How is the market now, locally (around Palo Alto)?

How does the activity compare with the previous years, in the 5 combined Cities of: Menlo Park, Los Altos, Palo Alto, Mountain View, & Los Altos Hills?

The inventory of all homes for sale stands at 330, with 181 homes over $1 million, and 78 over $2 million.
Exactly a year ago, there were 370 homes for sale, with 231 homes over $1 million, and 118 over $2million.
Exactly 2 years ago, there were 485 homes for sale, with 292 homes over $1 million, and 118 over $2 million.

Clearly there are fewer homes for sale, which traditionally fosters a rise in home prices.

Week-end open houses see a lot of traffic, with many pre-approved buyers ready to buy “right now”. There are also a lot of people who are just starting their search. (I would say about 50%).

The best properties (showing well and/or upgraded) sell with multiple offers, often with all cash offers.  This indicates a lot of potential buyers who have been looking for a long while.

However, I also notice that buyers are very selective, and cautious.

Out of 109 properties for sale in Palo Alto, 50 are pending sale (in contract) with an average number of days on the market of 88 day, before entering in contract. This figure however includes 6 properties which have been on the market for over 200 days… (even one with 644 days on the market). One can say that the market is pretty active, but not unreasonable. It is also unforgiving...

Do you have any experience or input on the subject?

Thanks for reading,
Francis

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Nationwide: home prices decline, rental prices increase in 2010

A new study shows home prices declined 9.8 percent last year, while rental prices nationwide increased 11.6 percent during the same period, according to Hotpads.com. The rental price increase is a factor of uncertainty in the U.S. economic climate, which has forced a transition from a home-buying mentality to one more in favor of renting. The growing number of homes lost to foreclosure in 2010 expanded the number of people seeking to rent, creating a renter surplus, according to the study.
The impact on a State-by-State study gives us an idea of the impact on our local Silicon Valley real estate landscape.
With the U.S. unemployment rate at more than 9 percent throughout 2010, low-risk housing options became more desirable, a trend which may continue in the coming months, according to this Hotpads.com report.

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Useful school web sites, around Los Altos, Palo Alto, Mountain View etc...

Questions always abound when it comes to schools around here in the Silicon Valley.
This is a collection of web links that, I have found, answers a lot of them:  
- Silicon Valley schools.

This includes for instance an incredibly useful map of the boundaries for the various Los Altos schools. (It has ten layers of information!).
Of course, one should always call the school to double check attendance for a given year.

Thanks for reading.   Francis

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Remodeling: national - and local - "Cost Vs Value Report"

This most recent report compares construction costs with resale values for 35 midrange and upscale remodeling projects comprising additions, remodels and replacements in 80 markets across the country. Data are grouped in nine U.S. regions, following the divisions established by the U.S. Census Bureau.

The top interior projects for resale value included an attic bedroom and a basement remodel. Both add living space without extending the footprint of the house. An attic bedroom addition costs more than $51,000 and recoups an estimated 72.2 percent, nationally, upon resale; a basement remodel costs more than $64,000 and recoups an estimated 70 percent. Improvement projects that are expected to return the least are a midrange home office remodel, recouping an estimated 45.8 percent; a backup power generator, recouping 48.5 percent; and a sunroom addition, recouping 48.6 percent of costs.

Replacement projects usually outperform remodel and addition projects in resale value because they are among the least expensive and contribute to curb appeal.

For more information on the subject of remodeling and how much one can recoup, follow this page, which also allows you to download the report for your area of interest (most probably close to San Francisco).

http://www.realtor.org/press_room/news_releases/2010/12/home_owners_recoup

To read the full project descriptions, access national and regional project data, and download a free PDF containing data for any of the 80 cities covered by the report, visit http://www.costvsvalue.com/ . “Cost vs. Value” is a registered trademark of Hanley Wood, LLC.

Francis
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Los Altos: Home Is Still a Good Investment.

To keep in perspective: nationwide.

