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.
Accurate pricing of a home for sale has become important again. In red hot markets homes will receive multiple offers and the price will be bid up to market value. In a more balanced market multiple offers are not a certainty and a home can be sold for less than current market value. Of course, overpricing it will cause a home to sit and not sell in any market. Now, more than ever, pricing it right matters! Jeff Stricker
Will the Fed drop in interest rates equate to a drop in mortgage rates? Not necessarily. Lenders are primarily concerned with inflation. If they feel that a move increases the chance of inflation moving higher they may actually increase loan rates on a decrease by the Fed. That is exactly what happened when the Fed reduced rates by .75% last week.
The Conference Board released their report on Consumer Confidence Tuesday. In researching the long term confidence data, I noted that only once since 1970 has consumer confidence gotten this low without the US going into a full-blown recession. Hopefully, we’ll avoid it this time, too. The Federal Reserve is doing what they can. Congress is trying to come up with a stimulus package. However, there’s only so much they can do at this point without creating other economic problems (inflation primarliy).
What has this caused in the local real estate market? So far, prices have not weakened (in fact they’ve continued to rise) due to the fact that more sellers are staying out of the market. Inventory of homes for sale is very low. Demand is still greater than supply.
We’re starting to see weakness, though. Homes that have negative “issues” or those that are slightly overpriced are taking longer to sell than they were a month ago. Super Bowl weekend is typically slow (this week there are very few new listings coming to market). The next two weeks should be very telling in terms of supply and demand.
Home buyers should not wait to see whether the conforming limit is raised from $417k to $725k in California. Although a conforming loan has a lower interest rate (about .75% currently) the increase to the limit is only a proposal at this time and may not be passed in Congress. If passed the increase may not take effect for 6-9 months as legislation moves forward very slowly in Congress. Lastly, one can obtain a no cost loan now and refinance into the lower rate later at no cost. Jeff Stricker
This past week was brutal! Last Saturday & Sunday we had the most traffic ever to come through our open houses. However, on Monday (MLK Day) foreign stock markets crashed. On Tuesday the Fed dropped the Prime Rate by ¾ of a point. And by Wednesday, according to several agents, local buyers were retracting their offers to purchase homes. Then, at the end of the week, Congress came up with a plan to restore confidence and stability in the market. Here it is, as reported by the California Association of Realtors reported on their website: “Under the terms of the proposed stimulus package, the conforming loan limit — the maximum loan amount that government-sponsored enterprises like Fannie Mae and Freddie Mac may purchase or guarantee on the secondary market — will be raised from $417,000 to as high as $725,000 in high-cost areas.”
The Senate has not – and several Senators have telegraphed that they may not – sign onto the plan, however. More should be revealed on Monday.
The increased “conforming rate” would help our local market by greatly increasing the buyer pool for folks trying to sell their condos or lower-priced homes allowing them, in turn, to trade up into our higher-priced market place.
Are we now experiencing a “buyer’s market”? No.
We continue to get calls from prospective home buyers who believe that it has become a “buyer’s market” in our area. In order to give one of our buyer clients some specifics re the current market yesterday, I pulled up all the recent entry-level home sales (up to $1.7m) listed on the MLS in Palo Alto and Los Altos that had sold since Sep. 1st and had a min. of 3bd/2ba. Here’s what I found:
Palo Alto Los Altos
Total Sold since 9/1/07
Sold in 14 days or less
Median Sales Price
Avg. Percent of List Price Rec’d
Sold in 15 days or more
Median Sales Price
Avg. Percent of List Price Rec’d
Current no. of Homes for Sale
Avg. no. past 10 years
The bottom line: demand for homes exceeds supply in this market place. It was reported this week in the SF Chronicle that in 2007 the Bay Area added 54, 000 jobs. It’s expected, they said, that at least 15,000 jobs will be added in 2008. While the housing market nationally and in the wider region of the Bay Area may be the slowest since the Great Depression, the housing market from Menlo Park through Los Altos is very strong; homes sell quickly, often with multiple offers.
Home purchases should always be viewed as a long-term investment (5 to 10 years). The key to real estate success in our area is selection, not timing. Get professional help. Select carefully.