Archive for the 'los altos real estate' Category
so says Warren Buffet…………
The Real Estate Bloggers report that Warren says:
“within a year or so, residential housing problems should largely be behind us”
“prices will remain below “bubble levels”"
“many families that couldn’t afford to buy an appropriate home a few years ago now find it well with their means”
I would say Don’t bet against Buffet.
In my previous few posts, I documented that the number of homes sold in San Carlos Menlo Park and Palo Alto during the second quarter of 2009 was TWICE the number of homes sold in the first quarter of this year.
The numbers tell the story – but stories also illiminate the numbers.
I recently wrote an offer for a buyer client of mine on a property listed listed at $619,000.
My clients offered $670,000 “as is” - had a solid pre-approval and a 35% cash down payment.
This offer had only an appraisal contingency and would close in 30 days.
The buyers had read and approved all reports, inspections, and disclosures.
So basically the offer was as clean an offer as any seller could want.
Offers were due earlier this week in the early afternoon of the offer day.
In the morning, I checked with seller agent and was told there were 8 offers.
By the end of the day, there were 25 offers on this property!
I am not sure what property sold for but it was over $700,00 and I suspect closer to $750,000 by the time the dust settled.
I have heard of other properties priced in the $400,00 to $500,00 range in Redwood City selling for $100,000 over list.
So if you are waiting for the bottom, I think we may have already hit bottom and have started back up.
This is certainly true under $1,000,000 price range.
There is lot of data about the local real estate market out there.
Much of it is conflicting and one really needs to pay attention to what the data SPECIFICALLY measures.
So I am going to write about what I see and am experiencing on a first hand basis in my own business and in my office.
The past few weeks, my office has averaged about 15 sales per week.
During the first three months of the year, I would say my office weekly sales were more like 5 to 7 per week.
In the past few weeks, my office has sold some property at very high prices – $6M, $4M, and $3M.
That being said, the upper end of the market is still much weaker than the lower end.
In the past week, I wrote 4 offers for my buyer clients and 1 was accepted - the other 3 lost out in multiple offer situations. This offers were in the entry level price range.
This increased market activity is due to several factors in my humble opinion:
1. Buyers are feeling a little more confident about their jobs and the economy.
While the economy is still weak, the attitude is much more positive NOW than it was in October and November 2008. When the stock market was dropping like a rock and our wonderful leaders in Washington DC (Not!) were preaching doom and gloom, many of us were worried about whether our economic/financial system would survive as we know it. I believe at the present time, most of us believe we will survive – that some tough times are still ahead but that our economic and financial systems will not collapse.
2. Sellers are getting more realistic about prices. Buyers are getting to believe prices are attractive.
Sellers are always about 6 to 9 months behind the buyers – ie the buyers know the market has changed while the sellers refuse to accept reality and hope for the market when there wer 10 offers for every listing.
3. Interest rates are about as low as they can go.
For months, buyers have been wiating for rates to drop and they have. But I think it is now apparent that rates will not go much lower if at all.
We are not out of the woods yet. But things look better than they were 6 months ago.
There are some good buys out there!
Teresa Boardman of St Paul Real Estate – ps she is a great photographer – recently wrote a post about “move-up” buyers in her market want to buy but since they existing home is underwater they can not sell their existing home. Hence they are unable to buy.
Many of her comments about the entry level being the strongest portion of the market with the “move-up” market being very slow or non-existent applies to the market on the San Francisco Peninsula.
Many first-time buyers are getting into the market – taking advantage of lower prices, very low rates and tax credits. Most sales are at the low end of the price spectrum with foreclosure REOs being a large percentage of all current sales. Hence median and average prices continue to go down.
The “move-up” buyer is sitting on the fence. Unlike your area, it is NOT because these potential “move-up” buyers are “under water” but rather they do not have confidence in the economy or the market to make a move-up in a market where moving up means selling for $1.5M and buying for $2M. These folks are just not interested in taking on $500K in additional debt when things look very uncertain. In addition since the price of their home has dropped, they may no longer have enough equity in their current home to put the 20% to 25% down needed to buy and finance their new home with a jumbo mortgage. So they are not “underwater” but lack the down payment to buy the larger house. I believe the “fear” factor is the bigger issue but lack of equity to make the downpayment on their purchase also contributes to the lack of activity in the move-up market.
That is the $64Million question on many folks’ minds.
Here is my “take”:
In my San Francisco Peninsula market, I would say:
Are there good values to be found? Yes.
Are we at botttom? Probably not. I expect contiuned downward pressure on prices. (In most San Francisco Peninsula cites, values are down maybe 10% to 20% from the peak in 06/07)
Is it a good time to buy? Yes: 1) if you find a house you really like in the community where you want to put down roots 2) you have a long-term perspective – say 10 years and 3) your job situtation is pretty stable and 4) you buy comfortably within your financial means – this is not the time to stretch.
Jay Thompson The Phoenix Real Estate Guy provides a similar perspective on the Phoenix market which has been hit much much harder than our own market.
