Los Altos Real Estate Blog

The Los Altos real estate market is as strong as ever with the average selling price in March up to $2,032,075 and 37 single-family homes sold.  That's up from 15 homes sold last month and up from 28 sold in March 2011.  Prices are up and multiple offers have become standard as the median is now up to $1,915,000.

With only 1.8 months of inventory, the market is strongly biased to sellers.  The sales price to list price ratio is one telling sign of this.  In March 2012 the ratio was 102.7%, down a bit from 104.2% in February but still high.  This means that offers over asking dominate the market.  Another factor is that days on market is also low.  Most sales are happening within one week on the market, with a few homes taking up to 2 weeks (depending on price and location).  Low inventory is partially due to some sellers waiting for "The Facebook Effect" to occur - buyers with Facebook IPO money to get into the market.

Some of the major sales last month in Los Altos include 1310 Villa which sold for $3,450,000 and 307 Verano Drive which sold for $3,395,000.  They were two of four sales that closed in March over $3 million.  What's more interesting is five sales in the $2.4-2.6 million range.  This is a major tier for builders and was a barrier in prior years.  The increase in activity indicates more "move up" buyers who are buying larger, quality homes without pushing the top tier too far.  If sales continue to hold in this price range, the overall market should continue its strong climb.

Several eateries in Los Altos are participating in the Dine Out for Packard event to help raise money for the Lucille Packard Children's Hospital at Stanford.  The event takes place on April 19th, all day, at the following places:

• Spot - A Pizza Place
• Marie Callender's
• Baskin-Robbins
• Bumble Los Altos
• New Wing Wah Restaurant
• Peet's Coffee
• Rick's Cafe
• Round Table Pizza

Merchants will take 10-20% of their sales that day as a donation to the cause.  There are a few conditions for some vendors.  Marie Callender's and Bumble require a printed flyer from the website (see link above) and Peets is only donating from their bean sales.

Overall, this is a very easy program to help support.  The Lucille Packard Children's Hospital has done amazing work over the years and is a true asset to the local community.  If you have a chance to support this effort, please visit those merchants.

Have you been missing the downtown Los Altos farmer's market?  Well, it comes back on May 3rd, 2012 starting at 4PM and ending at 8PM.  There is lots of quality produce, entertainment for kids, and other products available.  If you've never been, come down an enjoy the lively atmosphere while shopping for quality produce, flowers, fish, and other products.

Make It An Outing

What I've seen for years and advise new shoppers to do is make a night of it.  Head downtown and have a nice dinner (there are lots of places to go) before heading to the farmer's market.  You can then do your shopping before heading home.  Rather than a quick stop, it becomes a destination.  It just gets better as the weather warms up because you can stay later.

Tips On Produce

Just like restaurants getting first pick produce, the best selection is available to those who arrive early.  The earlier you arrive, the more selection you have of everything.  If you get there right at 4PM, you should have the best pick of everything you need and it won't be so busy you can't talk to the seller about their recommendations.

As most locals know, there has been an ongoing debate with the Bullis Charter School (BCS) about where it should be located.  The latest proposal in these discussions is to create a super campus at the site of Covington Elementary school.  If you read some of the commentary on the story about exploring the super campus option in the Los Altos Town Crier, emotions run pretty high.  Regardless of the emotions and opinions, one fact remains that adding several hundred students to the Covington campus will have an impact on traffic and that could impact surrounding neighborhoods.

This issue has a larger impact on the community besides just where kids go to school.  For that neighborhood (having lived very near it in two different homes), I'd be concerned about traffic and how to manage so many kids in a single location.  The campus is nice and there is plenty of space.  However, there are some logistical issues with the intersection of El Monte and Covington that to me seem challenging.  It's already an issue with existing traffic so adding more to me seems tough.  Of course, a traffic study will be needed to confirm my suspicions. 

It seems one big issue the BCS camp is concerned with is the splitting of the K-8 program.  What I've read and seen in comments on other reports is that there is a desire to keep all the kids at a single campus.  The Los Altos School District (LASD) would like to split them.  To me, that makes sense.  It's rare to have a program run K-8 on one campus.  Hopefully, there will be some compromise.  If the class were split the traffic issue might not be so big.

As a home buyer in Los Altos, you should be aware of this so you understand the impact it has had or may have on LASD or BCS down the road as well as the community at large.  Just keep in mind that both Los Altos School District and Bullis Charter School offer an excellent education and both will continue to do so in the future.

The Neutra House in Los Altos is an example of mid-century modernism architecture designed by Richard Neutra.  Finished in 1939, it was one of three small homes built on a half-acre orchard on Marvin Avenue.  Each of the first two, one-bedroom homes contained approximately 750 square feet, small even for the time.  The final third smaller home was built later.  The location on Marvin Avenue isn't far from the current location on Hillview, where the current "Neutra House" was moved to city land a few years ago.  The restoration project was completed in 2008.

The home was extensively renovated with donations from community supporters.  Since the home was completely restored, it has been made available as a community center available for conferences, meetings, or other events.  There is also a complete HDTV A/V system available for presentations and other similar displays.  Visitors can see the history of Richard Neutra and other modern homes in Los Altos.

