"We had a real surprise when it came to pricing. Sticker shock. This is one of the most expensive places to live in the U.S.," Dian Evans said.
The Evanses lived in Temecula for 18 months, before Rob's job took them to the Netherlands. After five years living abroad the family was relocated to the East Bay. Dian said her husband spoke with colleagues and all signs pointed them to Danville.
"The schools," she said. "We heard about how great the school system was in Danville and decided to come here."
The prevailing attitude that Danville is a destination point for those coming to the East Bay is one reason why housing here has begun its slow recovery from its three-year tailspin.
"In our particular area we have superior schools. Outside of private education you need to come to one of these locations (Danville/Alamo/Lafayette) to get your kids into superior schools," said ReMax Realtor Joe Combs. "This is a great area to live and even with a shaky economy people are still going to come here."
Combs and other Realtors, though, are the first to admit that the situation has changed substantially since 2005, and it has transitioned to a buyer's market.
Three years ago, Contra Costa County was in the midst of a housing boom. Homes would be put on the market Thursday, Realtors would spend the day touring the latest listings and then report back to their clients. By Friday, multiple offers, usually over asking price, would be placed.
Inventory at nearly all housing levels was down and any new listing was snapped up. Purchases were made not just by families seeking a new home, but also by real estate speculators taking advantage of available loans to buy a house, wait for it to appreciate in the boom economy, and then turn around and sell it for a profit.
However, just as the seasons change, so did the marketplace. And the housing market nationwide bottomed out on a wave of foreclosures and mortgage failures. Home prices began to fall and have stayed in a steady decline ever since. Combs said that locally these setbacks are largely due to the downturn in the economy and the mortgage crisis but are exacerbated due to an exodus of baby boomers.
"They can sell their house in Alamo and retire in any other part of the country and live better than they have at any other time in their lives." He added, "We're expecting that to be a growing trend that will dampen our property values over the next few years depending on the economy."
Countrywide Bank Senior Loan Consultant Jim Black said a number of factors have impacted the slowdown in the housing industry, but he said they are starting to see movement in certain segments of the market.
"This is a good time to buy," he said. "Not if you are a speculator, but if you are a consumer who is looking to own for the long term."
Black said that as a short term investment, home buying is not going to be a solid plan. But for people who see themselves staying in their home for five to eight years, now is the time to either purchase or refinance. "The best potential to buy is between $417,000 and $1 million, where the guidelines are opening up again."
The recent failure of Washington Mutual and the mergers reshaping the landscape of the banking industry have left consumers uncertain about the possibility of getting mortgages. On the contrary, Black said he thinks the recent changes may have a beneficial effect.
"For the next three to six months I think we're going to see restrictions of access to credit but in the long run it will allow for more consistent choices for the consumer," he said.
The people most likely to benefit from the changes will be those who apply for full documentation loans. "We'll continue to see an advantage for people who do principal and interest payments and qualify with full documentation as opposed to interest-only minimum payments and reduced documentation loan programs," Black said.
Both Combs and Black agree that the key to what is happening in Washington with discussions of the Wall Street bailout plan is that it will restore consumer confidence.
"Anything the government does to create a higher sense of confidence will be good for our market," Combs said.
Black echoed those sentiments. "Once these (bailout programs) are online we'll see conditions start to be healthy again," he said. "Consumer confidence will drive more money into the financial markets and our local economy. This will create momentum in spending and consumption, which will create greater revenue, more jobs and more income to help pull the economy out of uncertainty."
Area Realtors say they are feeling the market begin to turn.
"There are some bright lights out there in the marketplace," explained Tom Hart of Empire Realty. "We're seeing a higher volume of pending sales and closed sales in the last 30 days and a decrease in the amount of available homes for sale in some price ranges."
Hart said homebuyers seem to be gravitating toward the median price ranges, from $800,000 to $1.3 million.
Statistics from CalREsource show that home sales in Danville for September were estimated at 55, with a median price of $880,000. That is down slightly from August, which had 64 sales, but far above the low point for the year in January with only 33 sales.
Median prices of the homes sold this year have fluctuated on a month-to-month basis but essentially stayed between $800,000 and $1.1 million. Similar figures for Alamo have showed a median price range of $1.1 million to $1.4 million. Sales in Alamo have also seen some flux with January as the low point with four sales and April and July tied for most sales with 16.
Realtor Ginny Mees said houses are selling but not at the prices they were even a year ago. Mees and her husband Paul are part of Harper-Mees and Associates with Keller Williams realty.
Mees said that while homes are selling, price points have taken a step back. "We're back to 2004 pricing. If someone bought their house in the last four years they'll have some trouble making any money on the sale. If they've been in there longer they can price it competitively without taking a loss."
Having also recently sold her own home in Danville, Mees had advice on the best way to proceed for owners needing to sell. "You need to make sure your house shows well. That can be staging it so when people walk through, it looks its best. Also you want to make sure you list it well."
Listing it well means being aware of what other homes in the neighborhood are going for and pricing your house accordingly.
Mees said they had some difficulty in the early going of selling their home. "We listed in November of 2007. That was when the mortgage crisis started to rear its ugly head. We priced based on a comp (comparison property) that had closed in August. We thought it was close to the mark but we had to readjust our house price three times before we got the 'hot zone.' Then we got three offers in a week."
While there is movement in the housing arena, it is expected to still be some time before things normalize. "California real estate is typically a boom or bust venture," said Tom Hart. "Demographics across the state say demand will be higher than the supply over the next few decades. It wouldn't surprise me if the pendulum swings back to high demand/low supply."
Predictions vary as to when prices might start to go up again. Jim Black said it could take the market two years to level out, but as much as five or more before we start to see a robust market again.
Black's advice for the short term is if you don't need to sell a house, to wait out the current turbulence in the market. If you are buying for a long term investment, with the condition of mortgages and refinancing, now is the time to move.