In these rough times of the mortgage crisis, buyers are finding it increasingly difficult to find a home loan. Lenders are tightening loan guidelines and scrutinizing applications like never before. Actually, they are scrutinizing applications like they should have before! One recent client applied for a loan and was surprised to find out what her credit score was. I won’t say whether this client was surprised good or bad, but the client did ask how credit scores are determined. Great question!

Most lenders use what’s called a FICO score to assess an applicant’s credit score. In case you’re wondering, the FICO score is developed by Fair Isaac Corp., hence the name. FICO scores will range from 300 to 850 with higher scores being a better credit rating. So here’s how a FICO score is generally broken down:

35% Payment history
30% Amounts owed
15% Length of credit history
10% New credit
10% Types of credit used

Each of the three credit bureaus (Experian, TransUnion, and Equifax) will determine their own FICO score with a lender typically going with the middle score. So what’s that all mean? If you are looking to buy a home in the near future, consult a lender or your financial advisor to determine what your FICO scores are. Helping to pay off certain debts can raise your credit score and help with your loan application.

Source: Realtor Magazine Online (12/04/07) citing Pamela Yip, Dallas Morning News (12/03/07)

Speaking of statistics, last Friday’s (12/21/07) San Jose Mercury ran an interesting article about the state of the housing market in the Bay Area. On the front page section under the headline “November home sales at 20-year low,” the Mercury reported that in Santa Clara County homes sales (new, resales, detached, and condos) for the month of November experienced a 35 percent decline from the previous year. The article, however, stated that despite the decline in number of sales, the median price during the same time period rose 0.7 percent. Not much of an increase in the median price but an increase nonetheless. How can there be an increase in the median price with such a steep dropoff in sales? More high-end homes are selling than the less expensive properties.

This is not completely surprising given the current mortgage crisis. The buyers who can afford the higher priced homes are more likely to have sufficient funds for a deposit to qualify for a home loan. On the other end of the spectrum, first time home buyers and buyers with lower incomes will have a much more difficult time qualifying for a loan today. Thus, reducing the number of lower-priced homes being purchased.

I hope everyone had a nice and relaxing Christmas break. While the malls and parking lots were filled with the usual madness, it did seem a little bit slower this year than in the past. Not that it made finding a parking spot at the mall any easier. In all the hustle and bustle of the holiday season, the numbers for November 2007 were overlooked. So let’s take a look. As always, the following statistics represent Central San Jose’s (MLS Area 9 which includes downtown San Jose) condos, townhomes, and lofts.

2007 . . . . . . . Inventory . . . . . Closed Sales . . . Median Sales $ . . . . Total Sales Volume

September . . . . 162 . . . . . . . . . . 12 . . . . . . . . . $490,000 . . . . . . . . . $5,986,500

October . . . . . 172 . . . . . . . . . . 12 . . . . . . . . . $430,000 . . . . . . . . . $5,943,700

November . . . . 166 . . . . . . . . . . 14 . . . . . . . . . $421,000 . . . . . . . . . $5,990,500

There was not a whole lot of change over the past few months as you can see which, in this real estate market, is probably a good thing. The number of closed sales in November was up from the preceding two months but the median sales price continued to dip. The more telling statistics, however, are reflected when comparing this year’s numbers to last year. So let’s compare November 2006 to November 2007:

Year . . . . . . . Inventory . . . . . Closed Sales . . . Median Sales $ . . . . Total Sales Volume

Nov 2006 . . . . 114 . . . . . . . . . . 28 . . . . . . . . . $479,500 . . . . . . . . $13,094,650

Nov 2007 . . . . 166 . . . . . . . . . . 14 . . . . . . . . . $421,000 . . . . . . . . . $5,990,500

Boy, what a difference a year makes. Inventory is up over 30% from last year and the number of closed transactions is down by half from last year. Now this may seem like a dramatic dropoff in the number of transactions from the previous year, and it is, but let’s not forget that these are statistics. And statistics can be deceiving. What these statistics don’t reflect are closed transactions in new construction developments. Why? Most new construction developments don’t list their properties on the MLS and, therefore, aren’t reported in MLS statistics. In downtown San Jose, this will account for a number of transactions. How many? Hard to tell. But what we do know is this . . . North Keystone, City Heights, and Lofts on the Alameda all opened for sale this year. Sales in any these complexes won’t show up in MLS statistics which may account for some of the discrepancy between this year and last year.
The real estate downturn from the foreclosure fallout probably accounts for a big part of the dropoff, but statististics also have to be taken into consideration.

*These statistics are generated using information from the MLSListings, Inc. (formerly RE InfoLink) MLS, but have not been verified and are not guaranteed. MLSListings, Inc. disclaims any resposibility for the accuracy and reliability of these statistics. This information should not be relied upon for real estate transaction decisions.

The San Jose Parks, Recreation and Neighborhood Services Department held a community meeting last night to discuss the development of a new park to be located near the corner of N. San Pedro and W. Julian Streets in downtown San Jose. The 1-acre park would be part of the proposed North San Pedro housing project development by Barry Swenson Builder and The Olson Company. Bruce Hill, landscape architect, introduced the initial preliminary design for the park which would include open lawn space, a 20-foot wide paseo, and an oak tree at the center of a multi-use plaza. The park, currently dubbed as “North San Pedro Park”, would also feature two entry arches to greet visitors entering the park through the paseo.

The North San Pedro park would be a center point for the North San Pedro housing project which is slated for three high-rise residential condo towers and 89 townhomes. The North San Pedro housing project would add approximately 600 new residential units to downtown San Jose.

