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Inside this issue:

Happy Holidays

Write Down Your Goals

Comic

Who Is Catton Proper-ties?

Home Values Drop -Price per Foot

Property Taxes

Current NeighborhoodStatistics

Client Testimonial -Mark & Julie Galbraith

Earthquake Insurance –The Value Proposition

Money Saving Tip

December 1, 2007Volume 2, Issue 4

Quarterly Review

Nicholas French, Broker Associate, CRS

I wanted to take this opportunity to thank all of my clients, family and friends for being such a positive and inspiring part of my life. The holidays are typically the time when individuals re-flect on the previous year, experiences and ways to improve the coming twelve months. I spenda good deal of time reflecting while running in the evening focusing on how I can improve my-self in all aspects of my life including business and health. I must admit that I haven’t run lately;I guess the cold weather is enough of a deterrent, but that hasn’t stopped me from reflecting. Itry to show my appreciation through my actions each day and recognize this as another opportu-nity to share my gratitude.You help me grow both personally and professionally through your friendship, mentorship, andof course your referrals. Thank you for trusting me with your family and friends. I am lookingforward to the new year with all the challenges and experiences. I wish your family my very best for wonderful year of happiness and good health.

Happy Holidays

Nicholas French

Broker Associate, CRS

4906 El Camino Real #2Los Altos, CA 94022650 773 8000 (cell)650 961 2338 (office)650 961 5238 (fax)nfrench@cattonproperties.com

Write Down Your Goals

We all know that the new year brings dreams of resolutions and goals that typically last a matter of months. Most of you know that I am religious at writing down goals. Every year I consider my short, mid and long term goals, enter them into my blackberry and look at them oftenthroughout the year to check progress. I have found this process to be a very effective way atreaching my goals. A few tips on goal writing: 1) set realistic goals, 2) write them down, 2) shortterm goals (3-6 months) are important because you feel satisfaction relatively quickly. The oth-ers are medium (1-2 years) and long (5-10 years) term goals, 3) Mix it up - have personal, busi-ness and maybe a vacation goal. By reviewing your goals you will verify being on track and feela sense of accomplishment and satisfaction when completed.

Do you have the bottled water, first-aid kit, and other survival supplies ready? As a Bay Areanative it was part of the lifestyle to have an emergency plan in case of the big earthquake. I canrecall hearing stories about the

1906 San Francisco Great Earthquake

from my late-grandfather discussing the aftermath and how so many families were displaced and the infamous fire-break at Van Ness. I am sure most people agree that it is not a question of

we will have a large earth-quake, but

when

. Recently a few people have asked me about my views on earthquake insuranceand the value proposition. I am not an Insurance Agent or an expert in the field by any means, but think that this topic warrants a cost-benefit analysis, so that each family can decide the valueindependently.The two main options for obtaining this type of policy is to purchase a private company insur-ance program or go into the pot of the California Earthquake Authority. There is a fine line be-tween the two. When you call your favorite Insurance Agent and think you are buying their pol-icy you may actually be paying into a government program where claims are regulated and paid-out on a statewide basis. The premiums and coverage can vary dramatically so it is important toknow the product you are purchasing. The government program is statewide; therefore, similar to the post office, some properties are being subsidized by others through standardized pricing.A low risk property may have a higher premium because it is making up for the riskier prop-erty’s subsidy. However, if you are in a high-risk area your premium may be cheaper. The inde- pendent companies pricing schedule should be based more on risk and payout. I think that the premiums are just smoke for the true costs of earthquake insurance.The main cost associated with the policy is the deductible. This is where it gets fun. Again, theactual cost of the premium is fairly nominal, but is an amount that will in most cases never get back to the individual. In this example the annual premium should range from $1300-1800.This premium is a sizeable profit for a policy that will most likely never pay out. This is impor-tant because unlike automobile insurance that pays out frequently the earthquake insurance has ahigher probability of not paying out, so the profit, I mean premiums, compound annually whilelining the corporate pockets. My sample property is as follows:

City:

Los Altos, 94022

Size:

2,000 square feet

Type:

Ranch home

Age:

45 years

Replacement Cost:

$500,000

Deductible:

15% (there is also a 10% option)Unlike our hazard insurance deductible that may be $1,000 or even $2,500, the deductible for earthquake insurance is a percentage of the replacement cost. Yes, you heard me correctly, a percentage of the total replacement cost. If you have earthquake damage in the amount of $50,000 there is no reason to file a claim because you haven’t reached your deductible amount.In this case you may be hoping for severe damage. But in the case of severe community dam-age, will other government authorities and programs take effect similar to hurricane Katrina?The main costs of earthquake insurance are not realized until a disaster, so the next reasonablequestion is whether the insurance agency will exist at all after such a disaster. It is important to point out the lengthy list of those circumstances and items that do not warrant the policy, howthe policy is paid out and whether a company will be viable at all. We can all do our part to be prepared and analyze the financial security or burden individually. This article is intended to bea starting point for your family. It is important to way the costs and benefits of such a programand how it fits into your family’s situation.

