Tag Archives: Condominiums

Palo Alto Condo Price Climb

One of my specialties is Palo Alto condominiums and I have been keeping a
close eye on the condo price climb. Statistics show this real estate
trend is likely to continue as the market responds to the fundamental economic
law of supply and demand.

According to figures released by the National Association of Realtors, homes
for sale across the United States were at their lowest level in 11 years for
December 2012. Despite increasing demand, home sales fell in December due
to the shortage of homes for sale. The “Existing Home Supply” report is
based on residences that have been previously owned and not new construction.
You will see in the attached graph the drastic decline in homes for sale
over the course of the last year.

The Palo Alto real estate market is feeling the impact of short supply and
condo prices are climbing as a result. Several factors are contributing
to the short supply of available units in Palo Alto:

Stock market
volatility- people are relying on their homes as their investment
potential as the stock markets face turbulent times.
Baby Boomers-
having purchased their homes when markets were substantially lower, they
are staying in their homes as long as possible not only for the investment
factor, but to avoid capital gains as well.
“Facebook
Effect””- what realtors are calling the trend of IPO companies creating
massive wealth in Palo Alto and the Silicon Valley, and a subsequent
influx of homebuyers.
Palo Alto is
desirable- with top-rated schools and amenities, an address in the
community of Palo Alto is considered prestigious so buyers are increasing.

As you will see in the following graph, factors such as these have driven
the price of town houses and condominiums up despite a tough economic
climate. Out of 1,242 listings, the median average in 2012 was $900,000
from only $580,000 in 2004. This provides a condominium owner with a
significant return on their investment if they choose to sell (see graph below).

The steady decline in available units and the condo price climb in Palo Alto
have created a seller’s market. If you have a condominium and you are
considering putting on the market you can expect multiple offers and a price
well beyond what you could have expected in prior years.

I specialize in Palo Alto condominiums and would be happy to discuss ways
for you to not only maximize the exposure of your unit, but also attain the
highest sale price for your condo.

A Tale of Three Condos

Not surprisingly, one of the most common questions I hear from sellers is, “how can I get the most money for my condo?” It’s a fair question. It also doesn’t always have concrete answer, because many different factors will affect the overall sale price of your condominium. However, I use a strategy that consistently gets my clients a premium price for their condos. I’ll illustrate this strategy with one of my recent condo sales.

I recently listed a 2 bedroom, 1 bathroom condominium in Mountain View. The unit itself was nothing out of the ordinary. The floors had older carpeting, with linoleum in some areas. The countertops were original from 1970, and the appliances were about the same age. When we listed together, there were no other units for sale in their building (one had just sold, but nothing else was available), so the owner and I were excited about putting the unit on the market. Unbeknownst to us, two identical units in the same complex were about to be put on the market. We were about to face some pretty fierce competition.

Our Preparation

We went to work making the unit shine. The owner vacated the unit, and I added freshly painted walls (one pink room became a white room), steam cleaned carpets, professional staging, and made several other small changes over the next few short weeks.

Once the unit was ready, I hired a professional photographer and created a customized website for the unit. My marketing team then created some fantastic brochures to present the unit in the best possible way.

I also posted the unit prominently on Redfin, Zillow, Trulia, and several other online home search pages to make the home easy to find.

Finally, to determine the price I looked at reasonable, comparable sales, and spent considerable time feeling out the market for the amount of activity. Once I had gathered sufficient information, I suggested that we place the property price at the high end of the market value. In short, together we decided to charge a premium price for an older, but well-presented unit.

The Competition

That week, two other properties came on the market within the same building. Both were the same size, with the same floor plan. They also had 2 bedrooms and 1 bathroom. Unfortunately for us, the other units had newer appliances and granite countertops. The first floor unit even had hardwood floors. To make the situation even more daunting, they were each priced under $350,000… $75,000 below our price!

However, what the other units had in amenities, they lacked in preparation. The units were both occupied by tenants, making them difficult to show. There was no staging to speak of, and neither unit had appealing paint colors. Worse yet, the photos of one unit were taken with the agent’s iPhone. Their information online was hard to find, even incorrect in some places.

The Result

The next two weeks were fascinating. Agents came through our unit and were immediately impressed by how it looked. Soon after, buyers came through and spoke highly of the unit. Within 10 days, we had received two great offers, and sold at our list price of $425,000. Success!

