OMOVIMENTO

They’re coming to America / Never looking back again / They’re coming to America / Home, don’t it seem so far away / Oh, we’re travelling light today …

Like the song by Neil Diamond says, foreign real estate investors are coming to America. Today’s San Jose Merc front page article explains how foreign real estate investors, especially from China and India, see our Bay Area/Silicon Valley as a wonderful opportunity, while locally we still see it as a challenge.  Absentee buyer purchases accounted for 15% of sales in Santa Clara and San Mateo Counties in June.

Individual stories of the transactions can be read here. The article also points out how the web is increasingly being utilized as a tool, with online searches from foreign countries climbing for these following cities -  Los Altos Hills (+182%), San Jose (+86%), Palo Alto (+121%) and Atherton (+68%).

The Mercury business page also had a good article on big companies and their city affiliations  in Silicon Valley, something I have blogged about before. I touched on this previously  regarding Apple and the city of Cupertino. This article focuses on Netflix and Los Gatos.  I used to work next door to the very first Netflix office.  I drove by  it everyday, twice a day and  never bought any stock.  I could be writing this from a catamaran in the British Virgin Islands if I had done so – Uuuggghhhh.

Netting one of these companies is not only great for job creation and city finances, but also gives the city a nice kick in branding itself.

Face to Face with a Banking Asset Manager

Our best event of the year! Our CCIM Silicon Valley team has worked very hard to get you face to face with an asset manager(s) in commercial mortgage banking. For a few years now everyone has been wondering what is happening with distressed commercial mortgages and how may you and your clients participate. We went to get the answers for you by putting together an outstanding panel to enlighten us on what is happening in the commercial assets manager’s kitchen. Take advantage of our efforts and this powerful panel. I will see you on the 26th. See event details below.

H1B visa update and Apple’s new dream.

Here are a couple of articles that show the DNA that makes Silicon Valley tick. The Bay Area and Silicon Valley real estate market is a well diversified market that attracts global employees and home buyers. The same factors that influence the job market in this beautiful area, also influence the real estate market and that is why I feel positive about the near-term future of the valley. Back in November, I wrote the following on this blog regarding HIB visa’s, after attending the Silicon Valley International CEO forum featuring CEO’s Patrick Lo of NetGear, Sandra Beach Lin of Calisolar and Michael Splinter of Applied materials. 

“H-1B Visa: All the CEO’s agreed that the current system is broken. One of the issues used as an example is a foreign student coming to one of our top universities and getting a a degree in a highly demanding field. That student gets a job and a H1-B visa, but then has to wait for about 10 years to get a green card. This long wait creates uncertainty for the student (now employee), and they go back to their country of origin, taking with them the education and work experience in the US with them.”

This article from the USA today business section is a fascinating article  of an example of H1B workers taking their US education and their experience back to their home countries such as China and India and starting a business that has not only created tech jobs that could have been based and used in the US, but also created international competition. Kunal Bahl had to relocate back to India due to an expiring H1B visa and started the company SnapDeal that is not only creating 70 jobs a month, but also putting itself into direct competition with one of our own dynamic start-up’s - Groupon.

Work visa’s in early 2000 were capped at 195,000. The current cap is 65,000. I recall back in early 2000 when the H1B was at its peak, Silicon Valley was in full stride with dot.com and we were very busy writing loans and real estate contracts for these very well qualified buyers. Expanding the H1 visa  would not only provide new companies, new jobs but would also give our real estate market here in the Bay Area and the Silicon Valley a needed  boost.

This week’s excitement came from Steve Job’s presentation at the Cupertino city council for Apple’s new headquarters. (photos). The goal is for it to be the world’s greatest corporate facility. Today’s paper looks back at this dream that started  30 years ago with Steve Job’s thinking of San Jose’s Coyote Valley as the site for this goal. Many of you remember the Coyote Valley as  the place where Cisco was going to build it’s corporate multiplex.  Which of the next generation of Silicon Valley company’s will look to one up Apple’s real estate venture? Will San Jose’s Coyote Valley, once again,  be the site to get it done?

150 reasons why the Silicon Valley and San Francisco Real Estate Market will improve.

The real estate news today was the Wall Street Journal  reports  that values were down 3% for the first quarter. I am still positive about the real estate market and here’s my view on why I think there are good days ahead for our market.

