Los Altos Real Estate Blog

Well it looks like we're not quite at the top of the list but we're very close and in good company with some well known towns for the well-to-do.  I read an article in Yahoo Real Estate and Business Week Online about the most expensive small towns in the U.S.  The article is here:
http://realestate.yahoo.com/promo/most-expensive-us-small-town-sagaponack-ny.html

Some positive news for us is that while the median price in the list of Top 50 towns dropped 5.4% in November, the prices in Los Altos Hills rose.  That reflects what I've been seeing in Los Altos and Los Altos Hills, prices are moving up and the high-end probably saw the bottom the middle of last year.

A few other local towns making the list include Monte Sereno (18), Loyola (21) NOTE: this isn't a real town but area near Los Altos, West Menlo Park (50).  What the last two towns show is that the data was compiled using sources that identify areas that aren't really "towns" in some cases.  For example, Atherton isn't on the list and they have a population under 10,000 according to the last census.  I'll reach out to Business Week about corrections.

As you're probably aware, China has a major role in the financial stability of the United States.  They're the #1 buyer of our bonds which is critical to our government's ability to finance anything, including the economic recovery.  The original story on MSNBC is here:
http://www.msnbc.msn.com/id/34800156/ns/world_news-washington_post/

Now, China is facing its own potential real estate meltdown.  Prices have risen substantially in recent years making real estate speculation more lucrative than actual work.  Sound familiar?  It should.  That's what started the mortgage meltdown here.

How does this affect us here and our local real estate market?  On several fronts, including buyers of luxury homes, the general health of the economy, and interest rates.  Many buyers of luxury homes (and property in general) have come from overseas as the value of the dollar dropped in recent years.  With the recent drop in real estate prices that buying has continued.  However, if the economy in China takes a hit we could see many of those buyers disappear.  I see a significant number of overseas buyers of luxury homes in Los Altos Hills.  The high-end market is rough enough but that would hurt even more. 

China put curbs on bank lending yesterday which caused a slight dip in our stock markets.  From a psychology perspective, having the market drop again as it did when our mortgage meltdown started would damage what little confidence we have in the current recovery.  So from a selfish perspective, we want China to stay strong so our recovery can continue.

As for interest rates, the impact from a meltdown in China is difficult to predict.  However, it could mean more limits on our banks to lend with higher costs as a hedge against defaults or to cover losses.  We're not done with our own foreclosure storm yet.  With rates rising in recent weeks, the up-trend will take a little wind out of our recovery's sails.

I'll keep an eye on this issue and post again when and if we see a real impact.

An article on MSNBC and other media outlets reported that according to the National Association of Realtors, the number of people preparing to buy a home in November dropped -- the first decline in 9 months.  Here's the article:
http://www.msnbc.msn.com/id/34704789/ns/business-real_estate/

The concern is that the only reason sales have held up is government tax credits and lower interest rates.  Sure, those have helped but they're not the only reason.  In a lot of markets around the country investors have been buying homes because they can rent them out for more than the mortgage payments.  They've depleted low-cost inventory locally in most markets.  Even city governments are getting into the act such as when Menlo Park bought properties within city limits as affordable housing.  Investors are not being driven by the tax credits.

Even without investors, inventory levels are low locally and sales strong.  Look at my post on Monday about closed and pending sales in Los Altos.  If we see a dip in demand, it will likely remain at the top end of the market (which is still weak).  There are sufficient buyers to keep local sales strong.

As for the rest of the economy, manufacturing is up, job losses are dropping, and consumer spending is improving.  All these signs in the last few weeks point to a stronger economy.  As those bolster consumer confidence and the media speak positively about real estate, we'll see the housing market continue to improve.

Let me start by saying "Happy New Year" to all the buyers, sellers, and agents reading my posts.  This year will be a great year on a lot of fronts, not just real estate.

We're starting off the year with inventory of available homes at exceptionally low levels, considering the market in 2009.  Here's where things stand now:

Los Altos: 47 (37 single-family, 10 condo/townhouse)
Los Altos Hills: 34 (all single-family)
Mountain View: 59 (29 single-family, 30 condo/townhouse)

Just to put some perspective on how strong demand is, 7 homes in Los Altos closed in the last week of December and 4 homes went pending.  That's pretty good in any week let alone a time when most people are away on vacation.

In Los Altos Hills, I had a call each day the week of Christmas (except Christmas day) for my listing.  Three properties closed in the last week of December and 1 went pending.  Not bad considering how few homes are on the market and the prices.

We'll see how many homes that expired or were pulled off the market last year come back on.  If the economy continues to recover we should see local sales stay strong.