Click HERE for the results of this Deal or No Deal.

Nestled in the heart of Ignacio Valley, Walnut Creek is the heart of the Contra Costa County economy. During the dotcom boom, tech companies of all stripes opened offices downtown, as the skyline grew and housing developments began to dot the hillsides. (click on images to enlarge)

During the housing boom, surrounding towns like Antioch,
Brentwood and San Ramon saw rapid development as
homebuilders threw up houses where farms and rolling hills
once stood. Traffic, along with the local economy, grew, and
Walnut Creek gained mightily as its neighboring towns overflowed.

Housing prices in Walnut Creek shot up during the boom, like they did everywhere else, but the town’s relatively strong economy caused values to hold up relatively well. Median prices peaked at just north of $900,000 as recently as January 2008, but have since tumbled to just over
$600,000.

630 Sitka is a 3 bedroom, 2 bathroom house with 1,602
square feet on an nice sized lot. The property has a nice
yard and some updates, but there certainly is room for
improvement. The only question (of course) is whether
it’s a: DEAL or NO DEAL?

Address: 630 Sitka Dr., Walnut Creek, CA 94598 (MLS Listing)
Status: ACTIVE
Bedrooms: 3; Bathrooms: 2
Living Space: 1,602 sq ft
Lot Size: 8,880 sq ft
List Date: 6/19/2009
Original List Price: $669,950
Current List Price: $649,950
MLS no.: 40415690

Real Estate Agent Comment: Like a smile is to happiness, this home’s perfect blend of structure and environment creates a warm, comfortable place to relax and enjoy with your family & friends. You’ll appreciate how this home has been tastefully updated throughout and how the abundance of natural light brings this home to life

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

No, we’re not talking about the upper class neighborhood in Santa Monica. We are talking about a city 52 miles northeast of San Francisco, a farming town that epitomized the housing boom and bust. Of late, sales activity has leapt in Brentwood, almost exclusively due to the prevalence of the FHA loan program. (NOTE: in the days it took us to produce this edition of Cirios Trends, this home went under contract).

Neighborhood Overview: Brentwood, CA had a population of 7,600 in 1990, when its economy was based almost exclusively on agriculture. Many farmers discovered a new source of income in the mid-90s: Selling their land to homebuilders to create large subdivisions. Brentwood’s population ballooned to over 50,000 in 2008, fueled largely by the white hot housing market. As prices fell back to levels that are within FHA loan limits (typically around $417,000 for this type of community), buyers returned to the market in droves. The FHA requires down payments as low as 3%, a credit score not much higher than 600, a stable job and a house that’s in reasonably good condition. Sales in Brentwood spiked more than 200% from last year’s levels and supply is way down. The question we keep asking: Is this trend sustainable, or is it driven by loan programs that don’t require buyers to put down a substantial down payment (sound familiar?)? Only time will tell.

2640 Torrey Pines Dr, Brentwood, CA 94513

Original List Price: $384,000
List Date: 4/22/2009
Current List Price: $384,000
Previous Sale: $529,000
Previous Sale Date: 2/11/2004
Estimated Down Payment: $11,520*
Estimated Monthly Payment: $2,479.55*
Bedrooms: 4; Bathrooms: 3
Liv. Area: 2,951 sqft; Lot Size: 10,000 sqft

Positives:
+ Near a golf course
+ Interior condition is very good with high end appliances
+ Located on a very quiet street

Negatives:
- Backyard and side yard are in need of maintenance
- Corner lot, yards poorly laid out
- No golf course view

Cirios Valuation Approach:

Step 1: Location

First, we review the subject’s location on Google Earth to see if there are any negative obsolescences. The major detractor is that despite the large lot, the yard wraps around the house creating 3 small yards, rather than one large one.

Second, we look for positive factors: Based on examining Google Earth and likely traffic patterns, the road does not appear to be heavily traveled. Since Torrey Pines Dr. starts and ends on St. Andrews Dr., there is no reason for cars to go down this street unless their final destination is a home on the street. There is a good chance the street is safe for children to play in.

Step 2: Data Analysis

% of Zip Distressed: 10.2% (Very High)
% of Zip For Sale: 1.8% (High)
% of Zip Sold Over Last 3 Months (year-over-year): +39.6%
Elementary School API: 796 (above average)
AHA (Affordable Home Amount): $482,451

The number of distressed properties in Brentwood remains very high relative to the listed homes, which leads us to believe there is a significant amount of inventory due to flood the market in coming months. (See this month’s Doing Your Real Estate Homework: RealtyTrac, for more on this subject). We fear the amount of qualified and willing buyers in this area is starting to diminish, based on sales activity that is already beginning to slow. However, the affordability number is encouraging and we find the subject to be a very desirable home for the area. The distressed properties coming on the market may not negatively affect its sale price for a few months.

Step 3: Comparable Properties

Please visit www.ciriosre.com and click on “Market Commentary” for our CLEAR valuation with a full list of comparable listings and sales.

