Too big to succeed?

Imagine taking a Saturday drive to San Francisco for dinner out with friends and crossing state lines in the process.  Picture a heated inter-state sports rivalry with teams from the neighboring state of Silicon Valley.  Try reciting "I pledge allegiance to the 55 United States of America," without cringing.  Those would be reality if the plan to plot California into six states goes through...and it just picked up a lot of steam.

The plan to split California into six autonomous states came one step closer to possibility this week, as the movement got the green light to start collecting signatures to put it to a vote, according to the California Secretary of State.  For that to happen, the bill’s initiator, Silicon Valley Venture Capitalist Tim Draper, needs to garner 807,000 signatures of registered voters.  He has until July 18^th to get those signatures, the deadline to get the six state plan on the November ballot.

So what’s behind the plan to divide the Golden State into 6 separate entities?

Draper, and proponents of the spilt, argue that California is far too large to govern effectively from one central point.  The most populous state in the United States by far with 38 million people, holds a cross section of people from every demographic imaginable.  Draper points to the different needs and issues of those people, and the unique challenges each region of California faces.  Breaking into six states would allow each new state legislature to prioritize the needs of those areas.  For instance, Southern California faces illegal immigration issues, while the Central Valley is concerned with water management and agriculture, while the folks in upper NorCal have been concerned with taxation without representation.

That would fix a lot of the current problems California’s facing, thinks Draper, in the state where “where you pay the most and get the least,” as he calls it, referencing the crumbling pillars of public education, infrastructure and the prison system.  "Vast parts of our state are poorly served by a representative government dominated by a large number of elected representatives from a small part of our state, both geographically and economically," the plan says.

The six states would be set like this:

•    South California: San Diego and Orange counties

•    West California: includes Los Angeles and Santa Barbara

•    Central California: includes Bakersfield, Fresno and Stockton

•    Silicon Valley: includes San Francisco and San Jose

•    North California: Sacramento area

•    Jefferson: Redding and Eureka areas

So Sacramento, the current seat of government, would be its own United State, spanning from somewhere near Vacaville or Fairfield all the way up to north of North Natomas and sprawling east through Placer County.  Just about everything we know about the State of California would change, too, from new state flags, capital cities (outside of Sacramento,) voting in10 more Senators to Congress, implications for Federal spending and policies, amending history books and school curriculums, possibly introducing new sports teams, roadway restructuring (and definitely more tolls!) and even adding 5 stars to our current American flag! 

“If the federal government approves the proposed creation of six new states,” says the summary from Secretary of State Debra Bowen’s office, “all tax collections and spending by the existing State of California would end, with its assets and liabilities divided among the new states.”

It sounds like a wild scenario, but just how realistic is it?  Not very.  Even if Draper gets the autographs necessary to put it on November’s ballot, it still would have to be approved by voters and once the nuts and bolts of that transition dawn on people, the chances of it going through are miniscule.  In fact, this isn’t the first time someone has pushed for a multi-state California.  In the past, there have been measures introduced to partition it into 2, 3, and even 4 states.

So what is Draper’s motivation?  It’s probably not money.  He’s a multi-millionaire many times over and founding partner of Draper Fisher Jurvetson, a venture capital firm in Menlo Park that cashed in on clients like Skype and Baidu, China’s largest search engine.  Politics?  Is it a thinly veiled power play to seat himself as the King of a new state?  Not at all, says Draper.  If the plan goes through he wouldn’t run for governor of the newly formed Silicon Valley, preferring to, “leave that up to Silicon Valley to go find somebody great,” he said. 

The only political dance he’s done to date was with the California Board of Education, for which he served.  Fixing the state’s broken education system is a passion of his, one that he’s sunk millions of his own dollars into.  He thinks the new six state system would help alleviate the problems in education, as well as other infrastructure issues that seem to be falling apart.  “Leaving California the way it is, the status quo, is a crime. It’s a crime to our children, it’s a crime to our children’s children. California has failed,” says Draper.

Instead, he believes six Cali’s would encourages regional cooperation but also economic competition, "which will lead to better and more responsive governance."  It’s unlikely Draper will even get far past the signature collection phase, if there, but at the very least he brings some needed attention to the current pitfalls of California that renders it “ungovernable,” in his opinion.

