out in a variety of denominations—a $400,000 one, say, and a couple of $100,000s, $50,000s, $10,000s and $1,000s. There’s maybe 10 checks in a roll—probably close to $1 million in different denominations.

(Virtually everyone I told this story to has suggested that the courthouse steps at noon would be a great place to stage an armed robbery. That either tells you something about my friends, or their intelligence. You wouldn’t get very far with those stolen cashier’s checks.)

It turned out that on my first outing to Alameda, there was another non-pro on the courthouse steps, looking for a deal. He had his eye on a place in Dublin, which has a bunch of nice, new homes on the market that are going into default. In better times, they tend to sell for $1 million to $1.1 million new. So this guy bought one of them for the floor price: $970,000. No one else bid.

Happily, he produced a cashier’s check for that amount, and was handing it over, when everyone realized he had made a newbie mistake: The purchase price must exceed the floor price. He looked chagrined, until one of the pros reached into his pocket and flipped him a penny. That satisfied the bank, and he got the house.

After he left, the pros said, the Dublin buyer got hosed.

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Six Ways To Spend Less To Make More At Resale

There you are on the sidelines, waiting out the real estate meltdown by not selling your house. Which, you cannot help but notice, could use a new coat of paint. Not to mention a kitchen facelift. You're not a Rockefeller, but minor upgrades would go a long way toward making the place more liveable.

But then you remember you live in uncertain times. With the economy in free fall, can you justify spending money—even a small amount of money—on a new deck? Yes, yes, yes.

Especially a small amount of money. As this story points out, the renovation projects that pay off most are often those that cost the least. The list of the six savviest ways to spend money on your house includes:

1. New siding (because the average homeowner will recoup up to 88.1 percent of the cost at resale; )
2. New wooden deck (get back as much of 85.4 percent at resale)
3. Kitchen makeover (recoup up to 83 percent)
4. New windows (as much as 81.2 percent)
5. Bathroom facelift (up to 78 percent)
6. Install crown molding (can cost as little as $100 a room, so how could it not be worth it?)

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BREAKING: That House On Throckmorton Sold

Barely a week after the brokers' open house—you remember how we were so excited about the live piano player and the shrimp platter— the Mill Valley house with the perfect Mayberry location at 445 Throckmorton (5+BR, asking price $3.489 million) is in contract. More on this developing story as details unfold.

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Thursday, March 27, 2008

Lost and Found

Our favorite checker was rooting through a baggie of old eyeglasses under the cash register when we were buying our dinner tonight. "Lost and found," she explained. "You'd be amazed at the kinds of things we get."

For instance? "A table cloth," she said. A white one. Not new, not old. Not even just back from the dry cleaners in a cleaning bag. Neatly folded up and placed on a shelf in one of the aisles. She figured someone bought it up the street at the Thrift Store, came into the Market and forgot about it. "It stayed in Lost and Found for 30 days [ed: standard Mill Valley Market Lost & Found policy] and no one claimed it." So another check-out lady took it home.

As our checker-outer put the rest of our stuff in a bag, she laughed her explosive laugh. "I'm waiting for a fur coat," she said.

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How to Fix The Mortgage Mess

We've always admired Daniel Gross, Slate's Moneybox columnist and resident Bubbleologist. The guy is everywhere. In this Q&A, which first appeared on, he takes readers' questions on the mortgage crisis. His best idea? Creating a New Deal-style federal agency that would buy up foreclosed properties and slowly sell them off:

One possibility would be something like a Resolution Trust Corp. (from late 1980s or early 1990s) that would buy up the bad debt and take ownership of foreclosed properties—and work them out or sell them over time, rather than dumping them on the market en masse as is being done today. The way the foreclosure dynamic works in the private sector, there's no way the lenders can handle the sort of one-on-one negotiations necessary to modify mortgages, etc.

[Photo credit: Russ Abbott]

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Primetime, Rather Than Subprime, Mortgage Meltdown

This ought to be good: Fortune's Managing Editor Andy Serwer teamed up with CNN to produce an investigative report that, from the sound of the press release anyway, concludes that we're all to blame for the housing mess. The hour-long program:

...takes everyone to task, from loose lenders and slick Wall Street operators to lax regulators and greedy homeowners. No one is off limits in what is shaping up to be the worst housing crisis since the Great Depression.

Participants include NYT columnist Paul Krugman, securities expert Janet Tavakoli, former Treasury Secretary Larry Summers and erstwhile Fed boss Alan Greenspan.

Premieres Friday, March 28 at 8 PM EST

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Obama on Mortgages: Take The Middle Road

In a speech today in Manhattan, Democrat Barack Obama said the government has to "confront the housing crisis" to help end it.

