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.
The Private Mortgage Insurance Company (PMI) released its winter 2009 Economic and Real Estate Trends report which includes a risk index of where property values are heading. The index currently predicts that in 97% of 381 U.S. market areas prices will be lower by 2011. We agree. The economic and housing decline is happening in two phases. The first phase was mass foreclosures due to sub-prime mortgages. The second phase currently under way is mass foreclosures due to the severe recession caused by phase one. We do not subscribe to the forecast that economy will be turning around by summer 2009.
If you are going to sell, sell now.
If you are going to buy, be cautious.
2008 has thankfully come to an end. The real estate meltdown has finally hit the Bay Area – hard! I just tallied the announced layoffs by Bay Area companies with 75 or more employees since 9-1-08: 13,366 folks have been given pink slips, so far. And that doesn’t include all the layoffs at smaller companies, independent contractors, and the self-employed who are out of work. Yikes!
A Dec 31 Bloomberg News articleby Matthew Benjamin outlines just how nasty ’08 has been: worst job loss since WWII; worst stock market and housing market since the Depression; record setting Holiday spending slump; record volume of mortgage forclosures. He states, “The National Bureau of Economic Research this month determined the U.S. economy had been contracting for 12 months, already the longest downturn in a generation, with no end in sight.”
What’s the good news for 2009? Record low interest rates! Affordable home prices in the best neighborhoods (well, affordable for some, anyway).
Buyers: Here’s your chance – don’t miss it!
Sellers: You’d better price it right!
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
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
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