 

7 Reasons why wealthy Americans are buying real estate as fast as they can.

Coming out of one of the worst real estate crashes in the history of the United States, many people are still overly cautious about jumping into the housing market again.  However, as the market roars back and prices swell, there’s definitive evidence that real estate is still one of the best – if not the top – investment most people can make.  But don’t just take my word for it – let’s take a look at how the wealthiest Americans feel about investing in real estate – with their own money, not just lip service.  The simple truth is that the upper class are now snatching up real estate as fast as they can.  Whether it’s residential homes, commercial real estate, apartments, or shopping malls (but especially residential homes!) the rich seem intent on adding as many properties to their portfolios as possible.

In fact, a recent survey by New York’s top investment bank, Morgan Stanley (MS), revealed that U.S. millionaires see real estate as the top alternative-asset class to own in 2014.

Of investors with at least $1 million in assets, more than ¾, approximately 77% own real estate!
At least 33% of the millionaires who participated in the survey stated that they planned on buying even more real estate this year, the leading asset choice.

What was the second most popular choice to buy more of?  23% of those surveyed said they expected to invest in real estate investment trusts, as well.

In summary, Morgan Stanley determined that direct ownership of residential and commercial real estate was the No. 1 alternative investment choice for 2014.

I’d venture a guess that the wealthy get wealthy and stay wealthy for a reason, and that’s because they’re on the cutting edge of information, trends, and resources to help them make big money (and not lose money.)  Maybe it would be wise to follow their lead?  Here are 7 reasons why the wealthy are so eager to buy real estate this year:

1. Appreciation.
According to the S&P/Case-Shiller index of home values, prices in 20 markets are up an aggregate 24% since the 2012 low.  Additionally, U.S. commercial-property values rose 8 percent January 31, 2012, and have jumped 71 percent since hitting the post-recession bottom in 2009, reports Green Street Advisors.  That skyrocketing appreciation certainly attracts wealthy investors.

2. Low interest rates.
Analysts believe that mortgage and lending interest rates will stay stable or even declined over the next couple of years.  Despite media scares, rates are still super low and the Fed is doing a good job of easing off stimulus while focusing stability.  Rates have dropped almost every week in 2014, and even with room to swell a little they’re near record lows.  But in a couple years, higher rates will diminish the attractiveness of real estate.

3. Stocks are shaky.
The DOW is down and stocks are cool with wealth investors.  It’s not a bad market per se, but they consider the Bull dormant and expect stocks to get more expensive and displaying uncharacteristic vulnerability in 2014, opening the door for real estate investments.

4. Foreign investors are strengthening the real estate market.
A lot of foreign currencies are strong against the dollar and growing international economies are resulting in wealthy foreigners snatching up U.S. real estate.  That keeps demand high and prices healthy, therefore stimulating more appreciation.

5. The basics still apply.
So much has changed in our financial landscape but the fundamental strengths of real estate still apply.  Real estate in an up market yields fantastic leverage of limited funds to acquire the asset, a predictable stream of rental income, and input over picking and maintaining the right property.  BigSur Partners CEO, Ignacio Pakciarz is on record as stating that owning real estate is also attractive because better control and supervision over the investments.

6. Tax breaks are in play, again.
Some huge positive changes concerning the taxation of real estate are imminent.  A shuffling of the head of Senate Finance Committee is expected to signal reauthorization of the mortgage debt forgiveness law that allows financially stressed homeowners to escape federal taxation on the principal balances written off by lenders in connection with short sales, loan modifications and foreclosures; deductions for private and FHA mortgage insurance premiums; and write-offs for certain home energy-saving improvements.  That’s huge news for the tax-conscious wealthy.

7. Uncharacteristically low risk.
The one downside of real estate is that it’s an illiquid asset, posing significant risk, but if stocks are seen as risky then real estate is even more of a sure bet.  Wealthy investors are also opting more for simple ownership of quality residential real estate, abandoning big development, shopping centers (as retail sputters,) condo projects, fixer uppers, etc. because of the risk and complications they pose.  By simply taking fee simple title in their names (or entities) they focus on buying good cash flowing properties that produce income while they sit back and gain appreciation.