He said the way to do this is to give lenders incentives to buy out upside-down mortgages and convert them to new fixed-rate loans homeowners can afford:

"Over two million households are at risk of foreclosure and millions more have seen their home values plunge. Many Americans are walking away from their homes, which hurts property values for entire neighborhoods and aggravates the credit crisis. To stabilize the housing market and help bring the foreclosure crisis to an end, I have sponsored Senator Chris Dodd's legislation creating a new FHA Housing Security Program, which will provide meaningful incentives for lenders to buy or refinance existing mortgages. This will allow Americans facing foreclosure to keep their homes at rates they can afford."

What Obama's really doing is carving out a moderate position on the real estate meltdown that clearly differentiates him from both Republican John McCain (opposes government bailouts) and Democrat Hillary Clinton (who proposed freezing foreclosures and creating a $30 billion fund to buy up distressed properties). Obama would spend his $30 billion like this: $10 billion to help bail out distressed homeowners, $10 billion to the 19 states whose expected budget shortfalls could lead to higher taxes and reduce services and $10 billion to prop up the unemployed.

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BREAKING: That house in Strawberry Point sold

We were in Produce this morning, considering the virtues of the local organic strawberries that the teachers at Park School told the fifth graders to tell their parents to buy. (Supposedly, they prevent global warming.) That's when we ran into one of the 4,000 real estate brokers who live in our little town of 13,000 people.

To divert her from the baby arugula, we said casually, "So, how are things?"

"Busy," she said. She looked more excited than you would expect of someone who was examining carrots, even if they were tiny purple-colored carrots that save polar ice caps.

"Really?" we asked skeptically, having read in the paper how there's this big real estate crisis that is going to plunge us into bankruptcy and out on the street, where we'll be living off the muddy stems of other people's arugula that we scrounged from the garbage.

She leaned closer. "Did you hear about the house out on Strawberry Point?" she asked. "The one that was listed for almost $4 million?"

"You mean the one that's been sitting there for a while now?" we asked.

"It's not sitting anymore," she said. "It sold!"

True story? Eager to confirm it as quickly as possible, we bypassed our favorite checker Barbara (she chats) for the fast bagger on Three.

It turned out that not only is the house—5 BR, 4581 square feet, with "take-your-breath-away views"—in contract, it also got multiple offers. At least two. We'll let you know the sale price when it posts.

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LoanShark Confesses: I Can't Pull A Credit Score From A Hat

Ever since most major lenders tightened credit standards, my job got harder. Borrowers used to need to have a 680 credit score to qualify them for the best rates. Now it's 700. Anything lower and you can't get a non-conforming loan. Clients ask if one 30-day late payment will be detrimental enough to disqualify them from getting the best rate. Or does it take one 60-day late? Or three 30-day lates along with a high debt-to-credit ratio?

I wish I knew. A FICO score, which can range from the 300s to 900 (although I've never seen one that high) is based on a complicated proprietary formula nobody has cracked. Believe me, I've tried. I've seen people with a lot of lates and they have a score of 720. I've seen somebody who had one late and it brought him down to 600.

I tell clients to get a copy of their credit reports ASAP (get all three because we get all three, every time, and we will use the middle score to qualify you). I tell people if they see anything at all negative on the report, be proactive. Contact the creditor to ask to have the negative information removed (in my experience, it's a lot easier to get a late car payment removed than a late mortgage payment). It's better to write a letter than to phone, and attach copies of your bank statements showing the payment was made.

It's worth the trouble. On a $300,000 loan, here's what you could save:

FICO® score APR Monthly payment
760-850 5.600% $1,722
700-759 5.822% $1,764
660-699 6.106% $1,819
620-659 6.916% $1,979
580-619 9.220% $2,461
500-579 10.242% $2,686

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Wednesday, March 26, 2008

Parallel Universe: Noe Valley Apparently Didn't Get The Memo

Today, as we continued to obsess over this week's news that the real estate market tanked badly in January, we heard a story that sounded so bizarre we thought at first it came from the Twilight Zone.

"We keep trying to buy something, but then we get outbid," said a friend of ours who lives in San Francisco and who drove north over the Golden Gate Bridge to have lunch with us today. "Each weekend we keep running into the same people at open houses. I feel like I'm starting to get to know them."

Apparently, all those people are looking for the same thing as our friend and his wife: a condo in the $1.1-$1.3 million price range in San Francisco's Noe Valley, the hip-to-be-a-family-with-one-or-possibly-two-kids neighborhood where, if this wild tale is to be believed, multiple offers and bidding wars are still common.

