Arn Cenedella

Archive for the 'Real Estate' Category

San Carlos Real Estate Trends 2007

296 single family homes sold in San Carlos in BOTH 2006 and 2007 eventhough the numbers of listings decreased in 2007 from 440 to 381.

The median price for single family homes actually increased 11.9% from 2006 to 2007 to $1,077,500.

The number of single family homes sales has been decrasing while average and median prices continue to increase.

Just as with single family homes sales, the number of condominium and townhouse homes sales was basically unchanged from 2006 to 2007. (95 sales in 2006 and 96 sales in 2007)

The median price in San Carlos for condominiums and townhouses increased but at a lower rate 8.2% than did single family homes.

The San Carlos real estate market like most communities on the San Francisco Peninsula did fairly well in the overall down market in 2007. Sales remained fairly level from the prior year and property values increased.

Real Estate Statistics – take with a grain of salt !

Kevin Boer of 3 Oceans Real Estate, a Palo Alto real estate broker recently posted on analysis of Menlo Park real estate market data. The median price of Menlo Park homes has dropped significantly over the past year or so. Have property values actually dropped? Local agents like Kevin Boer and myself are out seeing and selling property in our local market place. We know Menlo Park values HAVE NOT DECREASED. Kevin’s analysis indicates that over the past year or so inventory has increased dramatically in Belle Haven, a Menlo Park neighborhood located east of HWY 101. The Belle Haven area is the lowest priced neighborhood in Menlo Park (average price $600,000) and it has been especially hit with the subprime mortgage meltdown. Inventory has decreased in the more expensive areas of Menlo Park west of HWY 101 and especially west of El Camino. So what has happened is that lots of lower priced homes in Belle Haven have come on the market and DO NOT sell, therefore the median price of Menlo Park homes has dropped BUT VALUES have not gone down.

This clearly points out why statistics need to be taken with a grain of salt and also points out the important of working with an expereinced local agent who knows the market in order to give you the accurate up to date information on the market.

Zillow estimates? How accurate are they?

How accurate are Zillow estimates?

As a test, I decided to check the Zillow estimate of my own home in San Carlos.

My home is a 3 bedroom 1 bath home of a little over 1200 square feet.

It is located in the desirable White Oaks area of San Carlos and is located on one of the best streets (only 2 blocks long – large lots – no thru traffic) in the White Oaks neighborhood.

The Zillow estimate was $794,087.

I know I could put my house on the market and sell it tomorrow before NOON for that price !!

I looked at the 50 comps used my Zillow.

The average price per sf for these comparables was $698 per square foot.

Of these 50 comparables used by Zillow:

22 were either in Redwood City (lower average sales price than San Carlos) or on very busy streets like Alameda de las Pulgas or Brittan Avenue.

Of the remaining 28, 9 of the comparables houses were over 1,500 square foot in size.

Using larger homes to value a smaller home on the basis of cost per square foot underestimates the value of the smaller home because such a large percentage of the overall value of the property is in the land. If a price per square foot number is accurate across all size homes then a 1,000sf home would be worth one half what a 2,000sf home would be (in the same neighborhood) and I think we all know that isn’t true.

Eliminating homes in the wrong city or on busy streets and eliminating homes that are 25% larger than the subject property results in a price per square foot of $750 -  an 7.4% increase in price per square foot. An 7.4% increase in the zillow estimate would result in a market value of approx. $850,000 – still low but closer to the true value.

Zillow provides some useful “down and dirty” information but really is only a broad brush estimate of value. It is a starting point only. Condition, degree of updating and remodel, school district, overall appeal, and specific locational factors are not considered.

For an accurate estimate of your home’s value, contact an active real estate agent in your neighborhood. He or she will know the recent sales and the competition. The value analysis can be fine-tuned based on this expert local knowledge.

A colleague of mine in the Piedmont area Julie Joyce Coldwell Banker in her homes across the bridge blog did a similar study and found that Zillow included comparables in another city and in an inferior school district.

Nothing beats local knowledge !

The SF Chronicle finally gets a real estate article right !

Carol Lloyd of the SF Chron, in an insightful article, talks about her friends who are first time buyers with a big down payment and how they can’t find a house to buy in San Francisco. Carol talks about how her friend’s experience – actually being out there in the market, looking at houses, trying to find a house, making offers and still being unable to buy a house – is SO DIFFERENT than what most of the media would have you believe about the current market.

