Archive for the 'Annual Report' Category
The current tech boom has brought lots of jobs and money to our area once again. As a result, home sellers in 2014 were handsomely rewarded. Using the average of all 14 cities and towns listed below, here’s how 2014 compares to 2009: The number of homes sold was up by 16% while the number of homes for sale was down by 23%. The average “days on market” was down by 59%. All of this activity is eerily similar to the 2000 real estate market. Is this another bubble in the making? We believe more of a cyclical top than a bubble.
The strength of the real estate market is controlled by supply and demand. As the numbers below illustrate, in 2014 demand was UP while supply was DOWN. The tech boom is one of the few financial bright spots globally and is attracting a lot of money, talent, and jobs to our area – which explains the demand side. The reason the supply of homes for sale was down is that owners who saw their home values rising at the greatest rate since 2000 were in no hurry to sell. All of this made it especially difficult for buyers in 2014 as multiple offers and extreme overbidding were the norm. And nearly half of the sales in the high-demand areas were “all-cash”!
How 2013 compared to 2012, 2008, and 15-year Averages
BUYERS WRESTLE OVER FEWER HOMES FOR SALE IN 2013
Heavy demand in a recovering economy is nothing new. What was unusual in 2013 was the extremely low number of homes for sale! This is due to several factors. The greatest contributing factor is state and federal tax policy. At the state level, “Prop. 13” (passed in 1978) essentially freezes property tax rates based upon its sales price. Prior to the passage of Prop. 13, folks would often trade up or down as their circumstances changed. This occurs much less frequently now.
Today most owners will stay in their home and add on or remodel, as needed, rather than risk increasing their tax basis by buying a more expensive home. At the federal level, the IRS allows owners to leave their primary residences to their heirs at the “stepped up basis” (current market value). Thereby, both the home owner and their heirs avoid capital gains taxes on the property. These tax policies encourages the elderly to stay in their homes. Instead of moving into a senior facility many seniors are now bringing help into their homes instead. In fact, the “in-home care” industry is growing rapidly, due to this trend.
In the tables below, you’ll find 15 years of data for market activity and median sales price for the Year 2013 for Palo Alto, Los Altos, Los Altos Hills, Menlo Park and Mountain View. You can’t find this level of historical data all in one place anywhere else, so if you have any questions or wish to get more info about your community, don’t hesitate to contact us.
Homeowners tend to stay put when the value of their property is rising. Those who are thinking of moving tend to wait until signs appear that property values are starting to decline. At that point in the cycle, we typically see a terrific increase in the numbers of homes for sale. Lastly, people are simply living longer.
Adding up all of these factors, it’s easy to see why we have record low numbers of homes for sale. Demand for homes in our area will most likely continue at a heated pace and inventory of homes for sale will remain low until the next financial shock occurs.
WANT MORE SPECIFIC INFORMATION?
The towns included above have diverse neighborhoods and prices. When we look at averages we get clues to the overall market, but not the details. If you would like an in-depth analysis of market trends in your particular town or neighborhood, simply call Jeff at 650.823.8057 or Steve at 650.450.0160, or email us: [email protected]. We’ll be happy to help!
The San Francisco Peninsula & Silicon Valley real estate markets continued their spectacular recovery in spite of a global recession. Technology and social networking companies from Mountain View to San Francisco are rapidly expanding – and hiring. The demand for housing in this area is now nearly as strong as it was during the dot-com boom of ’98-‘00. Median sales prices, on average, were up 4% from last year, and up by 13% in Atherton.
Palo Alto Continues to Defy Gravity
Palo Alto again had the most overbidding in 2011 with sellers receiving 103.6% of asking price, on average. It also had the most expensive real estate in the area with homes selling at an average of $723 per square foot. Increases in sales prices and over-bidding are likely to continue in 2012, unless there is some major national or international financial upheaval.
Hills Markets Now Recovering
During the past few years demand has been low in Los Altos Hills, Portola Valley, and Woodside. Yet, in 2011 those areas had the greatest increase in sales volume over the previous year of all the areas covered here. In fact, Woodside’s sales volume was up by 84%!
2011 Local Real Estate Market Forecast
All market factors point to a sharp uptick occurring in local prices during the first half of 2011. Last year, the number of sales, median sales prices, and percentage of list price received were up in almost all areas. In addition, it took less time for a home to sell in most areas. All of these factors are good leading indicators that buyer competition for homes will continue to be strong (barring a major economic shock of some kind) and sales prices will continue to rise.