Los Altos Real Estate Blog

The latest national news headlines say that the median selling price of homes dropped in January 2012. Look at the chart below with median prices for the past several months.  When you look at the trend for the country, there are several months where the data doesn't change at all!  The trend, overall, is very flat.  Quite honestly, it's all a little suspect to see such small variations across an entire nation.  When I look at how the local macro-market has done - Santa Clara County specifically - and how my local micro-market has done - Los Altos specifically - there's no comparison.

Does the national trend, which is generally flat, really reflect anything happening in my market?  There are markets in my area that are flat, but they seem to be the exception, not the rule. Most of the markets in Silicon Valley, especially the nicer areas with good schools, have been trending up for the past 2 years.  For them, 2011 was a great year.  The trends get more varied as I look at specific neighborhoods and price ranges.  If that's the case, why would a local buyer care what happens to the price of real estate in Texas, New York, or South Dakota? 

My advice for buyers and sellers is the same; focus on what is going on ONLY IN YOUR NEIGHBORHOOD.  Put it this way, if you're in Delaware and reading this my advice to you is the same as anyone, anywhere - Real estate is local.  National trends don't reflect what's happening in local markets.  That said, national trends SHOULDN'T impact the decisions made by local buyers and sellers.  If you're making a decision about buying or selling, focus on the local trends and make your decision accordingly. 

My advice to sellers in Silicon Valley is to move ahead with plans to sell.  The trends are very positive and prices have been moving up progressively in many neighborhoods and towns.  My advice for buyers is to buy now but strive to get the best value you can.  With unemployment down, interest rates low (and likely to stay that way), and more buyers coming into the market, your best bet is to watch the local market carefully and time your purchase to your best advantage.

The Mountain View market has been very strong for the past year and that trend continues.  As we finished last year the average selling price (ASP) was trending up and that has continued into 2012.  Many buyers are still confused about the local market trends compared to what they hear on the news.  National reports still talk about rampant foreclosures, price declines, and lots of inventory.  That is NOT the case in Mountain View, California!

The National Assocation of REALTORS shows a decline of 4.8% in the ASP for the country in January, while Mountain View increased last month.  This trend is likely to continue as there is s shortage of inventory.  Moreover, the price range and overall trend is basically flat nationally over the last 2 years compared to Mountain View which has been trending up for the last 2 years.  As a consumer, you need to keep in mind that the national trends are completely different from the local trends.  While the local market may see seasonal declines just like the national market, the overall up trend and strong demand are completely different.

The trend in Mountain View compared to nationwide is likely to remain different.  Here are some key points:

• National sales are up while prices are declining
• Mountain View sales are up and prices are increasing
• National pricing trend is flat over time
• Mountain View pricing trend is up over time
• National new construction is moderately up
• Mountain View new construction is subtantially up

The chart below shows the current trends in Mountain View, California.  As with last year, the average selling price is likely to increase substantially in Q1 and Q2, then ease in Q3 2012.  This is normal seasonal behavior.  The difference between the local market and the nation is that prices do no come down as substantially.

If you've been watching some of the markets in the area, you'll notice that stories of multiple offers, rising prices, and few choices are once again standard.  The luxury market took a beating in the 2008-2010 timeframe but bounced back last year.  I'm here to point out some market trends so you understand what's happening in the various markets.  My definition of the luxury market is for homes priced at $1,500,000 and above.

Overall, the trend for luxury homes prices in the primary luxury markets (Atherton, Menlo Park, Palo Alto, Los Altos, Los Altos Hills, Saratoga, and Los Gatos) is for prices to go up and inventory to be down. Palo Alto has the strongest luxury market in the last 12 months.  Los Altos has done very well but others are flat or trending up slightly (Saratoga, Los Gatos).  The trick on knowing which segments of the market are strongest can be summed up easily.  The entry-level luxury market is the strongest.  In fact, homes priced $1,000,000 to $1,500,000 are on fire!  I left those out of the analysis because they tend to skew the results.  It's not uncommon for a home priced in that range in the top school districts to sell at 10% or more above asking price.

A general lack of inventory is still an issue across the region.  The overall number of listings is lower than last year and the trend seems to be flat for the time being.  There are rumors that sellers are waiting for prices to rise even more but that's unconfirmed.

MARKET SEGMENT DETAILS

• Homes priced under $1.5M are selling immediately, sometimes with pre-emptive offers
• $1.5-2.5M - Very active market but stronger in Los Altos and Palo Alto than other places
• $2.5-3.5M - Moving nicely in Atherton, Los Altos, Los Altos Hills.  Moderate activity in other luxury markets
• $3.5-5.0M - Lots of active buyers and deals coming together both on and off the MLS.  Fairly not market.
• $5.0-9.9M - Quite a few buyers but few seem to be making buying decisions.  This segment will heat up.
• $10M+ - Several buyers in this range as well and more listings coming on recently.