While most folks have stated that the three most important factors in real estate is location, location, location and there is truth to that, I have always felt that three most important factors are jobs, jobs, jobs. While this feeling is stronger in the commercial real estate industry where jobs create office space, warehouses and all the buildings’ that service those new employees, like retail and medical buildings, I feel it is the strongest factor in residential as well. In my opinion location may determine value, but jobs determine volume. It does not matter where a residential property is located, jobs in that area will determine if the property will be occupied or sit there vacant and melancholy. 

This is why I am very upbeat about the Bay Area and the Silicon Valley real estate market. The SV150, an index used by the San Jose Mercury news (does anyone know if there is a stock index fund tied to it?), had a special report out  last week. This index is ranked on worldwide revenue (sales) for the last four quarters. The top six were dominated by the usual suspects Hewlett-Packard, Apple, Intel and Cisco, Oracle and Google, with Intel leap-fogging Cisco from last year. Here are some of the outstanding record numbers from the companies in the SV 150.

Revenue growth (highest in a decade) + 20.3%

Profit (highest ever) + 78.6%

Companies with more than 1 billion in sales 50

SV150 market value 1.55 trillion  +11.4%

Profit margin (highest ever)  + 15.6%

Employees 1,119,780  + 6.1%

117 of the 150 companies are profitable (78%)

 The List

 Keep in mind that these are only Silicon Valley public companies. We are not even counting or noting Facebook, Linkedin, Zynga and Twitter, all lining up for initial public offerings. How long before Facebook jumps into the Big Six on the index…. two, three years? Everyone knows that they are moving to Menlo Park, but does everyone know of the three extra buildings they want built at their new home to host their expected employee growth. While in the past we had seen some tech jobs going to Austin, Texas and Dell, it is now reversed with Dell now wanting to operate in Silicon Valley and dip into its talent with 300 new positions at their new facility in Silicon Valley.

If you agree with me that jobs is the most important factor in residential real estate, then you may also feel that our local real estate market is about to take off pretty rapidly.

 Keep us in mind when looking for financing for your homebuyers. We are very competitive in all the conventional products, but we also have niches that may make that difference in putting one more person or family into a new home.

 Loans to 4 million

Interest rate of .250 better with an automated payment. Amazing, for a limited time only.

Discount of .375% points on Purchase transactions.

Finance up to 10 properties for investors. Cash out on non owner properties

Jumbo product with fico scores as low as 660, ratios to 50%.

80/10/10 to 1.25 million purchase price.

Newest change this week, we now will do properties with up to 40 acres. Good news for the markets such as Napa and the Central Coast

Yin and Yang

How to have a good day

How to have a bad day

Will Relocate for Work

A recent USA Today article must have known how I was going to spend my day.  A good friend of mine, a top real estate company’s relocation director, and I attended the much-to-offer 19th Annual BAPRM Mobility Conference hosted by the Bay Area Professionals in Relocation Management. The relocation industry has faced the same economic challenges as most of the real estate industry has the last few years. Being what it is, I knew that the current job market had negatively influenced corporate relocation but I was still amazed at the figures. The USA Today article mentioned the following eye-opening statistics.

“Sixty-nine percent of workers who turned down a relocation package last year did so because of housing and mortgage concerns, Atlas World Group’s latest relocation survey found. That’s down from 77% in 2009 but well above the 2006 figure of 30%.”

“Economist Marisa DiNatale, a director at Moody’s Analytics, says relocations in 2009 fell to their lowest levels since the 1950s, and last year’s level was likely low as well.”

While Peggy Smith of Worldwide ERC opened the conference by mentioning the article, the good news is that she also stated that her recent conversations with the relocation community gave her the feeling that 2011′s year to date numbers may have 5% to 10% higher volume than last year.

The recent unemployment rate dropping to 8.8% must surely be a good sign that the relocation volume numbers should continue to improve through the end of 2011 and hopefully bring about a substantial rebound in 2012.

The conference included some outstanding sessions. I thoroughly enjoyed the following:

Eric Halverson of Ebay Relocation discussing how they use trusted partnerships to leverage their small relocation  group. His ten commandments for a better relationship between client and supplier was down to earth and simple, yet powerful. Those concepts could and should be carried over into any business relationship.

