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REALTOR®: Real estate still path to wealth in San Francisco region, according to real estate expert

Despite what some analysts describe as a “cooling marketplace,” the San Francisco Bay Area continues to be a “star market,” and real estate here will continue to be “an asset which can build wealth for you and your family, depending upon how smart you play the market,” according real estate expert Carole Rodoni.

Rodoni is president of Bamboo Consulting, former president and chief executive officer of Alain Pinel Realtors, former president of Fox & Carskadon Realtors and former COO of Cornish and Carey Real Estate. A highly regarded speaker, author and advisor in the Bay Area real estate industry, Rodoni shared her experience and knowledge with Silicon Valley Realtors and the public at the first free Real Estate for Real People Home & Real Estate Expo held Sunday, March 18, at the Lucie Stern Community Center in Palo Alto.

Yes, with the cooling of the housing market and slowdown in home sales, the volume of sub-prime loans and the resulting high rate in foreclosure notes is worrisome, says Rodoni.

“It’s scary and the numbers don’t look good,” Rodoni admits, but the impact of these loans is spotty at best and depends on their location. She doubts sub-prime loans will negatively impact the San Francisco Bay Area.

“It shouldn’t be of tremendous concern because we are not in a sub-prime market,” says Rodoni, noting San Francisco’s share of sub-prime loans is 5 percent; Santa Clara County, 5 percent; Contra Costa County, 7 percent; Alameda County, 6 percent, compared with Salinas, 60 percent, and areas like Fresno, Modesto, Stockton, between 18-20 percent.

For those who live, work and play in the area, “it’s only important to look at the numbers in the San Francisco area because that’s what matters most to you,” said Rodoni.

Rodini describes the San Francisco region, which includes the Peninsula and much of the Bay Area, as a “star market” - unique in terms of location, assets and its economy. It cannot be compared to other parts of the state and the rest of the country.

While the unemployment rate is also spotty throughout the state and nation, Rodoni points out Santa Clara County’s unemployment rate stands at 4.6 percent. The Bay Area is home to seven million people and three million jobs. Land here is a limited, which in turn, makes real estate a limited resource, and it’s a “hard growth area,” where residents aren’t keen on new developments.

“So, if you give it some time, the asset will appreciate,” explains Rodoni. “Here, in the San Francisco region, we do not have a bubbling real estate market. We have a valuable market that over time is an appreciating market.”

“Real estate is an asset,” Rodoni flatly states. “It’s a value in which you expect a return sometime. Before, it was a sanctuary, a place where you build memories, put 20 to 30 percent down, maybe refinance once, and looked forward to owning it someday, free and clear.”

Today, Rodoni considers real estate as “the path to wealth.” It is fluid and constantly changing, she says, and depends on buyer preference, interest rates, supply and demand, inventory, lifestyles, and swings like a pendulum between sellers and buyers.

“Once in a decade, it can strongly shift towards a sellers’ market, like we witnessed the last six years, where homeowners experienced double digit appreciation that was off the charts,” she notes.

Rodoni recalls in1984, the median home price was $180,000 in the San Francisco Bay Area and homes experienced an annual appreciation rate of about 8.4 percent – the best in the country. During the 1990s, the median price shot up to $247,000 with homeowners receiving an average $1,000 appreciation.

Then, in 2000, the traditional model of real estate changed, according to the real estate expert. “The tech bubble burst, we had a recession, government then lowered interest rates, the mortgage industry opened up and instead of offering 26 options offered 200 options, all targeted towards enabling individuals and families to buy a home. Consumers became enamored with real estate and needed to own a home and even invest,” says Rodoni.

In the last six years, homes appreciated at an average of 11.1 percent a year, with homeowners receiving an average of $315,000 in appreciation.

Now the market is transitioning to normal conditions, and while it has slowed everywhere else, Rodoni doesn’t see a bubble in the San Francisco Bay Area because of its unique environment. She insists real estate in this area continues to be valuable.

“It’s not a question of when you get in,” says Rodoni. “The key is you have to get into real estate because it’s your path to building wealth.”

“Sellers need to get buyers out there, put their home at the right price, it’s their one time chance only and it’s deadly if they don’t price it right,” she says. She advises sellers to price their home five to seven percent below the market value, thus setting the base for their neighborhood.

“You want to be the competition in the forefront. Be flexible and willing to negotiate with the buyer,” she adds.

Buyers need to buy for wealth, she says. “Get in and qualify, get a safe loan that is bullet proof. Know that the sign says ‘for sale’ and not ‘on sale,’” Rodoni advises.

The real estate expert believes 2007 will be better than 2006 and “will depend on your focus, how you play this market.” 2008 should be decent; 2009-10, will start seeing more appreciation, but it is unlikely it will reach the double digits.

She tells both buyers and sellers: “Don’t be greedy. Don’t be worried about it (real estate). Get out there and be reassured that it’s an asset and it’s valuable especially here in the San Francisco region.”

The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.

The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.

Variations of this article have appeared in local area newspapers.

For further information, please contact Rose Meily at SILVAR Public Affairs, e-mail , or phone (408) 200-0109.

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