Los Altos & Palo Alto Real Estate Insight

Archive for the 'For Sellers' Category

Excellent S.F. Market Summary

A front page article in Sunday’s SF Chronicle about the residential real estate market in San Francisco applies equally to the Peninsula.

Home values are falling and buyers are striking terrific deals with sellers who want or need to sell.

Jeff Stricker and Steve TenBroeck

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Bleak Jobs Outlook Is Bad News For Sellers

Two recent press releases, one from UCLA Anderson Forecast predicting a grim outlook for jobs in CA and one from The Conference Board predicting an equally harsh employment outlook for the nation, will certainly cause local real estate values to continue to fall.

While this is certainly not good news for sellers, it is great news for buyers who have the financial wherewith-all and the courage to act.  In our area, “Buyers’ Markets” occur in only two to three years in each decade.  Their time has arrived.

Jeff Stricker & Steve TenBroeck

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How Far Are Home Values Falling?

It has become clear to us that South Peninsula homes peaked in value sometime during the fall of 2007.  However, it is extremely difficult to determine how far home values have fallen in a particular neighborhood. 

 

The various media report current sale prices for a large geographic area, usually by county.  Movement in median sales prices is not an accurate barometer, as it simply reflects what price range happens to be selling. And we also know that different types of homes depreciate at different rates. 

 

For example, high-value homes generally fall first and fastest as they represent discretionary purchases.  Homes with issues (noise, traffic, etc.) depreciate faster than those without issues.

 

The most accurate approach to assessing increases or decreases in a particular neighborhood is to find nearby homes which have sold and then re-sold a year or two later.  If the home has not been significantly altered, this can give a true measure of the movement in value from the first sale to the second.

 

Through our analysis we are estimating that, so far, there has been a 10-25% drop in home values from the peak in our area, depending on the particulars as outlined above.

 

Jeff Stricker & Steve TenBroeck

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South Peninsula Real Estate: Last to Decline in Value – First to Rise

Home values on the South Peninsula hold up best in economic downturns and are the first to recover.  Desirability and a limited supply of homes for sale are two of many reasons.  As 20+ year Realtor veterans in communities from Menlo Park through Los Altos (including Palo Alto, Los Altos Hills, Atherton, Portola Valley, and Mountain View), we know this to be true.  This proved to be the case in the downturns of 1980-84, 1989-93, and 2000-03.  While the average home in the Bay Area is down 40% from 2007, we are just now beginning to see prices decline, locally.  And while homes in our area have held up well in value, so far, we are not immune to the current economic downturn.  We expect local home values to fall at least 10% next year, on average, due to local layoffs and a higher number of homes for sale.  Homes with “issues” (traffic noise, bad floor plans, etc.) will fall the most in value.  Homes without issues will fall less.  Our current advice to sellers: If you are planning on selling next year do so as early as possible!

  

Jeff Stricker & Steve TenBroeck

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Sell Now or Wait?

October sales of homes in most peninsula communities are running approximately 50% of normal, compared with last month and October 2007.  So, the question is, should one sell now or wait for the possibility of a better market next year?

There are too many factors that could make the market worse for sellers next year. We recommend selling now.  These factors include the possibility of more competitive listings, a deepening recession, higher interest rates, local employee layoffs, and falling real estate prices.  It could easily take 5 to 7 years for values to return to current levels.

If you anticipate selling in the near future, do not wait.  Sell now.

Steve TenBroeck

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