This exceptional opportunity is perfect for the buyer who wants new construction in Los Altos Hills with the ability to fully customize the home to suit their taste.  Breaking ground in April 2012, the home will feature a total of 4 bedrooms all with en-suite bathrooms.  Two master suites, one upstairs and one downstairs, offer flexible living options.  The main floor has a formal living room, formal dining room, den, and gourmet kitchen with adjoining family room.  The second floor has living quarters, a theater, and gym.

For a private showing of the property and meeting with the builder to discuss options, please call me.  The list price is $4,200,000. All finishes can be customized, subject to allowances. 

This is directed at the consumer, the home buyer.  Yes, that's right, you...the person sitting there reading this because you want to buy a home.  You've been searching on the Internet looking for tips so I've got a few good ones for you.  A a prospective home buyer, what should you do when you go to an open house?

Be Honest

• Walk in, be polite, and shake hands with the agent
• If you have an agent, let the open house agent know right away
• If you don't want to work with an agent, just tell the open house agent that
• Let them know if you're new, been looking for a while, serious or not

There's nothing worse for the agent at an open house than having someone come in and say things just to get a little information.  It's deceptive.  I'm always happy to share what I know but I, as with my many colleagues, would prefer you be honest about your intentions.  In particular, tell me if you have an agent.  Being honest will actually get you further than not.

Ask The Right Questions

• What can you tell me about this house?
• What inventory is coming soon?
• Are there homes "off market" or "off MLS" that the public doesn't know about?
• Are there market trends I can't find online?
• What should I know that I won't find in the reports?
• What are the pros and cons of this house?

The agent at an open house may be able to give you insights you can't find online, in the brochure, or in reports. They should know details of the home and neighborhood not included elsewhere. The agent who really knows the market you're shopping in will (or should) know about inventory coming soon or available off market.  They should also be able to tell you the trends so you'll know if now is a good time to buy or you should wait.  The open house agent should also be able to give an opinion on what's good and bad about the house they're hosting.  You'll want an agent with perspective and an opinion, not just a cheerleader trying to sell the house.

Get To Know The Agent

You may be new to the market or just not tied to an agent yet. If you haven't interviewed any of them or very few, take the time to get to know the one at the open house.  The more agents you talk to, the better an idea of the style and knowledge you need and want.  If you like the agent at the open house and can talk with them easily and learn something you didn't know, they're a good candidate to help you in your search.

Read The Disclosure Reports

Take the time to read disclosures and educate yourself about what to look for.  After a while, you'll learn what matters and what doesn't.  If you have questions, ask the agent.  If the agent is particularly helpful, then perhaps that's the agent you should be working with.

Leave On Time

If you arrive at 4:25 and the open house is only supposed to go to 4:30, don't linger for 30 minutes.  It's just plain rude.  Believe it or not, the open house agent might actually have plans afterward.  If you want to see the house for a longer period of time, no problem, ask for an appointment.

Leave Your Contact Information

...only if you plan to actually work with the agent you've met.  Don't give out a name, number, and email address setting the expectation of doing business unless you actually plan to follow through with it.  Agents are at open houses to get new buyers.  If you're willing to be a buyer, leave your information.  If not, don't.

What's the point of going to an open house?  It's to learn about the property and the market.  To educate yourself as a home buyer, you want to see several homes and meet a few agents before jumping into buying.  Follow these suggestions and you'll learn the market in a short time.

Home buyers are faced with a lack of inventory right now in many markets.  The markets that are seeing new inventory watch newly listed homes come on the market and sell almost instantly.  Normally, this is a sign to sellers that they should put their homes on the market because demand is so high.  However, right now, we're seeing the exact opposite.

If you look at the new listings in Los Altos, Palo Alto, Cupertino, Mountain View, and other towns the number of new listings is smaller compared to years past.  If you take those three towns, collectively they had 127 new listings last February compared to 81 this year.  There were 55 closed sales compared to 64 this year.  So, if you think there's less to choose from, YOU'RE RIGHT!  So, why do we have about 1/3 less inventory this year than last year?

I think sellers are waiting for prices to rise.  Some markets did very well last year.  Palo Alto was up over 10% which is right back to the boom years.  Los Altos was up almost 5% last year.  However, sellers have heard stories of multiple offers, huge price gains, and cash buyers. They all want to see the same thing with their house.  So, my guess is they're waiting for prices to rise a little more so that the sold comparables are high enough to justify higher asking prices.

