An article about a recent client's experience

House hopping: Smaller in size, higher in price - but somehow still a dealBy David F. Smydra Jr. [ david@hmbreview.com ]

The client, a healthcare worker in her mid-60s, had told real estate agent Lee Engdahl that she and her roommate were hoping to move to the Amesport Landing neighborhood near downtown Half Moon Bay. They wanted to move out of their Cañada Cove home and move within walking distance of downtown.

They were also paying almost $1,000 per month in “space fees” at Cañada Cove that they thought they might as well put toward owning a home outside the community.

One problem: the real estate market was still flush in early 2007, and the client couldn’t afford the move.

“Last spring, you could not get into Amesport Landing for less than $500,000,” the woman said. Due to the sensitive nature of the woman’s job — in which she assists patients who have suffered from domestic abuse — the Review agreed not to disclose her identity. “We might have afforded it had we wanted to scrape up all the funds we needed to do it, but it didn’t seem like a smart thing to do at the time.”

What followed for the woman and her roommate during much of 2007 certainly isn’t a textbook example of what the Coastside real estate market has become — but that’s because textbook examples don’t really exist in real estate. The tale is proof, however, that all bets are off as the Coastside weathers its own economic turbulence amid troubles reported in the larger real estate picture for California and the nation as a whole. As Mr. Engdahl freely admits, the real estate market on the Coastside and in San Mateo County is clearly off its “peak.”

Indeed, statistics from the San Mateo County Association of Realtors show that fewer homes were sold on the Coastside in 2007 than in 2006. Moreover, the homes stayed on the market much longer. In Half Moon Bay, for instance, 25 fewer homes went on the market in 2007 than in 2006; 24 fewer homes were sold; and it took an average of 15 additional days to sell them.
One of those numbers belongs to Mr. Engdahl’s client. Complicating the duo’s wish to move to Amesport Landing was the fact that the woman and her roommate, a relative, couldn’t sell their Cañada Cove mobile home despite the still-bullish nature of the housing economy in early 2007.

“We talked to the mobile home agent on the 23rd of February, and she came in with a full offer plus $1,000 on the 25th of February,” she recalled. But that buyer backed out within 72 hours. Two weeks later, another offer came in for the full asking price. “But at that time, the lenders were getting uptight because all the news was beginning to break.” Banks were starting to reconsider their rates, the woman said, and her buyer “was not approved at that time.

“Then everything went real quiet,” she went on. “I mean there were days when they didn’t even show (the mobile home).” Things perked up again in May and June, but another offer didn’t arrive until late July. When it did, they sold the home for $243,000, less than half of what Amesport Landing condominiums were selling for.

That same day, Mr. Engdahl called his client and said a ground-floor condo in the neighborhood had just gone on the market. The client had turned down second-floor and townhouse units in the past, hoping to secure a more accessible unit. The owner wanted $509,000, but the unit was in rough shape. Engdahl quoted what he said was an old-time Realtor’s saying: “It looked like the inside of a goat’s stomach.”

The client and her roommate played hardball and were able to negotiate the price down to $470,000. They put all of their equity from the Cañada Cove mobile home into the down payment, and all of their profit from the sale into renovations that totaled more than $20,000.

“As near as I can tell,” the woman said, “the people who were living here were refinancing and refinancing and then got caught in the mortgage crunch. When the mortgage papers were drawn up and you looked at the financial history of the place, it looked like it had been refinanced three or four times.”

Now the two women find themselves living in a home half the size of their Cañada Cove residence, but at twice the cost. Their mortgage payments and association fees add up to more than $2,000 per month. Nonetheless, the switch has its benefits, the woman said.

“The bottom line is, even though we’re paying twice as much money for half the space, we are very happy here,” she said. They had flirted with the idea of leaving California, but very much wanted to stay in Half Moon Bay. “It’s just a really superb place to live, in my opinion,” the woman said. “It was worth going through everything.”