In a market where updated, well-priced, move-in ready homes are few and far between, the opportunity to buy fixer uppers is considerable. Current mortgage outlets, namely the US government, are reticent to give out loans on homes that need some work, which creates an opportunity for all-cash investors to buy homes that need some upgrades, do the work and resell them to homeowners looking for a turnkey home. (click to enlarge images)

731 Stannage Ave in Albany appears to be just this sort
of opportunity. Located in Albany, a quiet suburb just
north of Berkeley with extremely good public schools,
this home is in need of a face lift. Just look at those carpets. Structurally, it appears to be sound, so repairs would be kept to cosmetic items: New counters, carpets/flooring, paint, bathroom and some landscaping.

With some TLC, this home could very very attractive.

But at just under $500,000, this is not an investment for the faint at heart. Is the risk worth the reward? Is 731 Stannage a DEAL OR NO DEAL?

Address: 731 Stannage Ave., Albany, CA 94706
(MLS Listing)
Status: ACTIVE
Bedrooms: 3; Bathrooms: 1
Living Space: 1,302 sq ft
Lot Size: 3,800
List Date: 8/13/2009
Original List Price: $499,000
Current List Price: $499,000
MLS no.:40424505

Real Estate Agent Comment: STYLISH OLDER HOME IN NEED OF SOME WORK, GREAT ALBANY LOCATION, SPACIOUS ROOMS, FIREPLACE IN
LIVING ROOM, FORMAL DINING, BASEMENT, TANDEM GARAGE, GOOD SIZED YARD TOO, TAKE A LOOK.

DEAL or NO DEAL?
Comment below and tell us what you think!

Every once in a while, we get one wrong – even the Cirios valuation team is human.

A few weeks ago, we identified 1305 Campus Dr. in the Berkeley Hills as a Deal, assigning a value of $780,000 to a home listed at $759,000. It’s not often that we value a home above it’s list price, especially in this market, but we felt this one would garner enough interest for some high bids.

As it turns out, this home was more of a deal than
even we thought! 1305 Campus sold for $848,500,
almost 20% ABOVE the list price.

Truly, a deal.

Cirios Verdict: (ALMOST) DEAL (Click here for the original Deal or No Deal post)

The subject is a small home in the Berkeley Hills on a large lot, a good portion of which is usable. Crystal Way is a not-through street located in the lower part of the Berkeley Hills, close to the UC Berkeley Campus and around a 10-minute drive to the North Berkeley BART. The home is one of the smallest in the area, and also one of the lowest priced.

The Berkeley Hills is a desirable part of Berkeley, with lots of old money, big homes, many of which have amazing views of the San Francisco Bay Area. In general there is not much for sale in this area, especially at this price point. In recent weeks however, more supply is coming onto the market. We expect this trend to continue, and home prices to weaken. Since the broader housing downturn began, this part of Berkeley has held up remarkably well.

The subject is a unique home in the Berkeley Hills in that it is small and priced below $500,000. The only truly comparable homes are located down the hill closer to campus and the BART, as there is virtually nothing in the Berkeley Hills that is similar to the subject. For this reason, we believe the subject should sell close to list, but we believe a buyer should be able to talk the seller down a bit.

Address: 30 Crystal Way, Berkeley, CA 94708
List Date: 6/30/2009
Current List Price: $499,000
Cirios Value: $499,000
List Price vs. Cirios Value: 5.0% over-listed

For a complete Cirios Valuation, click here for our CLEAR report, or on the image to the right.

Have a home you’d like Cirios to use for our next House of the Week?

The Berkeley Hills aren’t exactly know for affordable homes. That’s because there aren’t really any up there. But this week’s Deal or No Deal property, 30 Crystal Way, is just about as cheap as houses get to live in one of the most sought after neighborhoods in the entire Bay Area.
(click on images to enlarge)

The house isn’t huge, to be sure, but with an 8,000 square foot lot you can just spend your time barbecuing outside on the patio.

Of course, that’s if the property is in fact a deal.

Home prices in the Berkeley Hills have held up better than most other parts of the Bay Area, but as of late have begun to slide. This is partly due to the fact that distressed sales or otherwise forced sales have been few and far between. Most people that move to this area don’t leave unless they have to, so it makes sense that Price Discovery has been slow to come to this hillside community.

Nestled at the end of a cul-de-sac, and with monthly maintenance (mortgage, taxes, insurance and upkeep, assuming 20% down and market interest rates) of less than $3,000 this could just be a ticket to privacy and quietude not easy to find at this low of a price.

That all sounds great, but is this house a: DEAL or NO DEAL?

Address: 30 Crystal Way, Berkeley, CA (MLS Listing)
Status: ACTIVE
Bedrooms: 2; Bathrooms: 1
Living Space: 1,020 sq ft
Lot Size: 8,190 sq ft
List Date: 6/30/2009
Original List Price: $499,000
Current List Price: $499,000
MLS no.: 40417417

Real Estate Agent Comment: What a bargain! Fantastic Berkeley Hills mid-century hideaway. Large lot, bonus office/studio; refinished hardwood floors and much more! Secluded, yet close to Berkeley Rose Garden, Codornices Park, N. Shattuck & Solano Streets, AC Transit, BART.

DEAL or NO DEAL?
Comment below and tell us what you think!

Each month we examine a single zip code, identifying micro-trends within the area to try and figure out how close (or far) that market could be from a bottom.

This month we shine the Zip Code Spotlight on 94703, an area smack in the middle of storied Berkeley, CA. The area contains an eclectic mix (it is Berkeley after all) of houses, condos and apartments. For this month’s analysis, we’ll focus on the single family residences within the zip code.

Looking at the zip’s sales history, one can see a trend that sets it apart from many other areas in the East Bay. Since the peak of the market in mid-2006, prices for homes in this zip code have fallen by 15%. Normally, this would seem like a staggering drop, but a 15% decline is mild when you consider the East Bay as a whole has come down more than 40%.

The area’s relative stability is likely a product of several factors (affordability, proximity to San Francisco and UC Berkeley, etc). Perhaps the most important of these is the fact that during the recent housing boom, home prices did not run up as much as many of the surrounding areas.

The average sale price is up 95% since 2000 — which is significant — but a moderate rise compared to the East Bay as a whole, which saw gains of more than 130%.

This is only part of story, however, and doesn’t explain why prices in 94703 have just come down to 2004 levels, while overall East Bay prices have already returned to levels not seen since 2000.

So is 94703 primed for a bigger drop or has it weathered the storm?

Source: Cirios Real Estate, MLS data

Only time will tell, of course, but until then we can watch for a few telling indicators.

First and foremost in our minds is supply, which, as we explain in detail in this month’s By the Numbers, can be an important leading indicator for prices. Spikes in supply often lead to price declines, as buyers can be more patient and sellers become more desperate. The larger the spike, the larger the decline.

As can be seen in the graph below, supply in 94703 is certainly moving higher and sits at the upper bound of its range over the past dozen or so years. We are watching this level carefully, as further increases would likely foretell more severe price drops in the future.

If, on the other hand, buyers step in and pick up lower priced homes, supply may return to more historic norms, supporting prices at their current levels.