We'll see how March goes but based on what I can see of the off-market inventory and listings coming soon, March will be underwhelming.  The best way to find a home right now is to work with an agent who has access to substantial "off MLS" inventory or can find a seller before they go on the MLS. 

I'll be holding open this wonderful estate property again this Satuday, February 25th, 2012 from 1-4PM.  If you haven't been to this fine estate home before, stop by tomorrow and take a look.  Even if you've seen it in the past, come again because the owner/builder has made some significant improvements and additions.  This is a completel "turn key" estate, brand new, and NEVER LIVED IN!  No other luxury listing in Los Altos Hills offers the ability to move in immediately.

When you're here, take the time to walk the grounds and enjoy the landscaping.  This is a very private estate with very little direct visual access to neighbors.  If you want to truly get away from the world, this a great place to be.  One of the newest changes is the completely landscaped front yard.  Lots of grass with a fountain and small creek makes this a grand and pleasant oasis.

The asking price is $7,188,000. 

Zillow just published their annual list of the most expensive small towns in America and, as usual, Los Altos Hills came in at #3.  It's nice to see our local markets represented in this list but I've learned that the method of calculating the values is flawed.

Zillow takes the median sales price in each town from the month of December (in this case December 2011).  From a statistical standpoint, this is full of flaws.  For one thing, when you look at Los Altos Hills there are only a few homes sold and the median is rarely an accurate reflection of what is selling.  There were very few sales in December and that's a time when bargains are typically sold.  Seasonal slowness combined with reduced prices gives a flawed impression of the market.

When you look at the AVERAGE SELLING PRICE (ASP) you get a different perspective, even when looking at an individual month like December.  The average selling price in Los Altos Hills was much higher in 2011 overall than the Zillow report.  The ASP is a more accurate representation of values when there are fewer data points.

Anyway, congratulations to Los Altos Hills, CA for once again being one of the most expensive places to live in the United States.  With the growth in the market, I'm certain we'll see continued price appreciation in 2012.

There is a wide variety of clubs in Los Altos and Los Altos Hills that service their members and the community.  Whether you're new to the community or a long time resident, there are plenty of things to do around town.  A club is a great way to make new friends or join existing ones.  Here is a sample of the many clubs available in Los Altos:

Los Altos Newcomers Club:  This club is focused on welcoming new members of the community.  I've met some of these folks and they remind me of the Welcome Wagon group from the 70s.  They have several other secondary clubs with a wide range of interests.  Take a look at their website for membership instructions.

The Garden Club of Los Altos:  This club meets regularly to talk about all things associated with gardening.  At each meeting they have speakers, discussions, and assignments to work on between meetings. 

Los Altos Tennis Club:  Do you love to play tennis socially but want a little competition added for fun?  This is the club for you.  They have ladders to compete among members and play other clubs as well. 

Los Altos Robotics:  Interested in building robots using Lego NXT and other sets?  This is the club for you!  It's for kids but they are serious and compete with other robotics teams from around the Bay Area, the state and the country. 

Los Altos Art Club:  An artist working in virtually any medium can and should join this club. You'll network with fellow artists, get support, gain access to shows, and other things.  They've even got a library of information to help.

Kiwanis Club of Los Altos: This club has been around since 1947 helping around the community.  They're the sponsors of the "Pet Parade" (a long standing tradition in the town) and the Christmas Tree Lot.

Rotary Club of Los Altos:  The Rotary Club has a long tradition of community service and support.  They are also the sponsors and event coordinator of the "Fine Art in the Park" event held every year.  If you are community service oriented, this club is a great one to consider.

The Metro, local magazine, is now taking votes for the 2012 Best of Silicon Valley.  Today is the last day of voting and I want to make sure everyone gets a shot at voting for the many Los Altos businesses that are on the list of candidates.  To vote, follow this link to the MetroActive survey.

Some of the Los Altos businesses that have been nominated include:

• Aldo's (Best italian restaurant)
• Los Altos Golf and Country Club (Best place to hold a wedding reception)
• Beausejour (Best french restarurant)
• JW Catering (Best caterer)
• Los Altos History Museum (Best small/quirky museum)
• Bus Barn Theater (Best Theater Company)
• Bicycle Outfitters (Best Bike Shop)

If you can get on there today and cast your votes that would help our fine local businesses get some exposure and the pride of being voted "The Best".  You can put a write-in candidate as well if you don't see you favorite Los Altos business on the list.