Step 4: Value Analysis

As noted above, the subject went under contract from the time we performed our initial analysis to the time Cirios Trends went to print. There is another home under contract nearby, 2771 La Costa which was listed at $349,000 with similar characteristics. The listing does not contain interior photos, which typically indicates a home that is less than ideal on the interior. Based on the subject’s superiority to this comparable, the sale price for 2640 Torrey Pines Dr. should be at or close to the list price.

Cirios Value: $384,000
Over-Listed Amount: Well-listed.

Brentwood, as we mentioned, was a poster child for California’s real estate boom and bust. A rural community turned boom town when homebuilders and speculators descended on its quiet shores. Ok, not shores so much as fields, but you get the idea.

552 Sassafrass is a gargantuan home, almost 5,000 square feet on a single story. A year ago, when it first went on the market at over $1 million, it was staged, well-maintained and in good condition. No buyers showed up and the house has since gone into disrepair and seen its asking price chopped in half. Now, with garbage in the back yard and empty halls, it will take an imaginative buyer to step up and buy this home.

Comparables were tough to find since this is a unique home, but some large new homes both on the market and recently sold can be found on the Cirios CLEAR report — click here (or on the image below).

Address: 552 Sassafrass, Brentwood, CA 94513

List Date: 12/26/07
List Price: $519,900
Cirios Value: $485,000
List Price vs. Cirios Value: 6.7% over-listed

The challenge for the seller is to find a buyer who would choose this home over the numerous other large, new, well-maintained and cheaper homes on the market. It’s uniqueness, however, does have value and for the buyer wanting a different home from his or her neighbors with a huge yard could pick up a modern-day Hacienda on the “cheap.”

Comments? Would you pay half a million dollars for this home?

For this week’s House of the Week, Cirios takes you on a ride to the formerly pastoral outskirts of Contra Costa County, an hour-long jaunt east from San Francisco. Brentwood, once a quiet farming town, became a poster child for the housing market’s boom and bust. Builders threw up development after development, buyers paying more and more with cheaper and cheaper loans.

Prices have fallen back to earth, but after more than a 50% decline in average sales prices, buyers are coming back into the market. Property values keep falling, but sales have been booming: In the past three months transactions are up over 300% from 12-months ago.

Address: 552 Sassafras Dr, Brentwood, CA 94513
Status: LISTED
Bedrooms: 4; Bathrooms: 4.5
Living Space: 4,678 square feet (yes, it’s that huge)
Lot Size: 21,911 square feet (0.5 acres)
List Date: 12/26/07 (421 days on market)
Original List Price: $1,200,900
Current List Price: $519,900
Elementary School API: 841 (High)
Zip Code Sales Last 3 Months (year-over-year): 331%
% Homes in Foreclosure in Zip: 9.3% (High)
% Housing Inventory for Sale in Zip: 2.6% (High)

Real Estate Agent Comment: Don’t miss out on a great opportunity to own a large home on an enormous huge lot! 4 bedrooms each with own bath! Large office with fireplace! Bonus/game room with fireplace! Large kitchen with granite counters! Great home to entertain!

(For all you aspiring agents out there, notice the perfect sentence to exclamation mark ratio of 1:1. Amazing work.)

WHAT WILL THIS HOME SELL FOR?
Post a comment below to guess!

Need more information? Please post a comment and we will get back to you.

The S&P/Case-Shiller home price index is out today, showing a continuation of the downtrend in property values. Data from August — two full months before the financial crisis spun out of control — shows weakness across the country:

• Prices fell in August for the 25th consecutive month
• Prices in 10 major markets plunged a record 17.7% year over year
• The biggest declines in August were seen in San Francisco (-3.5%), Phoenix (-2.9%) and Las Vegas (-2.4%)
• The biggest declines year over year were seen in Phoenix (-30.7%), Las Vegas (-30.6%) and Miami (-28.1%)
• No metro area showed a price gain in the last 12 months.
• The best performing metro areas in the last 12 months were Dallas (-2.7%), Charlotte (-2.8%) and Boston (-4.7%).

Data continues to show that home prices are not approaching a bottom. Also, since contracts signed in the past month for home sales will not show up in the data until early next year (1-2 months escrow, 2 months lag in reporting), it’s pretty safe to assume data will be bleak for the foreseeable future. Calls for stabilization, especially after yesterday’s “better than expected” new home sales figures are premature.

The continued drop in home prices is further evidence that when considering buying a home in this market, one must be prepared to live there for at least five years. Trying to pick the bottom is a dicey proposition for everyone but the most savvy, well-capitalized investiors.

Most anyone who has bought a home in the past few months (or even years) has likely lost money on his or her investment. Add in the effect of leverage, and losses will be quite severe if homeowners are forced to sell.

It’s important to understand that the Case-Shiller index is not released by Realtors or Homebuilders, spinning data to try and persuade people it’s time to buy, or that Congress needs to increase handouts to prospective buyers. The data is simply produced to evidence the prevailing trends, in whichever direction they may be headed.

Finally, keep in mind that data from the “San Francisco” metro area, for example, includes data from the entire Bay Area. This means Oakland, Brentwood, Vallejo and other hard-hit cities are lumped together with Palo Alto, Hillsborough and other cities that have held up rather well. Attempts to make generalizations about homeowners in a particular area based on this data is misguided at best.