Whatever happened to the other two units, which had more upgrades, but were harder to show, and priced below market value to draw multiple offers? Both received multiple offers, and sold immediately. One sold for $390,000. The other unit sold just under $391,000. Predictably, the other agents’ decision to price the units low to draw multiple offers had worked: they got multiple offers. But only my clients made an extra $34,000, or nearly 8%, by carefully preparing their unit, then setting a premium price.

The moral of the story is this: pricing a unit below market will almost certainly guarantee the unit will sell, but by effectively preparing a unit and charging a premium price, sellers have the opportunity to get the highest possible price for the sale of their condominium.

The Palo Alto Condo Market

Good things are getting better in the Palo Alto Condo market. North Palo Alto witnessed some pretty spectacular sales this last quarter, most notably the sale at 325 Channing (The Woodmark), where a 3 bedroom penthouse unit sold, with multiple offers, to an all cash buyer for $2,700,000. Wow!

The biggest change from this quarter over the last quarter is the quick sale of highly priced tag units. Newer complexes and top floor units are selling quickly for a premium. A prime example is 800 High Street, where a penthouse unit recently went into contract. The property was listed at $1,988,000 and sold in 9 days. It’s rumored to be in contract for more than $2,000,000. That’s a hefty price, especially considering that the unit is only 1,607 square feet.

Why are these high priced units moving so quickly? For starters, single-family home prices in north Palo Alto have priced many buyers out of other options. Many homes, especially in north Palo Alto, are selling in excess of $1,100 per square foot of living space (see 1170 Fife). North Palo Alto Condo prices are simply chasing home prices up the price curve.

Another possible reason for the high sale prices of high-end north Palo Alto condos may be related to the recent influx of overseas buyers. For this stream of overseas buyers, condos offer a low-maintenance purchase option with great access to downtown Palo Alto.

Either way, the lesson is this: if you’re looking to sell your high-end condominium or townhome, now is the time to do it.

Tools for buying and selling condos in Palo Alto

Peter Giovannotto, my colleague at Dreyfus Properties, has recently launched a Palo Alto condo website packed with analysis of the local condo market. Ever wondered about the 10 priciest HOA’s in North Palo Alto or last month’s condo sales? Peter has also developed a condo comparison tool to help people sell their condos at a premium price. He will soon unveil an online rent-versus-buy calculator to help buyers make wise purchase decisions. Check out his website for articles and tools.

Q2 Condo Health Report: Condo Inventory Falling, Buyers Clamoring

Condos and townhomes are a great way to get a pulse on the Palo Alto real estate market. This segment tend to be more volatile than single family homes, so we can get a good feel for what’s happening in the market by looking at their inventory, sales prices, and general activity. This market behaved differently in the first and second half of Q2, thanks to the Facebook IPO.

In the first half of Q2, our local market reflected excitement about the Facebook IPO. In the runup up to the IPO, we saw a large uptick in available (and later, sold) properties, as many sellers decided to capitalize on optimism surrounding the IPO. 67% of the condos and townhouses sold in Q2 were sold before the Facebook IPO. Even with the increase in inventory, buyers were clamoring for these properties. And then, just as quickly as the excitement began, the condo market lost its momentum.

Let’s dissect the second half of Q2. As the market changed, sellers and buyers reacted very differently. Sellers suddenly became apprehensive about listing their properties. As the optimism (and Facebook stock price) dipped, fewer properties became available to purchase. Compared with 2011, inventory in the final weeks of the second quarter was almost 55% lower than it was at the same time last year.

Buyers, however, still clamored for properties. Condos and townhouses sold just as quickly as before the IPO — and still sold, for the most part, above asking. Of the 14 properties which sold or went pending in the second half of Q2, only 3 lasted more than 20 days on the market.

In the pre-IPO excitement, sales activity increased. In the post-IPO hangover, sellers pulled back, while buyer activity remained constant, or perhaps even increased, despite the contraction in available homes late in the quarter. Right now, we find ourselves in a moment of low inventory and high demand. If you’re on the fence about selling your condo or townhome, now is a very, very good time to get premium price for your property.

Peter Giovannotto is the Palo Alto condo guru for Dreyfus Properties. Peter has created the only known Comparative Market Analysis tool to compare condominiums, townhouses, and homeowner associations in North Palo Alto. Find out more about Peter’s condo analysis tools on his website: www.paloaltocondoinfo.com