Freshly bruised from a failed attempt to buy a 4BR condo on Church (a 2,283-square-foot Zephyr listing, with an asking price of $1.199 million), our friend had a haunted look in his eyes. "We were one of six who bid," he said. "And we came in No. 2."

"Who got the condo in the end?" we asked gently.

"Somebody who bid $1.31," he said. "We thought we had it, but they came in with a no-contingency offer and agreed to close in fourteen days. The owners had already moved out, and they just wanted the cash fast."

"Weird," we said, although frankly we would have taken the cash fast, too.

"You'll get the next one," we said (as if we knew the first thing about what's going on in the San Francisco real estate market). "It must have been a fluke."

Or was it? Is there some secret, robust real-estate market hiding out in plain sight in San Francisco?

[Photo credit: Historic Noe Valley street scene by way of]

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McCain on Mortgages: Don't Blame The Rich Guy

The government has three choices in assigning blame for the real estate meltdown. It's the fault of the borrowers, the lenders or both. Republican John McCain blames both and says it's not the government's duty to bail them out:

"A sustained period of rising home prices made many home lenders complacent, giving them a false sense of security and causing them to lower their lending standards. They stopped asking basic questions of their borrowers like 'can you afford this home? Can you put a reasonable amount of money down?' Lenders ended up violating the basic rule of banking: don't lend people money who can't pay it back.

"Some Americans bought homes they couldn't afford, betting that rising prices would make it easier to refinance later at more affordable rates. There are 80 million family homes in America and those homeowners are now facing the reality that the bubble has burst and prices go down as well as up."

What he's really saying is they wipe each other out, so there's nothing the rest of us who aren't in trouble can do about it. At least nothing that wouldn't cost money.

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On the market: Celebrity homes in Palm Springs

Pssssst--got $9.2 million lying around? Have we got a house for you. This villa, once rented by Elizabeth Taylor, is among the celebrity pads for sale in Palm Springs, California these days.

The Desert Sun reports today that a number of pre-owned-or-rented-by-stars homes are crowding the market in Coachella Valley, including the Suzanne Somers retreat—65 mountain-top acres, for the low, low price of $27.5 million. That price, the paper says, would set a record, even for Palm Springs, which has long been a playground for Hollywood's finest. Also for sale are homes formerly owned by Frank Sinatra (his "hide away") and Sidney Sheldon. Check out the photo gallery.

[Photo credit:]

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Missing: One 6BR, $1.875M House In Marin

Marin County's stratospheric home prices are so wildly out of sync with the rest of America that they've caught the eye of New York Times columnist David Leonhardt repeatedly. Last summer, he described how one Mill Valley house sold for $1.4 million without ever officially being put on the market, which he took as a sign back in July that "much of the housing market there seems to be doing just fine."

Today, at breakfast we read that Mr. Leonhardt revisited Marin County, this time to point out how homeowners here are just as pigheaded as everyone else in the country about dropping their asking prices in a falling market. In 2005, the owner of one six-bedroom, $1.875 million house somewhere in Marin, he writes, refused to accept a $1.575 million offer. The last time the would-be buyer (is this him?) checked, the house was still for sale.

Were we the only Marin residents who immediately shrieked, "We can get six bedrooms for $1.875 million?" before leaping from the breakfast table to run to the computer to check the multiple listings?

Sadly, we couldn't find the house listed, so perhaps it went off the market unsold at some point since the last time the would-be buyer checked. Whenever that was. Or maybe the house is still there, lurking among the Novato listings? If anyone knows of a 6 bedroom house for sale in Marin County, please email us ASAP.

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Tuesday, March 25, 2008

Mill Valley Shocker: Owners Ask Less For House Than They Paid For It

Real estate brokers here in our twee Northern California town have been circling like buzzards around this downtown house for weeks, waiting for the listing to go live. The big question on their minds was whether the owners, who paid $2,750,000 for the 4bdrm, 2 bath house less than two years ago, would try to push the price envelope upward by asking more than $3 million.

The answer? Apparently not. The house came on the market today with an asking price of $2,700,000. Although some brokers we talked to speculated the house was priced to encourage multiple offers, others weren't so sure. Despite its vintage charm, the house has some quirks—such as its flagpole lot—which kept it from selling quickly in 2006.

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Remember The Old Days, When Contractors Didn't Return Your Calls?

Now is a good time to remodel, the Los Angeles Times says, for five reasons that we have taken the liberty of paraphrasing:

1. With interest rates low, you can borrow against untapped equity at a lower cost than a year ago.

2. Houses age. When you need a new roof, you need a new roof.

3. Not a good time to sell, so make your current house comfortable enough to live in for a while.

4. New-home builders are now competing with remodeling contractors for your job so you can negotiate a lower price.

5. The contractor needs the work so badly that the crew may even show up on the date promised. (If this happens, please let us know. We'll want to take photos to show our grandchildren someday, after we have grandchildren.)