Insightfully in her tale of San Francisco’s two cities, Carol writes:

Far from the Nob Hills and Noe Valleys, the Pacific Heights and Outer Sunsets, there are neighborhoods stretching across the southern and eastern quadrant of the city that tourists have never heard of and many San Franciscans have never visited. And it is these areas – Portola, Ingleside, Ocean View, Mission Terrace, Outer Mission, Bayview, Excelsior – that have been hit hardest by the real estate downturn.

A local agent tells Carol: “For the whole city, the supply of homes is about 3.7 months,” he says referring to a common measurement for predicting how long it will take to sell the homes on the market. “But if you take out those (southeastern) neighborhoods, the supply is closer to two months. If you look only at the (southeastern) neighborhoods, the supply of homes is closer to 20 months.”

Why would one part of San Francisco experience the housing bust while other neighborhoods seem immune? “We really started to see it during the whole subprime mess,” adding that buyers have become more scarce in part because low-down-payment loans have become more difficult to obtain.

The agent continues: “The banks got much pickier. The people in Pacific Heights never had to lie for a loan – never had to do stated income, they have sizable down payments. But the people buying in the lower end of the market – up to, say, $700,000 – often had no-down-payments with adjustable loans.”

Indeed, an inordinate number of the single-family homes coming on the market in recent weeks are located in these neighborhoods. 77 percent of December’s SFNewsletter’s list of houses that have been on the market for more than 100 days come from these (southeastern lower -priced) neighborhoods. ”

This pattern of two markets is demonstarted again and again up and down the Peninsula.

Above about $800,000 market is strong.

Below $700,000; the market is weaker.

A Tale of Two Cities

In previous posts, I have indicated that the strenght of the market is a function of the price range involved.  In my opinion, the market in 2007 has been strong properties priced at about $800,000 and above and weaker for properties below that price range.

To illustrate this point, let’s look at inventory levels in two cities, San Carlos (where the average price is about $1,200,000) and East Palo Alto (where the average price is about $600,000).

San Carlos

San Carlos inventory levels typically bottom out in January of each year. As with Menlo Park, the inventory level in January 2008 is higher and in the two preceeding Januarys.

East Palo Alto

Unlike most cities on the Peninsula, the CURRENT inventory level is HIGHER than at any point in the past 3 year. This graph clearly indicates the weakness in the East Palo Alto market. The inventory levels have been increasing since January 2007.

I believe the East Palo Alto inventory level is indicative of the damage the “subprime” crisis has done to the entry level market on the Peninsula. I would venture to say the overwhelming number of buyers who purchased the past few years in East Palo Alto obtained “subprime” mortgages. These mortgages are not available at the present time. Hence, East Palo Alto homes are not selling and perhaps many owners in East Palo Alto have put their homes on the market as the loan payments are no longer affordable.

Kevin Boer a Palo Alto real estate agent has looked at inventory levels from Burlingame to Los Gatos including Palo Alto.

Interested in Los Altos real estate?

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?

Real Estate Data: How helpful to the consumer?

There is almost an unlimited amount of real estate data available to real estate professionals and consumers alike.

The amount and availability of data is so different than it was when I entered the real estate business in 1978. Back then, there was no computerized database of mls listings. Each agent carried around a little black book that contained the listings. Each city had its own board of realtors with its own listings. Each city had their own keysafe keys. Since I sell property from San Carlos to Sunnyvale, I had 5 or 6 different keys to open up lock boxes. “Hotsheets” were printed out twice and a week. These “hotsheets” showed new sales, new listings, and price reductions. Agents updated their little black books by hand.

Fast forward 30 years – what a difference! On the Peninsula we have one mls system! One keysafe opener will open keysafes from San Jose to San Francisco. Zillow and Trulia post listing and sales data. MLS information is available to consumers thru a wide variety of sources.

Back in the old days, one of the main services an agent offered was access to the mls information. Today just about anyone can access mls information.

So what benefits do agents provide? what value do agents bring to today’s consumer?

Marian Bennett Coldwell Banker sells real estate on the San Mateo Coastside has written a recent post addressing these questions.

I agree with Marian that depsite all the information available to the consumer, an agent can help put this information in best persepctive for a buyer or seller. Agents like Marian or myself are out in the marketplace everyday. We see these properties – we see what’s on the market and what has sold. We can give buyers and sellers more detailed non-quantative information about these properties that are not available on the Web. We have been through countless transactions and can help guide our clients to solutions that work best for them.

