Whether you are a first time buyer or seller, or have been through multiple transactions, you might be surprised by how quickly the real estate market changes in Los Altos, Palo Alto and surrounding communities. You need hard-hitting historical data, current market analysis, and insider experience to stay informed and succeed in these real estate markets.
As a service to their clients, Jeff Stricker and Steve TenBroeck of Alain Pinel Realtors provide regular market analysis and commentary. You are invited to read the entries below, add your comments, ask questions or contact them directly.
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
The number of Days on Market (DOM) is frequently used to determine whether a market is running hot or cold. Not a good idea! The average Days on Market only includes those homes that sell – and sales are off substantially. If it included all the homes on the market, DOM would be increasing dramatically.
The number often moves in a counter-intuitive direction, too. Currently, for example, the number of Days on Market is dropping as the market is now cooling. Just about the only homes that are selling currently are the so-called “pick-of-the-litter” homes. They will always sell quickly, if priced well, in any market. Read the rest of this entry »
Today’s elections will determine the course of our country for the next 4 years, but we believe there is but one direction for mortgage rates.
The world economy is currently being flooded with paper currency to shorten the recession by stimulating spending. Although effective, this will certainly cause inflation and higher long-term interest rates.
It is our strong recommendation to all buyers (other than all-cash buyers) to buy before rates go up. Remember, mortgage rates have only been below 7% in 12 of the last 45 years. Rates were over 8% as recently as 2001.
Buy the best quality (good area, no issues) to minimize any short term downturn in the home’s value. And get a mortgage that has a minumum of 5 years of fixed interest rate.
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.
The financial markets are clearly signaling that a recession is here. What does this mean for local real estate? Typically the local real estate market slows significantly 6-9 months after a recession begins. The local real estate market is already slowing due to the current financial market turmoil. We expect the slowing to continue into the next year. It will clearly be a buyers’ market then and prices will begin falling for most homes. In fact, the high-end price segment and properties with “issues” are already falling in price.
For Sellers: If you want to move short-term, you should do it now or expect to wait for 3-5 years to get today’s prices.
For Buyers: You have a once a decade chance to get a great “blue chip” home without having to compete, and a historically low (less than 7%), fixed interest rate on your mortgage. Select carefully, but act quickly. When the economy pulls out of the recession in 12-18 months we expect much higher mortgage rates.