Earthquake Insurance - The Value Proposition

Page 2

Quarterly Review

Who is CattonProperties?

Catton Properties, pronounced CAT-TON, is named after my family withroots in Los Altossince the 1920’s.Formerly from SanFrancisco, my family moved toLos Altos as acountry escapefrom the city during the summer monthsand later becoming home to several generations. I chose CattonProperties when I moved my real estate businessfrom Palo Alto in2005 in part asrespect to my family. My lategrandfather was proud to have thename in town. I have been very pleased with my office move as I have become quiteactive in the Los Altos community ona business and personal level.Catton Properties isbecoming a knownbusiness in townand I amencouraged about continuing thiscourse.

We were impressed with Nick right off the bat. He listened to us carefully, patiently showed usall of our options and helped us negotiate the best deal. Now we're happily living in a homethat's perfect for our family!

Client Testimonial

As we have discussed in the past few newsletters it is no surprise that a good majority of the na-tion is suffering from price drops, high inventory and historic foreclosure rates. There is a clear correlation between the appreciation and areas that are struggling; those that went up the greatestin the least amount of time are generally coming down the hardest. The recent Monthly HousingMarket Report by New York based Radar Logic Inc shows the most dramatic decline among 25Metro areas on a monthly index comparing the September 30th previous 28-day period .Why is this important? While many areas are struggling to stay above water our area continuesto be a market leader and show amazing resilience. This supports the historic data which indi-cates that certain areas generally have less impact than others during market corrections. Keep inmind this is only one report focusing on a specific data set, but it is one of many that consistentlyresult in similar findings. We are not addressing whether or not our area will drop in price, butthat we appear robust when compared to areas such as Sacramento, San Diego and Las Vegas.This is vital data when considering whether to make that long term investment in a property or properties. With rent rates on the rise you will want to watch the market closely and look for buying opportunities. Data such as this should help you in that decision process. It is far from acall of the market collapsing, but rather a transition in the marketplace. This is where that goodlocation and floor plan go a long way. Even in the hot areas such as Saratoga and Los Altos,over-priced homes in bad locations with poor floor plans aren’t selling as there were six to tenmonths ago. This is a positive sign. However, those well-priced homes that show well are stillflying off the shelves.The real estate market is fluid making it important to analyzing and watch the changes and atsome point make that move. I used to hear the saying “paralysis by analysis” when referring toreal estate, meaning if you analyze the data indefinitely you will miss opportunities. All of thedata will not help unless you take the leap. I will work to continually bring valuable data to your through my newsletters. If you have a specific topic you would like me to address please do nothesitate to let me know. Happy investing!

Home Values Drop - Price per Foot

Page 3

Volume 2, Issue 4

Property Taxes

It is that time of year; if you haven’t already paid your 1st installment of your property taxesthey are due by December 10th at midnight. If your bill has a previousowner’s name donot fret, you pay that bill. If you did not receive a bill from the County Assessor in themail you do not get a free pass -visit the County website for a copy (I will be emailing links to our threeclosest counties).If you mail the payment just make sure you postmark by the10th. If you haveany questionsabout your tax bill or a supplemental payment pleasefeel free to giveme a call or you can call theCounty directly.

Source: http://www.car.org

Metro Area

$/SF % Change

Metro Area

$/SF % Change

Sacramento, CA $201.24 -14.8% Washington, DC $227.83 -3.2%San Diego, CA $296.48 -12.2% Boston, MA $227.77 -3.2%Las Vegas, NV $162.78 -11.0% Chicago, lL $180.00 -3.2%Tampa, FL $127.81 -10.1% Atlanta, GA $98.50 -2.9%Jacksonville, FL* $119.32 -9.9% Philadelphia, PA $159.37 2.9%Miami, FL $184.98 -9.5% Cleveland, OH $92.26 -2.8%Detroit, MI $106.78 -6.7% San Francisco, CA $419.49 -2.8%Milwaukee, WI $117.22 5.6% Denver, CO $142.60 -2.6%Los Angeles, CA $367.53 -5.5% Phoenix, AZ $148.18 -2.5%Charlotte, NC $98.49 5.2% Columbus, OH $96.27 -1.3%Seattle, WA $226.18 4.8% Minneapolis, MN $154.58 -0.6%St. Louis, MQ $108.43 -4.4%

San Jose, CA $463.14 0.2%

New York, NY $296.43 3.3%

Monthly Housing Market Report