From a Mini to a Hummer – new Menlo Park listings

Yesterday, I saw two listings in west Menlo Park…..

The “Mini” priced at $895,000 and the “Hummer” priced at $4,249,000.

895 Partridge Ave., Menlo Park is priced at $895,000 and located in a desirable west menlo neighborhood named Allied Arts. Allied Arts has many homes originally built in the 30s on narrow deep lots. Allied Arts is home to the Allied Arts Guild and is close to both downtown Menlo Park and Palo Alto. One can easily get to Stanford Shopping Center, Medical Center and the University by crossing the San Francisquito Creek along San Mateo Drive.

This property is a re-done cottage of approx. 900 square feet containing 2 bedrooms and 1 bath.

It is located on a “flag lot” which is typical in Allied Arts. Many new homes have been built in Allied Arts over the past 10 years with this kind of front back configuration – they are technically 2 lot condominium sub-divisions.

This property is listed by Gregg Ann Herren of The Abigail Company.

720 Hobart St. is priced at $4,249,000 and is located in prime west menlo. Prime west menlo typically has 1/4 acre to 1/2 acre lots. Most homes in the area were built right after WWII though over the past 10 years many large newer homes like this one have been built. West menlo offers proximity to Stanford and downtown Menlo Park as well as easy walking distance to Oak Knoll Elementary and Hillview Middle School.

This home is brand new nad has 6 bedrooms, 5.5 baths, and contains 4600 square feet of living space. The lot is 10,710 square feet.

This is a beautiful home on 3 levels – one underground.

This property is listed by Hugh Cornish of Coldwell Banker in my Menlo Park office.

Should move up buyers buy now?

If you currently own a home and are thinking of buying a new more expensive home, is this a good time to do so?

I think it very well may be.

All homeowners want to sell their home for as much as possible – that’s a given.

In the current market, one might not be able to sell their home for as much as they could have sold for in 2006. This is not true in all cirmcumstances. In many areas of the Peninsula, prices are as high as ever. But for the sake of argument let’s assume the current market value is slightly down from 2006.

Does it make sense to sell your current residence and buy a more expensive home at the present time?

One could say it makes sense to wait but let’s look at the numbers.

Let’s assume one’s current residence is worth $900,000 and the home one wants to buy is $1,200,000. Excluding closing costs, one would need to come up with $300,000 above and beyond the equity in the current home to purchase the new property. This $300,000 could be in the form of cash added above the equity out of the existing residence and/or an increase in loan balance.

Let’s assume property values increase 3% per year over the next 3 years – 2010.

The existing residence would be worth $983,454 and the new residence would be worth $1,311.272. The delta would have increased from $300,000 to $327,818.

So in this example waiting would have cost $27,818 plus the loss in enjoyment for 3 years of the more expensive home.

Taking advantage of the current market opportunity might well prove to be a smart decision.

Everyone wants to know – is this a crisis or an opportunity?

I have been a real estate broker since 1978 so I have been through a few market cycles. In the late 1970s, the market was very active and prices increased. In fall 1980 interest rates started a climb to 16 and 17%. The market slowed and on the San Francisco Peninsula, the makret turned flat and in some cases dropped slightly. This trend continued for several years and then the market settled in the mid 1980s and sales activity increased. The late 1980s was again a very robust market and market values increased substantially. The market slowed again in the early 1990s (maybe because of the earthquake more likely because the local economy slowed). Again the mid period of the decade was a period of stability. The late 1990s was again a very robust market fueled in large part by the dot com boom. The market peaked in fall 2000 and again we had a flat to declining market. Unlike previous decades, the market heated up sooner and 2004 was a record year. The market continued fairly strong until this fall when the sub-prime crisis took some steam out of the market.

I can tell you from personal experience, the up years were always much stronger than the down years. I have represented hundreds of home buyers over my 29 years in the real estate business and I can probably count on one hand, the numbers of buyers who regretted purchasing a home.

As long as one can afford what they buy, I believe, real estate will always be a great investment – especially here on the Peninsula where the economy is strong and there is little or no land left to build new houses.

Interest rates at around 6.5% are attractive, by historical standards.

In the current market, a buyer has a wider selection and a greater opportunity to negotiate with a seller without the pressure of competing with several other offers.

If you have a long-term perspective and can afford to do so, this is a good time to buy real estate.

Some may say: “I will wait until the market goes up”. The problem is one doesn’t know the market is going up until it is too late to buy at the bottom.