Interesting conversation on the Peninsula real estate market in Monday’s meeting. Some of the main points are worth summarizing (this isn’t a perfect representation):
Overall
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The dot.com bubble was about the high end. The 2008 bubble was about lending and lower price points. This bubble is about the Peninsula. We’re seeing a demand for homes on the Peninsula that has never been seen before.
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Buyers priced out of the mid-Peninsula are going south (Sunnyvale, Santa Clara) and north (RWC, San Carlos, Belmont). The comps are not keeping up.
San Carlos
We have a new watermark: a 3/1 teardown on a 5,000 square foot lot in the White Oaks neighborhood just sold at $1000/sq ft. Another home in The Golden Box sold with 19 offers, all cash for about $1.7M. The buyer profile is a dual income couple with good salaries and little kids, big company tech employees that weren’t early, not stock option buyers. They need good public schools, and San Carlos has them. They’re coming in and paying mind-boggling prices for the smaller stuff.
Redwood City
Nothing amazing in the 16 new houses on the market last week, but eye-popping sales have set new watermarks in Redwood City in recent months.The price per square foot range this year is into the 700’s, but agents keep listing in the 500s. This pricing has never happened in Redwood City. The old hands are justifiably skeptical, and keep testing the market with yesterday’s pricing. Redwood City is here to stay. The city is progressive; they want people to live there. They’re making downtown a destination and bringing a thousand new apartments online. With good private schools and charter schools, families are finding school solutions to make Redwood City work.
Belmont
Belmont is the hot place to go. San Francisco buyers are heading to Belmont. It’s a favorable commute, and people don’t want to be tied up in traffic. Belmont schools are phenomenal. Word is that middle schools in Belmont and San Carlos are even better than Palo Alto.
Sunnyvale
Buyers priced out of Los Altos are going to Sunnyvale. A house listed at $849 just went for $1.17M in an mediocre location of Sunnyvale.
Santa Clara
What’s happening in Sunnyvale is also happening in Santa Clara. A house in an area of Santa Clara that has Cupertino schools listed at $850 and went for $1.3M, with 34 offers.
Portola Valley
Several sales closed, and the bar has moved again on prices. The sale of the Danish Modern on Golden Oak has generated a lot of interest. It’s the only ultra-modern available in the $3-5M price range.
Menlo Park
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Pending sales last week are low end, with one exception. The shocker was 1840 Valparaiso. Listed at $1.398M, it was cute but not great. It got twelve offers and sold for over $2M. Stone Pine has been on fire — a disadvantaged location went for $1.850. You can’t get that square footage for that price in Menlo. Now, two are being floated for over $2M.
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The high end is not going. Properties over $3M are sitting, even dynamite houses like Santa Cruz and Windsor.
- The benchmark price seems to be $2.6M for 728 Olive, your typical Menlo Park rancher (2400 sq ft house, 10,000 sq ft lot). That comparable house (smaller lot) is probably $3.1M in Palo Alto.
Atherton
Several sales to developers.
Palo Alto
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The barometer rose last week when 385 Seale closed — a 7500 sq ft lot for over $4.257M.
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Big prices prices are coming down the pike. As higher prices get floated, the feeling is that buyers are getting shaken up, and the market will stall.
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80 of the 488 homes that sold in Palo Alto in 2013 were demolished, according to data based on demo permits.
- The turnover rate in Palo Alto was only 3.2% in 2013. We’re selling a lot less houses in this very tight market, where turnover usually runs around 5%. Land continues to be a big deal.
Woodside
Woodside continues to be a bifurcated market: good houses and good lots sell quickly. The rest sit forever. Last week: 34 houses on the market through MLS, 8 pending, 20 sold in the last 3 months.