[Photo credit: Bat Phone courtesy of Bat Cave]

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How Much Can I Get For This House?

Now is not the time to insist on asking $10,000 more for your house than your neighbor got for his last year. Asking prices dropped or were stagnant last week in more than two-thirds of the nation's 55 metro areas, according to new numbers from HousingTracker.

Inventory, meanwhile, continued to climb in more than 75 percent of those markets.

Here's how things look in the Bay Area where we live, where asking prices are starting to inch up:

Trend03/24/20081 mo3 mo6 mo12 mo
Median Price$519,898+0.2%-3.5%-13.1%-13.4%

Photo credit:]

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Seaside and Suburban Slums

As more homes move into foreclosure, local governments are under increasing pressure to clean up the neighborhoods. A front-page story in the Dayton Beach News-Journal says that as scores of homeowners move into default—some in seaside communities such as Ormond By the Sea—local police and code-enforcement departments are having a hard time keeping up with the growing number of overgrown yards and falling-down houses. That creates a problem for the rest of the neighborhood, needless to say.

With the number of foreclosures continuing to mount from the fallout of the housing bust, more properties could fall into seediness. But apparently it will be up to residents to steer government to do something about it.

Carol Kerrigan, Volusia County's code enforcement manager, acknowledged it's a growing problem, but her officers only respond to complaints from residents and don't proactively cite offenders.

"The philosophy of code enforcement is to let each neighborhood determine the level of tolerance it will accept," Kerrigan said.

For a home in foreclosure, however, often the property is in the control of a bank, and the financial institution cannot do any maintenance until the foreclosure is final, she said.

The problem isn't confined to Florida's seaside communities, of course. A grim piece in The Atlantic asserts that abandoned McMansions in suburbs across America could create suburban slums.

[Photo credit: Jawad Zakariya]

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Monday, March 24, 2008

Crouching tiger, running bamboo

Bamboo is taking over suburbia. This is not a good thing, according to a wonderful Matthew Rose piece in today's Wall Street Journal.

Running bamboo, whose 8-inch-thick stalks can grow 80 feet high, is particularly invasive, with steel-cable-like roots that can tunnel dozens of feet away to establish clusters of new shoots. It's also hard to kill; Rose writes that bamboo can even survive a nuclear blast:

Bamboo growers claim the plant was the first to re-emerge after the atomic bombing of Hiroshima. William Aley, an import specialist at the Agriculture Department's Animal and Plant Health Inspection Service, says he can't say whether the story is true, but confirms that "depending on how deep the heat flash was at a bomb blast, the shoots are formidable enough to survive having the above-surface portions destroyed."
Rose says that the 2003 hit movie, Crouching Tiger, Hidden Dragon, helped popularize the plant, which, in some bamboo-infested areas of the U.S., is sparking neighbor-on-neighbor lawsuits. Personally, we love the stuff. Then again, we keep it contained in giant pots on our deck.

[Photo credit of running bamboo:]

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On The Market: Frank Lloyd Wright

I used to ride my bike past this house practically every day when I was growing up in Elmhurst, Illinois. Looked like a box to me (I was not a child with discerning taste and preferred this house for its curving driveway). Little did I know I was snubbing a Frank Lloyd Wright house and that it would one day be on the market for $2.3 million.

Now I'd love to own the F. B. Henderson house, if I didn't have all those children to put through college. Even if it is the most expensive house in the neighborhood, it's one of the few Wright buildings you still can buy.

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Calculate Resale Value Before You Buy

Walking everywhere is good. Walking everywhere does not cost $3.50 a gallon. Walking everywhere does not melt polar ice caps (unless perhaps you are walking directly on a polar ice cap while wearing heated boots).

This is why we predict that houses in neighborhoods within walking distance of everyday destinations—such as libraries, schools, parks and liquor stores—are going to appreciate in value far faster than others during the next few years.

Before you buy, calculate a house's walk score on a scale of 1 to 100. At, you can type in an address and learn, even if you're not familiar with the area you're considering, if the neighborhood is one where you can walk to do most of your errands. A walkable neighborhood, as defined by the site, has "a discernable center, whether it's a shopping district, a main street, or a public space and ... dense enough for local businesses to flourish and for public transportation to be cost effective."

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Home Sales Are Up; Prices Are Down 8.2%

New numbers show home sales increased 2.9 percent nationwide in February over the previous month. But year-to-year prices are down 8.2 percent, dropping from a median of $213,500 to $195,900.