Alan Cherry, Senior Director of Human Resources of Tesla, talked about Corporate Relocation for a start-up. (Even though Tesla has gone through their IPO, they still have a start-up mentality.) While Tesla is not hiring in huge numbers, they have a global mindset when looking for employee talent. They hire auto design engineers from Germany and are also active in France and South Africa. Geography is not a hinderance in their search for top talent.

There were discussions that covered everything from complex immigration and tax challenges, all the way down to the challenge of irritant bed bugs in corporate housing.

It was an educational day for me learning how all the pieces and players from the relocation industry come together when moving corporate employees and their families around the globe. I plan to be at the next conference, same time next year.

Silicon Valley buzzing on mystery buyer of $75,000,000 residence.

Today, while I was sitting at Printers Inc Café, having a sandwich and reading about the improbable teams in this years Final Four, I heard the following conversation.

Two techies sitting next to me were talking about the probable Facebook IPO. They were talking about all the new potential young millionaires and how the  high-end Silicon Valley real estate market would take off into orbit again. Maybe we have already had our first clue that this is about to happen.

 Last week there was a lot of buzz in the local fishwrap’s about Silicon Valley’s “mystery buyer. The TechCrunch blog usually has the scoop on the newest product, ideas, or new start-up in Silicon Valley. Various local media sources were quoting TechCrunch on the possible identity of the mysterious buyer that paid 75 million US for a $25,500 square foot mansion. TechCrunch quoted “multiple sources” saying the new buyer was this months Forbes magazines featured cover and article, Yuri Milner. I saw Forbes confirming today, that Mr. Milner is the buyer, but won’t be moving to America. The interesting part of this story for me is the rumor that the assets that were used for the purchase a combination of cash and stock.

Mr. Milner and his company Digital Sky have been very active in the pre-IPO market, buying up shares in Facebook, Groupon and Zynga amongst others. Disruptive is a magic word in Silicon Valley, and Mr. Milner is quickly becoming a disruptive and powerful force to contend with in the VC world. Buying a $75 million house, means that he is planning on being here in the Valley for awhile.

 Even as we all get ready for Skype, LinkedIn, Facebook and Twitter to go public, the buzz is already moving on to Palo Alto’s newest startup- Bill Nguyen’s Color.  

With Warren Buffet this week pointing out that the pre-IPO market is a little bit frothy, with folks wondering if this is dotcom all over again. We are already hearing the words “this time it’s different”. Mentioning IPO’s, $75 million residential purchases in the same sentence, makes you feel that dotcom 2.0 may be around the corner. If so, the winners will be the ones that get in early, but even more importantly, exit early as well

Is this the best time ever to buy a home in the US?

It was a busy week in the news this week, in regards to where our real estate market may be headed with Pimco and Bill Gross  taking the spotlight. The Wall Street Journal on Monday had this article  on whether 2011 is the bottom of the housing crash. With interest rates still among all-time lows, purchase prices dramatically down, I feel they may be right.  Moody’s Analytics makes the point that this is the best affordability ratio they have seen in decades.

Could we being looking back at the next three months as being the opportune time of  buying a home or residential real estate investment?  There are a couple of factors regarding interest rates coming down the road that may answer this question. The short-term factor is what will happen with interest rates when QE2 comes to an end in June. The Fed feels that it can abruptly end their purchasing of Treasury’s versus slowly weaning themselves off. They point back to the ending  of QE1, to show that it was not a volatile factor on the bond market. Mr. Gross takes the other side of this opinion, which is covered in his investor outlook newsletter, where he asks who will replace the feds buying and at what yield. 

The long-term factor that Mr. Gross also weighed in on this week is what will happen if and when the Fannie Mae and Freddie Mac government guarantee is no longer backing mortgages. I was shocked to hear that with no guarantee tied to these, his expected yield to compensate for the risk of no  government guarantee would be about 3 points. That was eye-opening, even realizing that Mr. Gross would have a bias to keeping the guarantee. Everyone has buzzed about what would happen to rates if and when this event with Fannie and Freddie happens, but that is the first time I have seen someone quantify it.

Folks buying homes and locking in rates now may be smiling  broadly in a few years.  At Bank of the West/BNP Paribas, we are doing our best to help the upturn by running a purchase transaction promotion, where we are discounting the fee on the loan by .375 points.

You know that feeling when you are opening a bottle of wine…

and the cork breaks,  falling back  into the bottle.

