Los Altos Real Estate Blog

As of June, 2011 there are only two short sales in both markets, one in Los Altos and one in Los Altos Hills.  In Los Altos there are two short sales pending and in Los Altos Hills there are also two pending.  When compared with the overall market and number of units sold, these numbers are very low.

Short sales in Los Altos are rare and few have ever taken place.  The one short sale available right now has been on and off the market since August, 2008.  The current price is an incredible deal considering the size of the home (over 3000 square feet) and the location (walking distance to downtown Los Altos).  It's also very close to Covington Elementary School - ones of the best schools in Los Altos.

The two pending short sales in Los Altos have also been on the market for long periods of time.  The issue has always been price relative to location.  One short sale that is pending is the home at the corner of Richardson and Grant.  I reported on that home earlier this year.  It's a nice home that was completely remodeled but is located on a busy street.  It had been previously priced lower but the bank raised the price.  I'll update you when it closes escrow.

The only active short sale in Los Altos Hills, located on Francemont, has been on and off the market since 2006.  While it's a nice house, it has had many offers and still seems to be having trouble closing.  It's unusual for any home to remain on the market so long.  In my opinion this is an issue with the bank and not the home.

The two pending short sales in Los Altos Hills are both priced close to $1.7 million, which is a low price for the area.  Neither was on the market long before going into contract.  One was on the market a short while in 2009.  In both cases, they represent excellent values for what they are.  It is rare to see homes in this price range in Los Altos Hills, especially as short sales.

There have been 2 closed short sales in Los Altos and 1 in Los Altos Hills. Again, these are very low numbers in terms of the overall number of homes being sold over the course of the year.  As it stands right now, only a total of 5 homes could potentially be sold as short sales in Los Altos for 2011 and only 4 homes could be potentially sold as short sales in Los Altos Hills for all of 2011.

As of today there are 9 active or pending properties in Los Altos that are either short sales or bank owned (REO). Of those, 7 are single-family homes and 2 are townhouses/condos. The best deal in the bunch is a 3078 sq.ft. home on Lincoln Ave that went pending with a price of $799,000. That's an incredible deal in Los Altos, even though the home needs significant work to become "livable".

The one short-sale property that stands out the most is on Miramonte Avenue. This home was purchased to be flipped and all sorts of things went wrong in the process. First, it was purchased in April 2006 for $1.595M (now listed for $1.490M) and it wasn't back on the market until December 2007. That's about 1.5 years to remodel the home (way too long). Having done full home remodels myself (and I mean gutting them), the fastest I've done was 40 days. If you know what you're doing and plan well, you should target 60 days or less to completely remodel a home to flip.

Second, the starting price on the home was $2.95M for a home with only 2,688 square feet. Way too high! A completely new home up the street (literally) with 3,560 square feet sold for $2,495,000. That's about $700/sq.ft. Translated into the short sale on Miramonte the value is about $1,882,000. The seller priced the home wrong in the first place and as a result is now forced into a short sale.

This short sale sends a poor message to the market. While it looks like the home has taken a huge price reduction, in reality it is priced about 20% below what the value should have been in the first place vs. about a 50% price drop from the original list price. The perception of a huge price drop is not in line with reality.

When looking at short sales in Los Altos, consider that the price will most likely still be in line with nearby comps and don't expect a fire sale. I'll address the trends for the overall number of short sales in Los Altos and Los Altos Hills in future posts.