What does this mean? Looking at the big picture—that is, the bad stuff happening to the overall economy that may never affect your life on a day-to-day- basis but which you lie awake worrying about at 2 a.m.anyway—it could be good news. Increased sales may indicate that prices have come down enough to tempt buyers who have been sitting on the sidelines for the past few months. If there's enough pent-up demand to buoy sales for a second month in March, prices may stop dropping.

As the National Association of Realtor's chief economist Lawrence Yun put it, "We’re not expecting a notable gain in existing-home sales until the second half of this year, but the improvement is another sign that the market is stabilizing."

What does it mean for you and me? If you have been debating about when to buy, now may be the time prices are lowest. If you've been waiting for the right time to sell, keep waiting. In the meantime, stop worrying and go work in the garden. Digging a nice hole deep enough to plant an antique climbing rose will take your mind off this stuff fast.

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Sunday, March 23, 2008

You Can't Afford Not to Renovate

We all know that the best way to make more money on your house is to spend more on it by renovating with, say, an upscale kitchen remodel that costs $117,254. If you execute this maneuver properly, you can recoup $104,241 of that investment when you eventually sell the house. And in the meantime, you get to use all those shiny new appliances.

There is of course one little catch. The last thing you want to do is to spend money on things that potential homebuyers might think are, well, ugly. And let's face it, not all of us have the good taste to execute every detail of a renovation flawlessly. Luckily, however, the editors of Remodelista do.

Remodelista's pull-no-punches remodeling guide makes it easy to pick things other people will want to buy from you one day when you put the house on the market. They do it by:

"offering our opinionated (OK, bossy) ideas on the best faucets, the best sinks, the best bathroom hooks. Our combined experience includes a dozen remodels, so we’ve pooled our knowledge and compiled lists of our greatest hits. You’ll find our top ten picks in kitchen categories such as sinks, faucets, ranges, counter stools, and more."
Even better? They tell you where to to go to buy the stuff.

[Photo credit: PatrickandTiffany]

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Fixer-uppers: Why buy a house when you can get a whole town?

Poor Monse, Washington. Nobody wants it. The town, population 12, in northeastern Washington, made headlines in 2005 when a group of sellers put it up for sale on eBay for $575,000. For that, you'd get 60 river front acres, including 12 houses, a post office, general store and school.

The LA Times reported today that the historic town, which, during the 1800s, was a trading post and steamboat stop, got no takers. A number of people considered buying it and turning it into a family compound, but never closed the deal. The town's pretty run-down apparently. So instead, the buyers chopped it up and sold off a few desirable parcels.

[Photo credit LA Times]

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Saturday, March 22, 2008

Can This Listing Be Saved?

What kind of house sits on the market for nearly six months in Marin, the pricy northern California county just north of the Golden Gate Bridge where the typical house sells in about half that time for 94.7 percent of its asking price?

A) A teardown whose previous owner was a smoker and had 27 cats.
B) A teardown whose previous owner was a smoker and had 27 cats who also were smokers.
C) A 4,200-square-foot, 5-bdrm house in Mill Valley that has a really nice kitchen.

We feel bad about what happened to "C," the sprawling gray frame house at 16 Bolsa that has been sitting on the market since last fall. With a gracious floorplan like that, the house deserves a better fate.

Of course, the house isn't actually the problem. The original listing price of $3,495,000 was. Call us stingy, but that seemed like kind of a big leap from the previous sale price in July, 2006 of $2,190,000. (Yes, we know about the very nice new retaining wall in the backyard, but still.)

But don't cry for 16 Bolsa yet. After a dramatic price cut to $2,995,000, the listing agent feels confident enough to expect offers on Monday. We'll keep you posted on this developing story.

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Rates that sound too good to be true probably are

Some people are hearing about rates on 5/1 and 7/1 ARMS that are much lower than those offered by the main players in the mortgage market.

The main players—Chase, Wells Fargo, Citibank, and BofA—are currently offering rates on these loans in the range of 6% to 7% depending on whether or not you pay any points. Some secondary mortgage players (Union Bank and IngDirect) are offering rates as low as 5.5%. So how can they make money offering rates that are essentially out of the market?

Easy: They make their money by requiring up-front points and having prepayment penalties. They're betting the rates will drop to even lower interest levels than their current offer. The catch? Their borrowers will not be able to refinance to take advantage of lower rates because of stiff prepayment penalties.

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How to sell your house for more

One word, says the "American Association of Realtors:" Landscaping. The association estimates that good landscaping can increase a home's sale price by as much as 15%.