Our top 10 U.S. Olympic moments of all time.

Muhammad Ali lights the Olympic Torch.  Atlanta, 1996.

Seeing Ali return as the elder statesman of sports, his body slowed by Parkinson’s but his spirit beloved by all, was a crowning moment that embodied the best of the Olympics regardless of nationality, religion, or race.  36 years earlier, at the 1960 Olympics in Rome, it was a young precocious Cassius Clay who threw fists and verbal jabs on his way to a gold medal in boxing’s light heavyweight division.  Clay turned Ali certainly had a tumultuous history with the United States, as he was jailed for not fighting in the army and stripped of his heavyweight crown, and once tossed his original gold medal from Rome in the Ohio River after being refused service at a white-only restaurant.  But in 1996 is was Ali’s turn to be the international father of hope and healing as he lit the torch and kicked off the games. 

U.S. Basketball’s Dream Team brings home gold.  Barcelona, 1992.

Never before – and most likely, never again – will a greater group of athletes assemble on the same team as the 1992 U.S. Olympic hoop team.  The first year professionals were allowed to play, the roster was studded with stars; Magic Johnson, Michael Jordan, Larry Bird, Patrick Ewing, Charles Barkley, David Robinson, and others.  The initial concerns about subjugating egos was unfounded as the Dream Team plates together like a selfless well-oiled machine, smashing their way to a gold medal, and the record books with an average margin of victory of almost 44 points. 

FloJo becomes the fastest woman alive.  Seoul, 1988.

U.S. sprinter and track star Florence Griffith-Joyner took home three gold medals from the Olympics in S. Korea, the 100m, 200m, and 4x100m relay, earning her the moniker, “the fastest woman of all time.”  Her legacy was questioned after allegations of steroid use emerged but FloJo passed every single drug test. 

The ‘Miracle on Ice.’  Lake Placid, 1980.

Perhaps the greatest win for the United States in any sport at any time, a group of hockey misfits, castoffs, and amateurs that made up the U.S. team in 1980 went on to topple the mighty and unbeatable red war machine of the Soviet Union.  The Russian team had taken gold medals in almost every tournament since 1954 but somehow the scrappy Americans played their hearts out and achieved a miracle – a 4-3 win over the Soviet team.  Two day’s later the U.S. team beat Finland to capture the gold and inspire a generation of believers.

Women’s Soccer team wins Gold in overtime!  Athens, 2004

Any time you see the ‘United States’ and ‘gold’ mentioned in the same sentence as ‘soccer,’ you have to do a double take, but the improbability of the win by our women in 2004 led to one of the finest Olympic moments.  It all happened when Abby Wambach kicked in the winning goal against powerhouse Brazil in overtime to win the game- and the gold!

Jesse Owens takes on Hitler. Berlin, 1936.

The world was much different in 1936, as nationalist rumblings by a Nazi hatemonger named Adolf Hitler were building toward World War II.  The Chancellor of Germany at the time, Hitler was intent on proving to the world that the Aryan race was superior in every way – including athletically.  So when the Olympics took place in Munich, Germany in ’36 it was a perfect chance to highlight the dominance of his ‘master race’ theories.  However our own Jesse Owens, African-American sprinter, hometown hero, and model citizen of the highest magnitude, made sure that the Furor was personally embarrassed.  Owens had one of the most individually dazzling Olympics in history and came home with 4 gold medals in the 100m, 200m, 4.100m relay and long jump competitions, including the title of the world’s fastest man. 

Michael Phelps swims his way to the record books.  Beijing, 2008.

The boy-next-door turned Aquaman Phelps put on perhaps the greatest individual show in the Olympics by earning 8 gold medals in China.  He stood atop the podium with gold around his neck more than any other athlete in history after winning the 100m butterfly, 200m butterfly, 200m freestyle, 200m individual medley, 400m individual medley, 4x100 freestyle relay, 4x200m freestyle relay, and 4x 100m medley relay.  Phelps barely topped U.S. swimming great Mark Spitz’s record 7 gold medals at the Munich OIympics in 1972 and now is the all-time medal’s holder with an astounding 18 gold’s and 22 overall medals. 

