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.
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.
1-10-08 The stock market is clearly predicting a national recession later this year as most indices have had their worst drop to start a year ever. What does this mean for local real estate, if anything? Likely it will mean lower interest rates which will stimulate the local real estate market. Watch the local Silicon Valley economy (currently very strong), and in particular hiring and layoffs, to determine if a national recession slows the local economy and real estate market.
1-6-08_ Carol Lloyd’s Sureal Estate column in today’s business section of the SF Chronicle gives some excellent examples of what we’ve been talking about this week (regarding drawing conclusions from regional or city-wide sales statistics). Folks are amazed to find that there can be multiple offers in one neighborhood while in an adjacent neighborhood sellers can’t find a buyer, regardless of how many times they drop their asking price. This is the point in the real estate cycle when people painfully rediscover what is really meant by “location, location, location”! That old advice to buy the worst house on the best block you can afford is still the best.
1/3/08 The year starts with the biggest first-day-of-the-year stock market drop and $100 per barrel oil. What does this mean to the local real estate market? Not much unless it leads to contraction of the local Silicon Valley job market, leading to reduced buyer demand for real estate. Watch Valley job levels and regional consumer confidence as leading indicators of where the local real estate market is heading this year.
A final comment about following national and state real estate statistics: They are about as effective in understanding the local real estate market as a national or state weather prediction is for predicting local weather. The chance of their accuracy in your area is minimal. The Bay Area market, more often than not, behaves differently than the rest of the country. Our local economy and lack of housing supply are unique. Jeff Stricker
January 2- Silicon Valley tech stocks were up by 20% on average in 2007 versus 10% for the Nasdaq!Is it any wonder that our local real estate sales were robust and prices went up? The number of completed sales was down due to a lack of sellers, not a weak market. Of course, the real estate market was very different (i.e. weak) elsewhere in California. Resolve in the New Year to ignore state and national real estate statistics. All meaningful real estate analysis is local in nature. Jeff Stricker