We tried to find the source for that statement, contained in a PRWeb release today touting garden fountains as a smart way to gussy up your home-price-enhancing landscape. But we couldn't even find an American Association of Realtors, let alone a report quantifying landscape value. Perhaps they meant the National Association of Realtors? Here's a story on NAR's site that says good landscaping can increase your home's price by 20%. Oh well. This stuff isn't science, but it makes some sense.

Remodeling Online actually does a pretty credible job of trying to assess the cost of home remodeling, versus resale value. The site gets granular and lets you look at home-improvement projects by region. Nothing on fountains or landscaping though.


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Finally, A Country Where Things Are Worse!

Those poor Brits. Not only do they have to eat spotted dick, but it turns out they have more debt, credit cards and mortgage headaches than the average American. After a decade of rising real estate prices, low interest rates and easy-to-get loans, British households have a debt-to-income ratio of 1.62, according to today's New York Times. Although we're not exactly sure what that number means, we're relieved that our ratio here in the New World (1.42) is lower and therefore sounds less scary.

Meanwhile, the Times says, the real estate market is melting down in England, where more than 1 million homeowners have adjustable-rate mortgages that will reset at much higher rates in the next year:

"Home prices are falling, despite a dearth of housing and an influx of wealthy Middle Easterners and Russians, especially in London. Last year, housing foreclosures reached the highest level since 1999 and are expected to rise still further this year."

The rest of Europe might still be better off than us, though, because "the trend on the Continent was the opposite. Home prices in most European countries barely moved" during the past decade. Why? "Markets were more regulated, there was more housing stock and renting was more popular."

[Photo credit: TexasChapBook Press]

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Friday, March 21, 2008

Sell your house in Northern California, buy this and say so long to The Man

ew 3 BR, 3.5 BA on 9 acres in Virginia's Shenandoah Valley for $699k.

You've got your stream. You've got your views of Shenandoah National Park and George Washington National Forest. You've got your 48-inch JennAir cooktop with grill in the center island. There's even enough room for you and your cronies to sit around all day and chillax:

"The wide wrap around porch could hold 100 rocking chairs, and it comes with 6 Cracker Barrel Rockers."

Best of all, you can buy it on eBay. Wish we could make the open house Sunday at noon.

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My Monthly Mortgage Payment is Bigger Than Yours

New homebuyers are being more cautious. The typical monthly mortgage payment of February's buyers in the San Francisco Bay Area is a mere $2,446—down 15 percent from a year ago, DataQuick reports. In southern California buyers were even more risk averse last month, committing themselves to $1,821 a month, down nearly 21 percent from the previous year.

[Photo credit: Momadvice]

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Thursday, March 20, 2008

It's the School District, Stupid

Vote "yes" for your local school district's budget. A new study identifies nine lucky suburbs (click on map) around the country whose top-notch school districts have managed to keep the towns' home prices high even as the rest of the world was engulfed by darkness. The lesson here, according to, is:

"...purchasing a home with excellent local schools helps buffer the home from industry downturns."

And once you own the home, be sure to join the PTA.

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On the market: Flying Saucer House

Pardon me boy, is that the Chattanooga Space House? The Associated Press reports that Pearl Johnson of Cincinnati bought the mountainside house for a bargain $135,000 last weekend at auction. The price was disappointing for a landmark home, which sits atop six cement pillars and has a retractable staircase. Then again, it was built without architectural plans. Every wall is curved. It also has (winter) views of the Tennessee River and is on Signal Mountain.

Terry Posey, who auctioned off the 30-year-old home, writes on his website that if you Google Earth the address of the home it's labeled a "flying saucer." Of course, that and 50 cents will get you a cup of Tang (or would, if Tang were still the drink of Astronauts.) Anyone can label anything on Google Earth. Still, the house has a unique history. In the 1970s, according to the Chattanooga Times Free Press, the couple who lived in it got in a fight and the wife trapped the husband inside by parking her pickup under the retractable stairs. Writes Posey on his auction site:

This is an opportunity to own a unique property and is ideal for that weekend get away. It has app. 2,000 square feet [ed: 1,940 according to the video tour] of living space. Home has 3 bedrooms, 2 full bathrooms, kitchen, living room and large bar area. There is a poster of an alien at the bar that reads "I AM ONLY HERE FOR THE BEER".
This strikes us as the deal of the century. UFO-shaped houses were fads in the 1960s and 1970s—see the Futuro houses, designed by Finnish architect Matti Suuronen—as the space race heated up. The Tennessean reports that this one was built around the time Star Trek went off the air.

Here's a really cool video tour of the home.