Tommie Smith and John Carlos fists in the air.  Mexico City, 1968.

Smith and Carlos, U.S. track stars, had just won gold and bronze medals in the 200m race in ’68 when they took their places on the podium.  Dressed uniformly in black with one black glove on, they each thrust one fist in the air while the Star Spangled Banner was played in protest.  At the time, and through history, it’s been widely recognized as a salute for the Black Power movement but in fact Smith later revealed that it was a political statement to bring awareness to human rights, and both Smith, Carlos, and Austrian silver medalist winner, Peter Norman, were wearing matching human rights pins at the time. 

Greg Louganis hits his head on the diving board…but still wins gold.  Seoul, 1988.

Almost all of us have seen the now-famous photo of Louganis smashing the back of his head on the diving board while attempting a dive in that Olympics, but not everyone knows that he came back from that injury.  Bloodied but not discouraged, Louganis needed four emergency sutures and was suffering from a concussion when get got back up on the board and won two gold medals in two later events.

Rulond Gardner wrestles a legend - and wins.  Sydney, 2000.

With apologies to Carl Lewis, Marry Lou Retton, Eric Heiden, and Bruce Jenner, one of the top moments in U.S. Olympic history has almost all but been forgotten.  But the name Rulon Gardner stands tall in importance for our country.  Gardner, a lumpy farm boy with a big smile from Afton, Wyoming, went into the gold medal round of the Greco-Roman wrestling competition against an immovable force – Russian Aleksandr Karelin.  Karelin was an absolute beast, defeating hundreds of opponents up until then in a mind-blowing 13 year undefeated run in international wrestling.  Karelin hadn’t even given up a single POINT in over 6 years of matches!  But somehow, Gardener persevered and beat him for a gold medal, the only loss n Karelin’s career against 887 wins!

20 Tips to ease and enjoy your daily commute.

It’s a reoccurring nightmare – you’re stuck in bumper to bumper traffic during the 5pm rush hour commute, the road teeming with angry and frustrated motorists who cut each other off, try to squeeze ahead, and hurl expletives at each other.  You’ve been in the car 40 minutes already for a drive that should take you 15 any other time of the day, but it seems like the somber column only inches forward as the sky fades to night…

Unfortunately for millions of Americans this isn’t a nightmare you’ll wake up for, but a grim daily reality as they commute to work, a bad dream that plays out both ways.  A long, harrowing, and frustrating ride to work can be one of the most stressful and time wasting rituals of an otherwise great day.  Studies show that many motorists waste the equivalent of a whole week or more per year stranded in their cars in traffic.  But it doesn’t always have to be like that – there are ways to reduce your commute time or at least adapt to make great use of that time – and maybe even enjoy it!

Here are some facts about our collective slow-moving rush to and from work, and tips to help you wake up from the nightmare!

Just how much time do we spend stuck in traffic?

According to the Texas Transport Institute, the average American wastes 27 hours a year stuck in traffic.  That doesn’t mean their total commute time is 27 hours of course, but that’s how long we sit in traffic jams that don’t move.

What does it cost us?

At least $78 billion a year (data from the year 2005) are lost every year in wasted working hours and extra gas.  Americans had to buy an additional 2.9 billion dollars of gas because of traffic congestion at an additional cost of $710 a year.

Which cities are the worst for commuters?

Here is a list of the worst 10 for annual hours of delay (not total drive time) per commuter for U.S. metropolitan areas:

Washington D.C.:  67 hours

Los Angeles, Long Beach, Santa Ana:  61 hours

San Francisco, Oakland: 61 hours

New York, Newark:  59 hours

Boston:  53 hours

Houston:  52 hours

Atlanta:  51 hours

Chicago: 51 hours

Philadelphia:  48 hours

Seattle:  48 hours.

How bad are our highways?

31% of highways in the U.S. suffer serious traffic congestions.  Over the last 25 years, highway traffic has increased 131% and it’s expected to increase another 40% just by 2015!  Highways account for only 1.2% of our total roadways but include 50% of our trick traffic and 25% of all passenger traffic.

