Palo Alto CA Market Update, July 27th: One Year Later

 Sorry for the recent silence on my blog. Summer is busy! 

Lately I've been interested in tracking market changes by looking at my old market update posts and comparing them to current trends. Here's the latest in what I hope to be a semi-regular occurrence... the One Year Later market update. Let me know if these compare/contrast updates are as interesting for you as they are for me.

My Market Update for 7/26/10

Here's today's snapshot of the Palo Alto single family home market: 

121 Active listings

33  Pending sales

What does this mean? The inventory of active listings decreased by 1 and pending sales decreased by 3.  This is virtually unchanged from last week when there was a huge decrease in pending sales. The fact that pending has stayed stable is a good sign. The over 2 million market has 37  active listings and 7 pending sales which is pretty much the same as last week with only a decrease of 3 in active listings and the same number of pending . Under 2 million there are 84 active listings and 33 pending sales, which is slightly better than last weeks numbers. My guess is that we have hit the doldrums of summer and we will not see much change in August except maybe a little less inventory which is typical for August.

And here's where we are today:

100 Active listings

57 Pending sales

Over 2 Million:

36 Active listings

9 Pending Sales

Under 2 Million

64 Active Listings

48 Pending Sales

What does this mean?  Not much has changed since last July.  There were more listings last year, but the active to pending ratio was pretty much the same both above and below 2 million.  So there were more active listings and pending sales last year, but the percentage of listings selling is pretty much the same.  How does this jive with what the chatter in the news and real community saying we have hit bottom and prices are going up?

My take is that there is a lot of activity over a few houses.  If a home is priced low for the market and it is in a desirable location it is most likely to get multiple offers and be sold for over asking price.  But, a few homes selling for more than asking, and possibly more than market value, does not make for a fundamental change in market dynamics. 

Last year I predicted that the coming year would not bring much change in the market. Year over year I think I am correct.  Despite flurries of activity (particularly in the under million dollar market) overall things are similar.  Fewer homes, but fewer buyers.  Loans are still a challenge, jobs are still insecure, and the stock market is still volatile.

We still have a desirable market and buyers willing to pay a lot of money to live here, but homes are not flying off the shelf any faster now than they did last year if you consider active to pending listings a measure of how active or slow the market is.

Marcy Moyer

Keller Williams Realty

www.marcymoyer.com

marcy@marcymoyer.com

650-619-9285

D.R.E.  01191194

Photo courtesy of smartpassiveincome.com. 

Do You Want to Buy a New Car?

OR: What Hurts More, A Short Sale or One Where There's Still Equity But You Have Lost A Lot

This morning my husband opened up an envelope with information about his stock options. He looked at me and said, “Do you want to buy a new car?” 

My answer was of “Of course not.” He then explained we'd just lost $50,000 in value from his stock options. 

My response? “Don’t be so greedy.”  

We are both working, our mortgages are almost paid off on the house and rental properties, and the stock options are like dessert, nice but not essential. However, it was painful to him to lose that much money on paper.

It made me think of my latest clients.  Some have lost all equity and if they have to sell it will be a short sale. By the time they get to me it is gone, and they do not seem to be concerned about the price as much as the process.  Others who are losing equity when they sell seem to fall into 2 categories: those who are grateful to be able to sell and those who are fighting for every penny and do not seem to see the value in taking an offer to make a sale if it means losing a little more money.

If you are a buyer then your life will be much easier if you can find one of the former sellers. If you are working with a seller who is emotionally invested in every penny they are losing it will be a much more difficult sale.

If you are a seller it is important to clearly understand your goals when putting a home on the market. If you only want to sell at your price, then if your price is market value, you may get it. But if your price is above market, it won’t sell. Period.  

The most difficult part once you understand your financial choices is overcoming the emotional ties to a particular number.  If you want 1.5 million and you only get 1.4 million and life can go on, can you let go of your emotional attachment to to 1.5? If not, this may not be the best time for you to sell.

It is no different if you want 400K and you can only get 380K.  If your life can go on with a lower price and you need to sell, you may have to eat the emotions.  If you are just testing the market, don’t bother. In this environment you will fail. If you focus on your need and not your want you will get to your goal of selling a house much quicker and easier.

Marcy Moyer

Keller Williams

www.marcymoyer.com

marcy@marcymoyer.com

650-619-9285

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Palo Alto CA Home Prices in the Wake of Santa Clara County School District Consolidation Discussions

There was an article in this morning’s Mercury News about a grand jury investigation into Santa Clara County’s school districts and what to do about soaring deficits while keeping the level of education from suffering. The recommendation was to combine feeder elementary districts with the high schools that they feed into.  

So, for example, they recommend combining the Whisman/Mountain View and Los Altos elementary districts with Los Altos and Mountain View High Schools.  They also recommend the same for Saratoga and Los Gatos.  On the surface, while one can argue the merits of one big district vs smaller districts, both from an educational and financial stand point, these combinations do not stand out to me as having a huge change in what parents perceive as quality vs non quality education.  I'm not saying there would not be some level of concern, but I don't think that these consolidations would cause great panic.

However, I believe that just the talk of combining the Fremont Union School District with both Sunnyvale and Cupertino Elementary Districts could send shock waves through the real estate community.  Anyone in this area is aware of the desirability of the Cupertino School District.  Buyers pay huge premiums to be in the Cupertino district. If the district is combined with the Sunnyvale Elementary district fear might arise that the quality of education will be diluted.  I'm not sure I believe that, but what I believe, and even what would actually happen, is irrelevant. 

The worst thing for real estate values is uncertainty.  When buyers don't feel comfortable with what will happen in the future they don't open their pocketbooks.  The proposed high speed rail is a great example.  People have been buying homes next to Cal train tracts for decades and they trade the known noise for a lower price. Now that there may be a high speed train, and no way of predicting how that train might disturb the area from a visual or noise perspective, selling a home near the tracts is almost impossible. 

It's the uncertainty that is paralyzing home buyers.

So the point of this post is that Palo Alto already has a unified school district with K-12 in the same district.  There will be no talk of changes here.  Since it's a known rather than an unknown quantity,  like the other districts, I think that Palo Alto will look even more attractive to buyers looking for good schools for their families and who are not comfortable with possible changes. 

As I said, just talk of possible changes is enough to spook buyers in this very fragile housing market.

Marcy Moyer

Keller Williams Realty

www.marcymoyer.com

marcy@marcymoyer.com

650-619-9285