[Photo credit Terry Posey]

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Calculate Your New HELOC Savings

In response to our recent post about a simple equation to keep track of the interest you'll save on your HELOC as rates drop, a friend in the mortgage business offers this suggestion for those who want to give the old desktop calculator more of a workout:

"You overlooked the fact that HELOC interest is calculated on a daily basis, not monthly. To get really nerdy and precise, use this equation: Multiply the amount you owe by the amount the prime rate decreased, and then divide the total by 365 to see how much interest you'll save each day of the year. For your monthly payment, multiply that daily interest rate by the number of days in your payment cycle."

In other words, if you owe $200,000 in principal on your HELOC and the prime rate drops by three-quarters of a point, the two-step equation will look like this:

(200,000 x .0075)/365=$4.11 in interest saved every day

4.11 x 31=$127.41 in interest saved in a 31-day billing cycle

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Fed Chairman Bernanke's Home Value Plummets $270k

As your home equity disappears into thin air, comfort yourself with the knowledge that even the chairman of the Federal Reserve has the same problem. As Bloomberg reports:

The U.S. housing recession has arrived literally on the doorstep of Federal Reserve Chairman Ben S. Bernanke. Bernanke lives in Washington's Capitol Hill area in a four- bedroom, 2,600-square-foot house he bought new in May 2004 for $839,000.

"Even though he's the Fed chairman, he's going to get hit -- but I think lot of people will in Washington,'' said William Wheaton, an economist at the Massachusetts Institute of Technology. The value of Bernanke's home ``probably went up to $1.1 million and it's probably back down to $840,000,'' because prices in Washington just a couple years ago ``got out of control,'' Wheaton said.

Let's hope Bernanke put down 20 percent.

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From The Mouths of Realtors

This just in from south Florida, where John Tuccillo, former chief economist for the National Association of Realtors, predicted: summer or fall of 2009, the economy will be better, the housing market will be good and mortgages will be going for about 2 percent more than now.

The hat trick that will pull South Florida from the dumper, he said, is “population growth, falling home prices and a better economy.”

He urged the crowd to watch for three things that will indicate improvements in the real estate market: a drop in the number of home listings, a drop in the amount of time homes remain on the market and an increase in the ratio between the sale price of a house and its listing price.

Until that happens, however, “if you don’t have to sell your house, don’t,” Tuccillo said. Of course, not everybody trusts his advice.

[Photo credit: Nocirc]

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Open Houses: We Go, So You Don't Have To

Still no sign of a housing slump in rarified Mill Valley. When we showed up at 445 Throckmorton Avenue for the brokers' open house—and free lunch—the place was a madhouse, with enough real estate agents' BMWs hogging the on-street parking spaces to persuade us that we're the only ones who think the $3,489,000 asking price is kind of ballsy.

The first thing we noticed: A piano player had been hired to entertain the brokers. The second thing we noticed: The shrimp platter had already been decimated.

This one-of-a-kind vintage house falls into the same category as such recent listings as 255 Hillside (an old Tudor with commanding views of San Francisco that sold for $3,450,000 in November) and 35 Sycamore (a sprawling Craftsman in Mill Valley's most kid-friendly neighborhood that sold for $3,100,000 last summer).

Pros: Location, location, location. It doesn't get any better than this sunny corner lot if you want the full-on Mayberry experience of daily walks to town, school, the park and the library. Also, the house has five real bedrooms (and by real, we mean we saw an honest-to-God closet with a door and everything in every single one of them).

Cons: This is a matter of taste. The traditional center hall colonial layout and the floral wallpaper in the foyer scream Connecticut and may not appeal to the knock-down-the-walls-so-we-can-live-in-one-room-with-toddlers crowd. A kitchen renovation is in this house's near future.

Due diligence: The Victorian painted lady half a block away at 418 Throckmorton—with a legal second unit—sold for $3,250,000 in April 2007 after an extensive upscale renovation.

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Wednesday, March 19, 2008

Play Hardball With Your Real Estate Agent

Even if the value of your house dropped nearly 9 percent last year, that doesn't mean you have to pocket 9 percent less when you sell. Pass along the pain.

Pay a lower real estate commision. You can negotiate down from the going rate—5 to 6 percent, depending on your market—by pointing out that you are the sort of reasonable seller who is willing to price your house realistically for a quick sale. (Be sure to use the words "reasonable" and "realistically," and also throw in "motivated" for good measure.)

Yes, haggling makes us feel creepy too. But feeling creepy was a luxury that disappeared with the seller's market. On a $200,000 sale, paying a 4 percent commission will put $2,000 more in your pocket than paying 5 percent.