What are some solutions to ease traffic and long commutes?

Communications systems –

Digital message boards beside or on top of the highway alert motorists to accidents, drive times, upcoming road construction, slow downs, bad weather, and alternate routes, allowing drivers to make the necessary adjustments.

Ramp metering –

Ramp metering allows cars onto a highway based on alternating traffic lights.  It slows down the rate of traffic entering a highway but amazingly, that actually speeds up total flow and reduces accidents.  Cities who use ramp metering report a travel-delay reduction of 29.4 million hours annually and a significant decrease in traffic accidents.  However, it’s expensive and time consuming for cities to add traffic lights and the proper lane set up at every on ramp.

High Occupancy Vehicle Lanes-

HOVL’s, called car pool lanes by the rest of us normal people, offer a dedicated lane for cars that hold 2 or 3 people, allowing for faster passage and encouraging ride sharing.  There are also separate lanes or allowances for electric or hybrid vehicles.  According to the 2000 Census, nearly 81 percent of all commuting workers travel to work in a car, truck or van. Of that group, nearly 66 percent drove by themselves -- only 14.7 percent carpooled.

Adding lanes-

Traffic planners carefully study patterns of slow downs and bottlenecks and identify problem areas, allowing cities to add extra lanes or widen roads or highways in those spots.  Of course, the ensuing construction slows down traffic…

What are some methods for you to decrease your commute or make good use of the time?

1. Reduce breakdowns (that cause slowdowns and accidents) by keeping up maintenance on your car – tire pressure, functional lights, and brakes. 

2. There are plenty of smart phone apps for traffic information and commuting.

3. Ask your employer if you can adjust your working hours so they are off-peak for rush hour, like 7-3 pm.  They might even let you work 4 10 hour shifts and avoid the commute one day a week.

4, Listen to audio books and newspapers, news, and business periodicals while you drive.

5. Organize you day while you drive by using voice memo software (or a simple digital recorder) to go over your To Do list. 

6. Make a bunch of work calls (or call and say hi to your mom!) using a hands free device on your phone or in your car. 

7. Grab a friend and carpool!

8. Change into comfortable clothes before you leave work- the drive will be so much more relaxes if you’re in sweat pants and a t-shirt.

9. In order to avoid getting pulled over, studies show you should stay within 10 mph of the speed limit or with the flow of traffic and don’t weave in and out of traffic or make sudden movements. 

10. Be a good neighbor - let people in and definitely don’t block the box at intersections!

11. Get a toll pass system so you can fly right through toll ways without waiting in long lines.

12. Ask your employers if you can telecommute one or two days a week.

13. Listen to interesting podcasts while you drive.

14. Get an audio version of professional courses, college degree programs, or second language lessons so you can expand your mind – and you resume – as you drive.

15. Consider joining a gym near your work, not your home.  Every day at 5 pm when others are stressing in rush hour traffic you can be waiting it out on the treadmill and make the trip an hour later.

16. When the weather is good, bike to work.

17. Take the train if possible – you can take out your laptop and get your workday started or finished! 

18. Breath deeply – try to relax and think of your commute as scheduled down time for you to clear your mind and chill.

19. Gas up, get your coffee maker set on timer, etc. the night before so you won’t be rushed in the morning.

20. Rock out!  Build music playlists exactly the length of your commute, single along, and rotate them frequently.

10 Tips to stage your high-end listing.

Selling a high-end or luxury home is about so much more than a transaction, it’s a transference of lifestyle values, the marketing of an image of prosperity and taste as much as a roof and walls, and the presentation of your home should be treated accordingly.  Staging your home attracts buyers, creates bidding wars, differentiates your home from others for sale, and ultimately will put dollars in your pocket.  A recent study by the Real Estate Staging Association tracked 174 homes for sale in 2011.  Those that were staged sold in an average of 42 days, while those who were left unfurnished lingered on the market for 154 days!  We recommend enlisting the services of a staging specialist or designer, which we can help you find.  You may have to spend a little money to make money but if done correctly, the results always work in your favor. 