Even with several years of price declines, the typical seller who purchased a home eight years ago experienced a median equity gain of $33,000 - a 24% increase - while sellers who were in their homes for 11 to 15 years saw a median gain of 40%.  That's according to the latest survey of home buyers and sellers conducted by the National Association of Realtors.  (available at: www.realtor.org/research )

"85 % of recent home buyers see their home as a good investment, and nearly half think that investment is better than stocks", says Paul Bishop, NAR vice president of research.  "This indicates the long-term view of home ownership as a fundamental goal and value remains sound."

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California real estate market – a few facts of interest…

As I meet clients, I like to sometimes touch on a few little known facts of the real estate market in our state – which I have experienced myself first-hand in several cases in our local Cities of Mountain View, Los Altos and Palo Alto.
One of these facts is that buyers continue to face in many instances a competitive market, as evidenced by the following graph, showing that nearly half of properties sold attracted multiple offers:In 2010 the percentage is expected to still be over 50%.

Also, the number of all cash sales typically is around 8 to 10%, year after year. It is now around 20%. (a preference for real estate investment, over other types of investments, which may be perceived as too volatile?)
 However, it is also true that the net cash to sellers has seen big changes:

This information is available from the California Association of Realtors, in a study that I will be glad to send you upon request.

Thank you for reading.
Francis

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Buy, or rent in the Valley?

Nationwide an interesting study by Fannie Mae (link below) indicates that most Americans still aspire to be homeowners. More than half (51 percent) of current homeowners and renters say that the housing crisis has not affected their overall willingness to buy a home, according to the study. However, while homeownership aspirations are high for the long-term, Americans have near-term doubts about buying. For the shorter terms, 59 percent of renters said they would continue to rent in their next move, compared with 54 percent in January 2010.

In our area, the Silicon Valley, and more particularly around Palo Alto, Los Altos and Mountain View, but of course including Sunnyvale, Menlo Park and surrounding areas, the activity that I see at week-end open houses and what is reported in my weekly office meetings indicate that there is a strong demand for homes of all types. This area is doing a lot better than most due to the economic landscape and the high number of hiring companies. It is very common to see many, many visitors at the open houses that agents hold (even under heavy rain) and people are pre-approved and ready to buy the right property.

What I do see too is that the demand is more selective and there is pressure on prices.
The whole study on American homeownership aspirations.

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Condominium / Townhouse in the Silicon Valley – Any good?

In the Silicon Valley where there is a limited amount of land to build on, a condominium or a townhouse is often a good alternative to a house. In general, for the same amount of money, one gets a larger and newer property in a PUD or CID (Planned unit development – Common interest development) than in a house. In our local towns (Los Altos, Palo Alto or Mountain View) a lot of the house value is in the land. Consider that an average piece of land ~ 6,500 sq.ft. would easily fetch in Mountain View between $400k and $500k, and this would not be in a prime location. Therefore, when one considers a purchase around $600k to $800k, a PUD is often more appealing to live in.
Some other reasons to prefer a PUD could be safety, or lower maintenance, as various parts of the property are maintained by the HOA (homeowners’ association). For people who travel or work a lot, with little time for yard or house maintenance, a condominium or townhouse can be a good option - also, it is less isolated than a house. Older people may also like the PUD arrangement: less involvement in the maintenance. The “maintenance” is where the “association dues” come into play: depending on the complex the monthly dues can cover some utilities, outside painting, roof, fences or decks, ground maintenance, some insurance, and various amenities included in the complex like: exercise room, pool, spa, kids’ play structure, etc…

It is easy to rate complexes depending on the amount of monthly dues. But it is not that simple. It depends a lot on:
1/ what they cover and
2/ the reserves of the association.   More on this on the following  condominium page  because it would make a very long document on this blog...

Finally, what is the difference? In a condominium one owns only “from the paint on”. The walls belong to the association, and all own a percentage of the whole. In a true townhouse, one owns the land on which it sits, and the building itself. However, it must be noted that in the Bay Area a lot of PUD’s offer a mix of the two, and it is only by the legal definition (on the preliminary title report) that one can be sure of the nature of the unit. Many condominiums are “townhouse style” with two levels, no one above or under, and a 2-car garage.

Let me know if you have any specific questions!...
Thanks for reading! - Francis

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