[Photo Credit: Ezrealestateguide]

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From flipping burgers to flipping houses

Here's a guy in Newton, Massachusetts who's quitting his successful restaurant business to concentrate on buying up foreclosed houses full time. Though the food biz is still good, Fran Yerardi is shuttering Yerardi's Restaurant after 16 years because he's making more money from his real-estate franchise.

Yerardi sounds like a natural-born real-estate maven and entrepreneur. As he told a reporter for Wicked Local, a network of 158 local websites that cover New England:

About four years after Yerardi’s opened, Fran began buying up nearby houses as they came on the market.

“Any neighbor that would complain about the noise, I’d buy up their house,” he joked.

In May 2006, Yerardi opened the first New England franchise of HomeVestors, a real estate firm that specialized in flipping unappealing or foreclosed homes for a profit. According to their bright yellow billboards, the company gladly buys “ugly houses.”

As more and more homes head to the auction block, Yerardi has found that his real estate business was hotter than his restaurant business.

“We got to the point where the restaurant wasn’t our main source of income,” he said. “We still loved it, we still kept it, but we weren’t killing ourselves over it.”

We've seen the "We buy ugly homes" signs but don't know anything about Homevestors. If you've had any experience with them, let us know.

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Mortgage Rates: Heading Down?

Good news: The federal government took a big step today that should encourage mortgage rates to stabilize—and perhaps start to drop. The move, which gives Fannie Mae and Freddie Mac more leeway to buy loans, could shore up the secondary mortgage market by reassuring lenders that they'll find investors for the mortgage money they lend you and me.

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Tuesday, March 18, 2008

What Today's Fed Rate Cut Means

For fixed-rate mortgages: Nothing.
For your HELOC: A nice drop in your minimum payment. See here.

Seventy-five basis points isn't what Wall Street wanted so don't expect your 401K accounts to stop bleeding anytime soon either.

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My Town

In some curious way, the real estate prices in my little town of Mill Valley (pop. 13,600) have more in common with Manhattan than any other market. Nothing is affordable here. Nothing has been in years, and nobody's really concerned by the news that prices are dropping elsewhere.

Nobody but me, that is. I hope I'm not the bigger fool. I moved here six years ago and, unlike my neighbors who paid nothing for their houses decades ago, I'll be in real trouble if the market turns south. For now, prices in my northern California town continue to buck the trend, by increasing 7.7 percent last year even as they dropped 3 percent nationwide, according to Zillow. My neighbors are confident values will continue to climb, if these recent local listings are any indication:

Listing #20808136: 4br, 3 bath "almost new" 1-level home, asking $2,395,000 (sold for $1,580,000 in July 2007)

Listing #20807490: 4br, 3 bath "top quality remodeled spacious hm," asking $1,875,000 (sold for $1,375,000 in April 2004)

Listing #20807511: 4br, 3 bath, "tastefully remodeled and updated spacious home," asking $2,195,000 (sold for $1,200,000 in March 2006)

The sellers may be right. After all, one condo unit that sold for $379,000 in 2000 went on the market this week, asking $559,000; it already has a buyer.

[Photo credit: Epodunk]

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Smart Borrowers Have ARMs

Stop skulking around, feeling sheepish about your adjustable rate mortgage. So what if your next door neighbor keeps reminding you his fixed rate is never going up? He's already paid thousands of dollars in interest that you didn't. And when your rate adjusts, it probably still will be lower than if you had gone for a conventional, fixed-rate loan. Here's how Money magazine explains the situation:

If the Fed cuts rates by a half point Tuesday, the cumulative effect of the Fed cuts could entirely offset what would have been a significant rate reset for many homeowners.

For instance, a borrower with an adjustable rate of 4.5% could have faced a rate reset up to 7.5% before the Fed started cutting rates in September. Before the rate cuts, that homeowner would have seen an increase of $370 in monthly payments on a $200,000 loan.

But after Tuesday, that rate could reset only a little higher. And for some, the rate might not go up at all - and may actually drop - according to Greg McBride of

[Photo credit: Ironage]

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Monday, March 17, 2008

Silver Lining: How Much Your HELOC Payment Is About To Drop

Finally, good news. You'll probably see the minimum monthly payment on your home equity line of credit drop after the Fed cuts rates again tomorrow. That's because most HELOC rates are tied to prime. Here's how to calculate your savings:

Multiply the amount you owe by the rate decrease, and then divide the total by twelve. So, if you owe $200,000 and the rate drops by three-quarters of a point, the equation will look like this:

(200,000 x .0075)/12=125

The best use for the $125 you won't owe next month? Send it anyway to painlessly pay down the principal that you should have been paying down anyway to avoid getting into this mess in the first place.

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