Category Archives: Quarterly Reports

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The Glass is Full

The Spring real estate market sales activity continued with an upward trajectory for all of our local markets. However, in June we saw the beginning of the end for all-time low interest rates. Announcements by the Fed of a strengthening economy and the reduction of its bond buyback program triggered an uptick in the Treasury yields, which pushed interest rates off of their all-time lows. During the last 2 weeks of the June, the 30-year fixed interest rate bounced between 4.5% to 5% in comparison to sub-4% rates during most of the first half of the year.

As expected, the Palo Alto market continues to clear most of its inventory within 7-10 days on the market especially in the sub $3 million price point. Menlo Park and Los Altos also continue to witness high demand for the sub-$3 million properties. However, both cities are starting to feel a slight slowdown in the luxury market. Homes priced north of $3 million may now offer an opportunity for price negotiation, especially with more than 60 days on the market.

The common denominator across all of the mid-Peninsula cities, from Mountain View to San Carlos, is the high demand of first time homebuyers looking to purchase properties between $900,000 – $1.5 million. These buyers are often dual-income with young children (or have kids on the mind). They are looking to move down from San Francisco or out of a rental property.  We are witnessing a “glass is full” phenomena: these buyers are priced out of Palo Alto and Menlo Park, since these cities rarely offer properties in this price range anymore. They are now happily expanding their home search to include the surrounding cities of Mountain View, San Carlos and Redwood City, where properties are more affordable but still offer close proximity to lively downtowns and easy access to their places of employment.

What remains to be seen is what effect, if any, the rise in interest rates will have on buyer demand.  Since the majority of these first time home buyers need mortgage financing to purchase a home, it is this group that is most sensitive to interest rate fluctuation.  Over the past few months, we have received feedback from buyers that they have become accustomed to homes selling for $100K-$200K over the asking price. This has discouraged them from pursuing houses. If there are fewer buyers chasing houses due to the interest rate hike, buyers may have a renewed opportunity to pursue houses that they previously had felt were out of reach.

A Great Second Quarter!

What a fantastic second quarter I’ve had! After representing three
successful buyers in Q1, the next quarter I listed and sold three great
Menlo Park homes:

Central Menlo

1255 Santa Cruz
Avenue, Menlo Park, a new 4bed/3.5bath, 2700 sf single level home. We
were on the market only 15 days when we received a great offer. I felt
our listing price was at the top of the market range at $2,390,000, but
we sold the home at $2,300,000.

The Willows

116
Blackburn Avenue, Menlo Park, a 3bed/1bath, 1170 sf home with  separate
studio including a full bath. We came on the market Memorial weekend and
sold 12 days later with four offers. I felt our listing price of
$1,150,000 was right on the mark but we sold it for well over the list
price.

Linfield Oaks

360 Linfield Drive, Menlo Park, a
3bed/1.5bath, 1718 sf home with a remodeled kitchen, new windows and
new recessed lighting. Again we were only on the market 12 days and sold
with four offers. We listed the property at $1,695,000 hoping to
attract several buyers and that is exactly what we did! This home too
ended up selling for over list price.

As we head into summer, we
generally see a slow down in the market and not much of an increase in
inventory. Many buyers become tired and will hold back on making offers.
If you’re in the market to buy a house I would continue to keep on it-
interest rates are creeping up slowly and buying sooner rather than
later could save you money in your mortgage payments.

Q1 2013 Palo Alto Market Commentary

In our February North Palo Alto Market Report, we had a headline saying “Here We Go Again” and boy were we right. The average price for the first quarter of 2013 was up 30% over the previous year and the median price 34%. Our prediction of a 12% to 15% price rise for the first quarter of the year was low as the average price of a home in Palo Alto actually rose from $1.65M to $2.25M quarter-over-quarter! Inventory continues to be the big story as properties offered for sale were down 43% from the same quarter last year. Without a huge influx of supply it is hard to see this rally stopping and our traditional pattern of establishing prices in the late winter/early spring and then holding steady for the rest of the year, may be shattered as prices continue to rise into the summer.

For Q1 2013 sales trends in other local markets, check out these quarterly report cards:

Palo Alto Real Estate Sales Cycles: Looking Back, Forecasting Forward

Here we go again. 

The median price in Palo Alto rose 24% over the same last quarter in 2011, but more impressive is the 20% yearly increase from 2011 to 2012. For those into cycles, 2012 looks awfully similar to 2004 when we began what ended up being a 35% run on the median price from 2004 to 2008. Doing the math that means a $2,000,000 house today will be $2,700,000 by 2016. Our forecast for this year is a 12% to 15% increase in Palo Alto housing prices with that appreciation being realized early in the spring and prices holding throughout the rest of the year.

Menlo Park Real Estate Sales Cycles: Looking Back, Forecasting Forward

While the quarterly numbers look relatively flat, Menlo Park enjoyed an 11% increase in the median price in 2012, and nearly brought the market back to the peak median price of 2008. For those into cycles, the patterns say 2013 is 2005 all over again, a year that saw a 28% increase in the median price. Our forecast for this year is a 15% to 20% increase in Menlo Park housing prices with that appreciation being realized in the spring and prices holding throughout the rest of the year.