That feeling is how Portugal and my national pride have been feeling the last 6 months. It started in the World Cup, when Portugal fell short of playing the way we see the Selecao playing in our dreams. Then we became part of the European bailout acronym for Portugal, Ireland, Greece and Spain. Those Wall Street Investment Bankers, who came up with the acronym, have such a clever way of making friends all over the world. We then tried to team up with Spain, who has won just about every major sporting event in the last year, in bidding to host the 2018 World Cup. We did not come even close to winning, the bid   eventually going to Russia.  Last week , we had to have friends buy our bonds at an acceptable price’s to avoid having to receive a bailout ….for now.  The Economist predicted Portugal’s GDP in 2011 to be MINUS 1.

I then open up the Wall Street Journal today and see the following full page article from Lettie Teague.

With us being being beaten up the last six months in the public eye and maybe also because a lot of what Ms. Teague says, I know to be the truth. Reading the article, I felt like I was watching the broken cork falling back into the wine.  (I know, I know, I see the irony, cork is one our strongest exports).

I was dismayed how she described Portugal. It reminded me of that episode on Seinfeld, when George Constanza had the idea to make a show about  nothing. ” Portugal is mostly identity-less in the world” states Ms. Teague.

No mention of our largest, most beautiful neighbor – the Atlantic, our explorers, our sunshine or the hardworking, humble people of Portugal. There is this footballer, Christiano Ronaldo, that a few people are familiar with. Yes , the Fado is melancholy, but it is ours.

Before that sting had worn off ,  Ms Teague stated our unknown cuisine is basically one dish – salted cod (bacalao). That is like saying American cuisine is about the hot dog and French cuisine revolves around the crepe. I  enjoy all of the above dishes by the way, as you can tell by my ever increasing pant size. We then had my Portuguese brother, Mr. Paredes, state that the Barca Velha is “over-rated”. Amazing!!  That is the point where the my Portuguese blood reached 213 degrees Fahrenheit.

After the article, I went to buy some new soccer boots, put on my Luis Figo jersey and went to kick the ball around. I came home and opened a bottle of Valtorto, from Douro. I had some bread and cheese from St. George, Azores, all while listening to Mariza and Dulce Pontes  put poetry to music. I feel  better.

Even though it hurt Lettie, I thank you for your research, your attention, your honesty in showing us where we still need to go. If we ever meet, I would be happy to buy you a …….beer.

As the world tuned in, only One was Spectacular.

El Clasico  - It has taken week to get over the shock and disappointment. If the result had been reversed, I would have written this blog within seconds of it happening. On Monday, the global event was Real Madrid versus Barcelona at the Nou Camp. Millions of football fans have been waiting six months for this match. I have been following football all my life, and I can not remember so much talent in players and coaching on one field, not even in the best World Cup finals. Not only did you have two amazing teams, but possibly the world’s two best players – Lionel Messi and Christiano Ronaldo matching up. Eminem sets up the duel. You also had Pep Guardiola, who has  Barca playing the most beautiful football ever witnessed versus Jose Mourinho, ‘the Special One’, who wins championship trophy’s wherever he go’s.  I went over to the Britannia Arms to watch the game, wearing my Portugal jersey in support of Mourinho, Pepe, Carvalho and Ronaldo. It was mostly a Barcelona crowd, who were going delirious over the 5-0 spanking on Madrid. I  just sat there quietly, not believing my eyes.  Barca truly were out of this world. Ronaldo who started the game strongly faded away as Messi proved he is the best player in the world on this day. (It has just been announced that Portugal will play Argentina in London in February, another match-up of these two dynamic players).  I read a report that Barca completed over 300 passes in this match. Truly amazing and a football clinic if there ever was one. I was feeling bad for Madrid and at the same time mesmerized by the beautiful football of Barcelona.

Now we wait until April, when Barcelona visits the Bernebeu, where Madrid have a chance to reclaim their pride.Mourinho’s nine years streak  of  home unbeaten  matches will be surely challenged, unless Mourinho and the boys can find a solution. I also have a feeling that these two teams are going to meet again in the very late stages of the Champions league. With all the current global political and economic challenges, the football fans of the  world can at least look forward to joy of the next chapter’s in these titanic clashes, where the worlds best footballers on the planet show up to play in El Clasico.