Bay Area Home Buying - A Bubble Period Experience

Ads marketing newly built homes in Alameda, CA were a mainstay in the San Francisco Chronicle in the early 1990’s. They highlighted the opportunity to own a home in a beautiful island setting just across from the City of San Francisco – and that too at an affordable price starting in the 200,000’s. Although at that time home buying was not even in our horizon, the message was appealing. Even in our dreams, we did not envision that, twelve years later, we would be engaged in a bidding war to be in possession of one such home at almost four times the price. But, that was exactly how things worked out.

2004 favored only the seller but as we were scoping homes after selling our first home for a handy profit in that very market, we did not know any better to be worried. Our plan was to go for a smaller home so that we will have a cash buffer in place from the sale of our first home. Having wised up on the school system, we focused on getting a home in Bay Farm Island, for the top two elementary schools in Alameda at the time were both in that island. Bay Farm Island has around 4000 or so homes with the vast majority built in the late 1980’s and early 1990’s. It is a beautiful island community in a serene setting complete with golf courses and artificial lakes - a true treasure as far as Bay Area home buying locations are concerned.


Single-family homes in Bay Farm were upwards of $600K while a limited number of older homes, condos and town-homes started a little lower. A view of either the artificial lakes or the bay commands a premium of at least $75K - that kind of premium is typical in the Bay Farm home buying scene. A1450 sq ft 2-bedroom single-level home listed for around $600K in the Cantamar subdivision (Ratto Road) pleased us both very much. Before we could get around to placing an offer, the house was gone for over $625K. Still upbeat, we checked out a couple of smaller condominiums and town-homes that were going for the high 400’s and low 500’s and realized those were not what we wanted.


The first house we gave an offer for was for a single-level home in the Pelican Bay sub-division (Justin Circle). We offered the asking price but the house went at just above asking with only two bids – there were no counter offers which in itself was suspicious but following up further on it was meaningless. We also looked at a few other homes briefly and in more than one instance we could sense the agent being bent on guiding us away from the property listed - one on Kevington Road and another on Orr Road. In another instance, the agent was forthcoming on mentioning an untoward incident (murder apparently) at the location - Killybegs. Both the Kevington and Orr properties sold at or near asking price in a matter of a week. By then, patience had worn thin and from the next week onwards we too participated in earnest in the bidding wars that were going on all around – we put in an offer at $10K over asking for a beautifully remodeled home in Avington Road and $20K over asking for a home on Miranda Court – the former sold for around $40K above while the latter went for around $55K above the listed price. The Avington house, listed by a lesser-known agent, had only two offers while the one on Miranda Court listed by the best selling agent in the area (Ringo Liu) entertained twelve. This kind of hectic wheeling-and-dealing was the order of the day during this bubble period in the Bay Area home buying scene.


By the third week, we were truly disillusioned and sought advice on where we erred. The consistent feedback was that ours was an “outside” agent – apparently, there exists certain camaraderie between the local agents that implicitly results in most of the business getting done locally. Our suspicions were further confirmed when we came to know that for both the Justin Circle and the Kevington Road homes, the same agent double-ended the deal. We have to admit that it did cross our minds as to whether to continue with our agent – on the one hand he is truly a nice guy and a family friend – but on the other, Bay Farm is unique and it would be hard for a novice agent to get a break. Our luck turned in the fourth week as we spotted a rundown house on Sheffield Road being listed by an outside agent from Oakland. This time, the listing agent was a family friend of the sellers but because she was also an “outside” agent, the property slipped under the radar of the local agents. The house got sold in a couple of weeks, but this time we were the lucky buyers – there were two offers, both at the asking price, but we prevailed as our down payment was slightly ahead. We spent around 100K over the next six years ultimately transforming the house to almost new condition. The best part about that house was the neighbors.

Almost six years later (early 2010), we chose Ringo Liu to be our seller’s agent when it was our turn to sell the house. We were in a time crunch and selling our home was the need of the hour as the crash of the housing bubble was being felt in our area as well – both short sales and foreclosure listings were mushrooming. Adding fuel to the cause was that ours was the third house on Sheffield to be listed as open. Ringo Liu proved he was indeed top brass as he managed to sell our house at asking price within a week in a buyer’s market. More than anything, we were impressed at how hands-on his entire team was. Overall, we exited with an 8% loss including closing costs and commissions, but that was understandable, considering prices had fallen 10-15% from the peak and that houses in general were staying in the market much longer.

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Last Updated: 03/2012.

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