What say you?
What do my Homescopes blog buddies around Northen California have to say?
During my 31 years in the real estate business selling properties up and down the San Francisco Peninsula, I am often asked what is so special about Menlo Park or Palo Alto or Los Altos?
Why are homes more expensive in these areas compared to San Carlos (my home for the past 23 years), Redwood City, Belmont, and Mountain View?
On a quarter Q4 to quarter Q3 comparision:
Menlo Park home values up 1.2%
Palo Alto home values down -0.4%
Los Altos home values down -2.9%
while Mt. View is -7.1%, East Palo Alto is -16.7%, Redwood City is -8.4%, San Carlos is -7.3%, and Belmont is -9.4%.
The year to year data is similar Menlo Park up slightly, Palo Alto and Los Altos down slightly, and the other cities down a fair amount ranging from -4.9% to -37.3%.
As I have told my clients “when times are tough, the more desirable markets hold up better”.
But for those doomsayers out there, please note for EVERY CITY except East Palo Alto, the 5 year and 10 year annualized change are ALL POSITIVE. So even after two fairly tough years, home values in these San Francisco mid peninsula cities has gone up over the past 5 to 10 years.
Average increases over 10 years at about 6% per annum. East Palo Alto had a 10 year annualized increase of 5.3%.
A $500,000 property purchased in any of these cities 10 years ago – on average – would be worth $909,000 today.
Say this property was purchased with 20% down or $100,000 10 years ago, the current equity of $509,000 would represent a 17.67% return on the downpayment. This is a “broadbrush” calculation for illustration purposes.
Of course, if the market should continue down for another year or two, the 5 and 10 year annualized returns would be reduced. But I think this data does show the strenght of our local market in the worst economic conditions most of us have ever seen in our lifetimes.
The media often uses Zillow data to paint a bleak picture of the real estate market.
Using Zillow’s own data, I believe one can make reasonable arguments that our market is doing pretty good all things considered.
If there are any stock market guys out there, I would be interested to see 5 and 10 year annualized stock market returns after the current collapse.
Consider real estate in your retirement accounts. Want to learn more, just let me know.
With real estate values down, there are excellent buys in real estate for long-term investment – both here on the San Francisco Peninsula and elsewhere in the country. I have developed experienced real estate contacts in other areas of the country like Sacramento, San Diego, Phoenix, Dallas/Ft. Worth, Kansas City, Raleigh, NC, and elsewhere.
There are solid long-term investment opportunities available on the San Francisco Peninsula.
Would you prefer to have greater control over your retirement funds?
Would you prefer to invest your retirement funds in real estate – a tangible asset that people need for shelter?
Yes, real estate values in most areas of the country are down.
But I would submit that stock portfolios are down even more.
If you would like more information on investment opportunities and/or purchasing real estate with your 401(K) or retirement funds, please contact me for a FREE 50 page Q&A about self-directed IRA real estate investing.
I am happy to meet with you for a NO OBLIGATION consultation and explanation of the process.
2007 data is in blue and 2008 data is in red.
These numbers reflect closed sales through June 30 of each year.
As reflected in the number of sales my office has completed this year, the number of closed sales in all communities is down from 2007.
Mountan View down 3%
Los Altos down 21%
Palo Alto down 27%
Menlo Park down 28%
East Menlo Park down 72%
Redwood City down 16%
San Carlos down 20%
2007 data is in blue and 2008 data is in red.
As you can see inventory has increased in all communities from 2007 to 2008.
Mountain View up 91%
Los Altos up 45%
Palo Alto up 42%
Menlo Park up 47%
East Menlo Park up 58%
Redwood City up 61%
San Carlos up 54%
My colleague David Blockhus at Coldwell Banker Los Altos has just completed an inventory study for Los Altos. David also provides some interesting data regarding the number of listings each year with the number of sales each year. List price to sales price ratios are often published. The number of listings to numbers of sales is also a good market barometer.
There are some good comparisions between Los Altos and Menlo Park.
Current inventory levels as of January 1, 2008 are higher in both communties than they were in 2006 and 2007.
Inventory levels in Los Altos were quite a bit lower in 2008 as compared to 2006 and 2007. In Menlo Park, however, inventory levels in 2008 were about the same as they were during the preceeding 2 years. Interesting?
As noted in my earlier post, neighborhood differences within cities are important. Los Altos is a fairly homogeneous community with little or no moderate income property available whereas Menlo Park is a little more diverse and does offer housing in the Belle Haven area in the $600,000 price range – Los Altos homes typically start at about $1,000,000.
Another similarity to note is that in both communities during 2006 and 2007 the inventory curve contains a single “hump” – start low in January increase until about September and then drop through the rest of the year. In 2007, the inventory curves have more of a double “hump” (Math or statistic majors please help me out! I know there must be a technical term for the “hump”) where inventory levels rose after Labor Day and then decreased later in the year. I wonder why?