1. Clutter free.

The cardinal rule of staging your home to sell is to clear the space of as many of your personal effects and items as possible, leaving the area open and flowing when viewed.  Buyers who walk through will love this because they can instantly envision themselves living there and their own personal affects in the house.  Remove absolutely everything that isn’t essential to decorating the property or a highly personal nature (they don’t need to see framed photos of your family but they do need to see some artwork on the walls.) 

2. Paint in neutral colors.

One of the biggest mistakes sellers make is keeping bright or noticeable paint colors on the walls.  The aim is to keep everything as neutral as possible so no matter what the buyer’s tastes, they’ll feel at home.  Dark, brooding, colors or accent walls are a no-no, too.  Stick to an off white or light tan color and white moldings and you can’t go wrong.  Once you declutter and paint with neutral colors you’ll be amazed how much bigger and airy your home feels.

3. Don’t forget to stage outside.

Remember that people will drive onto your property, up the driveway, and walk to your front door first, so that’s when the first impression should start.  De-clutter the outside of your home, hire a professional landscaper to make everything look tip top, and consider a tasteful signature piece like outdoor sitting area, fountain, or other decoration.

 

4. Original artwork.

If you really want to convey the image that your high-end listing is unique and valuable, consider hanging original art as you stage.  Everyone’s seen prints by famous artists so decorating with those comes off as a little cheap and unsophisticated.  Instead, track down some original artwork that will add a dynamic visual detail and lead the buyer to take notice.  Your professional stager will probably have some great original artwork or you can contact nearby galleries and ask for a loan to help promote their work (the buyer might even want to buy it if they like it!)

5. Designs that tell stories.

When you walk into your favorite gourmet restaurant, you go to enjoy an experience, not just good food.  Same thing when you go to the nicest golf course or to a luxury hotel.  It’s the same thing with your listing; you want the buyer to have an experience as they walk through and the way you do that is by telling stories.  Incorporate local and historical items that have some history, antiques like old books, and other rare or interesting finds that are easy on the eyes but will spark conversation and contribute to the buyer’s perceived experience that your home is something special.

6. Mix it up. 

We’ve talked about your listing being neutral and free of clutter, but that doesn’t mean we want it institutional or lacking personality.  Now that we have the “canvas” ready, we’re going to bring in stimulating and diverse elements that will really pop and catch the buyer’s eye.  A well-orchestrated symphony of fabrics, curtains, finishes, area rugs, textures, pillows, candles, and flowers will turn your home into something special.   This is a good time to reassess your fixtures and lighting, too because it’s usually easy and not pricey to modernize, simplify, those elements.

7. Get it out of there.

To be clear, when we told you to declutter we didn’t mean to move everything from your house to your garage.  Buyers look for cues of quality as they’re walking through a listing – the little details that convey who you are or what the quality of the property.  One of the best ways to show how you live is to have the garage 100% clean and spotless.  I’m serious – boxes, bikes, skis, bins – it all needs to go and you should clean it exceedingly well.  People expect a dark, dusty, packed garage, so when they walk in and see it’s been as well treated as the rest of the property, that will make a statement.  This goes for all of your closets, too.  The best thing you can do is rent a storage unit and keep everything in there in boxes but DON’T fill up closets to the brim or pack your garage with the clutter.

8. Don’t match!

Good stagers and interior designers understand the elegance of utilizing cohesion without uniformity.  Rarely in a luxury home or high-end listing will you see furniture set that all matches.  Instead, you want elements - from the couch to the tables to the lamps – that complement each other but each have their own contribution to the je ne sais quoi, as the French say.

9. Culture sells.

One of the best ways to convey a feeling of class and quality in your home is to exhibit a few cultural or artistic items.  No one cares about your huge big screen TV, but having a baby grand piano, stand up bass, rare books, or telescope in your home shows an affinity for culture that is consistent with buyer’s perception of luxury. 

10.  Paint and plant.

If in doubt, or pressed for time or on a limited staging budget, the best thing you can do outside of decluttering is to focus on painting your interior walls a neutral color, your front door, (and shutters if you have them,) and plant colorful flowers, small trees, and soothing potted plants. 

***

I'f you'd like a complimentary analysis of your home's market value or some tips on staging before you list, feel free to contact the Alfano Group Real Estate.