Homeowners Selling at a Loss Now That The Housing Bubble Has Burst
San Francisco - A year and a half ago, Saverio Bellomo and his wife, Amy Robinson Bellomo, thought about selling their house. A real estate agent urged them to list it at $930,000. They decided to hold off for a while.
Big mistake.
Today, their two-story stucco house in American Canyon is on the market for $868,000. “Obviously, we’d love to sell high but we have to be realistic,” said Robinson Bellomo, who grew up in the East Bay and has lived in the house since it was built five years ago.
“The market isn’t what it was a year and a half ago. We felt that, even though the appraisal came in at $925,000, that price was too high. We wanted to make sure there was a good deal of interest - and listing it for less than the appraised price is also a point of interest for people.”
But getting would-be buyers in the door is the hardest part, given the current state of the mortgage market, eroding home prices and the historic seasonal sales slump. The Bellomos, like many home sellers in the region, are more than motivated. They’re resigned to losing money on their homes in exchange for selling.
“You’re not going to sell (in American Canyon) for $900,000 right now,” said ReMax Napa Valley Realtor David Barker. “The homes that are going to sell right now are well priced, in good condition with upgrades. The premium-priced homes are sitting because most of our houses here are subdivisions. If a house is listed too high, someone can go around the corner and find a house with the same floor plan for sale for a lot less.”
Barker is not the Bellomos’ agent. Lynne Lindahl of Coldwell Banker Brokers of the Valley has the listing. She said they arrived at the asking price after comparing the appraisal with comparable sales in the area.
American Canyon, located at the southernmost tip of Napa County, bills itself as “the gateway to Napa Valley.” But it’s also a distinctly new - and in some ways not very Napa - community. It became a city in 1992 and now has a population hovering around 15,000.
Designed to serve the needs of the ever-further-displaced home buyer, it’s a city of tract houses, where officials tout the arrival of a new Super Wal-Mart as a sign of the city’s growth. It’s also a city that has seen some of the biggest drops in home prices over the last few years.
According to real estate information firm DataQuick, only 14 homes sold in American Canyon in August and the median home price is down $69,000 from the median in August 2006 - a decrease of 10.31 percent.
But American Canyon also offers two things many Bay Area residents love - environmental preservation and more bang for your buck than you’d get in San Francisco.
A greenbelt consisting of preserved wetlands, the Napa River and the 500-acre Jack and Bernice Newell Wilderness Preserve surround most of the city. With the median home price in San Francisco still hovering at $822,000 in August, the Bellomos’ list price of $868,000 doesn’t seem so high.
The Bellomos’ house is sited on the edge of the wetlands. The large picture window on the second story overlooks acres of wetlands filled with egrets and other wildlife. Barker said his firm has put a value of $40,000 to $50,000 on the view but said he couldn’t value the home because he’s unfamiliar with it.
When the Bellomos bought their house on Wetlands Edge Drive in 2002, the market was so hot that they took time off from work to drive up from the Peninsula on a Friday morning. They nabbed one of the last houses in the development with a view of the wetlands. They paid $424,000. Because they had no children, the Bellomos bought the 3,300 square-foot, four-bedroom, 41/2-bath home for themselves, their cats Felicia and Felix, and for the many family members who visit often.
From the outside, the home is similar to many on the block: a large, nondescript house on a smallish lot. But inside, the house is large and stately. The Bellomos put considerable work and money into making it that way. They upgraded cabinets and added granite in the kitchen, placed an inlay in the foyer’s hardwood floor and added marble and granite slabs in the bathrooms.
Saverio Bellomo got his dream library-study with built-in cabinets and the couple added expensive Venetian plaster to many of the walls in the house. The same high-end cabinets and granite countertops used in the kitchen were installed in the laundry room. Every closet got a built-in closet organizer. New built-up baseboard and crown moulding was installed throughout the house.
The trouble is, upgrades for one family are renovations waiting to happen for another family, Barker said. For instance, the Napa Valley school district is a huge draw for many home buyers in American Canyon. But the Bellomos have converted two rooms to an office and a library, respectively - with built-in cabinets. For many potential buyers these would be kids’ bedrooms.
The Bellomos declined to say how much they paid to make the renovations but admitted that even if the house fetches full price they won’t break even.
“Upgrades are very difficult to value,” Barker said. “So much of what people do to their homes they won’t get a return on.”
For instance, Barker is listing a house that’s identical in layout to two other homes in its subdivision: more than 4,500 square feet, five bedrooms, three baths, 4 years old. In the house where he’s representing the seller, they’ve upgraded the carpets and have a huge walk in closet. The house has a view of the whole city. Still, Barker encouraged his clients to list their house for less than the other two houses in the subdivision - $620,000 instead of $625,000 or $630,000. They did that, he said, because they’re vying for so few buyers.
“If someone’s going to buy, we want them to buy our house,” he said. “What the upgrades do is they elevate you on the list for buyers.”
But then, the Bellomos didn’t do these upgrades with the intent to sell after five years. Instead, they were following Saverio Bellomo’s old-world ethic of buying a house and living in it forever.
“You keep the house in your family for generations,” he said. “You defend your territory regardless of jobs or crises or anything.”
But then Saverio Bellomo, a private pilot and an engineer, watched as the airline industry opportunities in the Bay Area declined after Sept. 11, 2001. A year and a half ago, he got a job offer out of the area and declined. In August, he got another offer in Albuquerque. It’s perfect for him. Reluctantly, they decided to sell.
They braced themselves for the financial loss. But they are also looking at it positively. “We’re trying to be Zen about it,” Robinson Bellomo said. “This is the market we have here. Hopefully, the market in Albuquerque will be the same and the real estate gods will be good to us, too. In the meantime, the home buyer is going to get an incredible value.”
As for whether they priced their home well enough to sell in this market, only time will tell. Robinson Bellomo looks hopefully at the weekly sales records for her city that show a home sold in American Canyon for $852,000 last week - not too far from their list price.
Owners face selling at a loss now that the housing bubble has burst