The proposed North San Pedro park would be bordered to east and west by the new townhomes. The park and paseo would extend north to Bassett Street and to the south to a re-gridded W. Julian Street.

Many of the community members in attendance engaged in a lively discussion about the design and use of the proposed park. Some local residents welcomed the open grass space proposed while others thought there should be more hardscape. Ideas about connecting the proposed North San Pedro park with Ryland Park also came up but that scenario is complicated by the fact that railroad tracks divide the two areas. A pedestrian crossing would be needed to link the two parks. Most people in attendance did agree that, with its proximity to the Coleman overpass, any park would have to be designed to discourage the homeless from sleeping or loitering in the park. There was no clear answer to this problem.

Overall, it was a productive meeting and most were excited about the prospects of a new park in downtown San Jose. What would you like to see in a new park in downtown San Jose?

I was out visiting properties with a client recently when we stopped by to visit a new construction development project in the South Bay area. While I was perusing the marketing materials, a couple walked into the sales office and was greeted by one of the sales agents at this particular new development. I didn’t pay much attention to the couple until I overheard a brief exchange they had with the sales agent. After the usual introduction pleasentries by the sales agent, the couple mentioned that they were working with a realtor and asked whether they needed their agent to be with them. The sales agent politely apologized and said that since they already walked into the sales office WITHOUT their agent, the sales team could no longer offer a broker cooperation commission. Mind you now that the couple had just stepped into the sales office and had not been there for more than a minute. At that point, the couple hadn’t even registered or filled out any paperwork. But now the couple was being told by the sales agent that they could not be represented by their realtor.

I’m a bit uneasy about the sales agent to denying a potential buyer the opportunity to be represented by a realtor before they register or view a model. Especially when the potential buyer asks upfront about being represented by an agent. The couple simply walked in and asked whether they needed their agent to be with them. But as soon as they walked in the door, their ability to be represented by their own agent vanished. Now this troubles me on several levels.

First, in my imaginary perfect world, the sales agent would have replied to the couple’s inquiry by informing them that they needed to be accompanied by their agent on their first visit. And since they had not yet registered or seen a model, they should return later with their agent. Instead, the sales agent put the couple in a precarious situation by telling them they could no longer use their realtor. New construction developments have a rule that realtors must accompany their clients on the first visit in order to be paid a commission. I have no problem with that rule; obviously the developer does not want to pay a broker cooperation commission if it can be avoided. Its less money out of the developer’s pocket. But when the potential buyer asks about it upfront, they should be allowed to leave and return with their agent. The couple on that day could have simply walked out and returned another day with their realtor, hoping that the same sales agent isn’t there. But that would put the couple in another ackward situation if the same sales agent was there. I’m a bit troubled by the fact that popping your head in to ask about using a realtor constitutes a “first visit.”

Next, if the couple was really interested in purchasing in that devleopment, they would have the unenviable job of telling their realtor that they walked into a project without him or her, and now they could no longer be represented. They actually could still be represented by their realtor but the couple would have had to pay for those services directly. And I doubt most buyers would be willing to do such a thing. Maybe the agent should have done a better job by informing the couple about how new construction projects operate. That if they walk in without an agent on their first visit, they lose their right to be represented. That belies my main gripe, which is this . . .

The sales teams at new construction developments will tell you that don’t really need to be represented by an agent. The sales team can represent you too, is what they will say. But let’s be realistic here . . . the sales team represents the developer. And the only thing the sales team really cares about is selling you a property. That’s how they get paid. Are they going to be looking out for your best interest? Maybe . . . but, probably not. Will the sales team tell you what the most recent sales prices were? Probably not. But that’s probably good information to have when deciding to make a purchase. The sales team will tell you that you can get thousands of dollars worth of incentives. But will the sales team tell you that the price has been marked up to offset the incentives? Probably not. Will the sales team tell you about the good AND the bad points about the complex and surrounding community? Probably not. The sales team will sell you on the great features of the complex and will leave everything else for you to read in a disclosure. You can probably find that on page 32, paragraph 15(d), line 3 of the contract. Its the sales team’s job to sell units at that complex. But is that unit, complex, neighborhood, area right for you?

And that, in a nutshell, is what bothers me most about what transpired that day when the unwitting couple walked in without their agent. Maybe this was an isolated incident, just at this location, or just with this sales agent. But now, the couple could no longer be represented by their realtor. Someone who is looking out for their best interest, and not the developer’s. So the moral of this story is that if you are thinking about going to visit a new development, make sure you go with your realtor. On the first visit. Before you walk in the door.

In last week’s Silicon Valley Metro, the “5 Things to Love” column featured restaurants near HP Pavilion. The short piece listed five places to find a good meal before heading over to the HP Pavilion (home of the NHL San Jose Sharks). The Metro list:

Amici’s East Coast Pizzeria (upscale pizzeria) 225 W. Santa Clara St.
La Pastaia (Italian food in the DeAnza Hotel) 233 W. Santa Clara St.
Paolo’s (Italian food) 333 W. San Carlos St.
Poor House Bistro (New Orleans specialties) 91 S. Autumn St.
Seven Restaurant and Lounge (hip restaurant and bar) 754 The Alameda

I’m not one to argue with that list, but I would think any list of pre-Tank meal stops has to include:

Sonoma Chicken Coop (rotisserie, pasta) 31 N. Market St.
Tied House (California style cuisine) 65 N. San Pedro St.

There are a number of other great spots but those are two to name a few. Anyone have any other favorite restaurants near HP Pavilion they care to share?