This home is one of many fascinating structures in Los Altos that offers insight into early 20th century architectural standards.  There is a concerted effort in Los Altos to retain homes that offer some historic qualities or reflect unique architectural interest relative to the town.  This house is one of the highest quality examples in the town since it was moved and restored.

For more information and details on seeing the property, visit The Neutra House Project website.  You'll find links to details about the life of Richard Neutra, the restoration project, and who was involved. 

Yes.  Very simply, we need them because they provide a valuable service to the community.  We have a nice variety of banks including national and local brands.  There's a debate in City Hall about the presence of two banks at the corner of 3rd and Main Streets in downtown Los Altos.  There is a committee being formed to discuss the merits of removing those banks.  The idea is that they take up a lot of space, don't generate much foot traffic, and break up the retail on Main Street.  That's all true, but...

We need those banks downtown.  They offer an important service that our residents need.  They also do bring foot traffic as people come downtown for the banks then head off to run other errands.  So, the solution to this issue is to approach these banks and the land owners with a proposition:

• Identify locations on 1st-3rd streets as alternate locations
• Identify smaller spaces that cost less to operate (better for the banks)
• Work with the bank on a relocation strategy
• Work with the land-owners of the existing sites on future uses
• Develop a real plan to implement strong retail at those corner locations

Personally, a bank located in a smaller space next to a high-traffic retail store is a huge win for both the bank and the town.  However, this has to be approached as a partnership all the way around.  If we want Anthropologie or Pottery Barn where the Chase Bank is located, that's a HUGE win for Los Altos.  It could be a big win for the bank too with more people just walking by who might need their services.  That's the sort of "co-location" strategy that creates a winning proposal for everyone.  It just needs to be discussed openly with everyone involved and not just a unilateral debate in City Hall.

My advice for everyone involved in this is to sit down and really hash out something along the lines of the proposal above.  Identify the "wins" for everyone and work out a real strategy to implement them.

I get this question frequently from prospective clients looking for perspective on when to sell their Los Altos home.  The question isn't simple to answer because, honestly, it depends on the objective of the owner.  You need to consider whether the home is producing income, has appreciated enough since you bought it, or if future appreciation is needed.  In general, this is an excellent time to sell and here are three reasons why:

#1 - BUYER DEMAND IS SUBSTANTIAL

The typical home in Los Altos (a 4BR2BA rancher) in good condition will sell in its first week, as long as it's priced right.  The number of buyers is reflected in the number of offers, easily 4-6 in most cases.  The key is how nice the home is and where it's located.  However, multiple offers are now very normal.

#2 - PRICES ARE UP

The average selling price was up almost 5% last year and the trend has continued into 2012.  Assuming inventory stays in the same ballpark and demand remains as it is, we'll see similar gains this year.  With prices up, it's definitely a good time to sell.

#3 - NOT ENOUGH INVENTORY

Over the last 6 months, the number of homes listed matches what sells, adjusted for listings that expire or get cancelled.  The perception among most buyers is that there is very little inventory and that is making buyers act faster and with stronger offers.

If you'd like to discuss the current market in more detail and the value of your property in particular, please call me to set up a meeting.

The latest news on parking in downtown Los Altos is that another study will be done to assess where and how to add more parking downtown.  It's really not hard to figure out since this topic has been studied to death for years on end but who knows, maybe they'll get it done right this time.

There has been a significant lack of parking in downtown Los Altos for years.  When major events happen, parking is nearly impossible to get.  It's hard enough when the Farmer's Market happens, let alone a festival.  The issue is well know and many studies, both formal and informal, have been done in recent years.  Among the many suggestions was a serious of underground parking spots in the city owned lots running behind the Main Street shops.  That proposal was pretty good and would have put in plenty of spots to address current a long term needs.

Here's my suggestion based on what I've seen from various groups over the years:  stop analyzing it and just do it.  The studies are just politics, not a path to solving the problem.  I'd venture to say there are those (wink, wink) who want the studies to run on forever so parking doesn't happen and chain stores don't come to town.  That said, the last suggestion for parking I saw was this:

• Tear out all the large lots behind the Main Street shops.  Start down by San Antonio.
• Offer a $1M bonus to the contractor for on-time completion.
• Excavate one block at a time every 45 days.
• Build out 1 level down with construction complete every 90 days (per block)

The result is a completed project in a little over a year and the problem solved for years.  Hundreds of spots added!  Can this aggressive project be done?  Yes.  Let's repeat:  YES.  If a freeway in LA can be rebuilt on a faster track and a skyscraper in China can be built that fast (faster actually) then it can be done here.  C'mon Los Altos, let's get this parking issue solved so we can bring in the new businesses!

The Los Altos real estate market last peaked in 2008 and dropped substantially in 2009.  At the time, the market was driven by fear and uncertainty.  Sales were still strong, from a units perspective, but the prices had dropped.  This was driven mostly by a nearly complete absence of high-end sales.  The homes that sold were, for the most part, the bargains.  Inventory levels were fairly high as people who had to sell did.

I remember conversations with agents in 2009 and 2010 where many felt they had no idea the bottom would come.  As you can see from the chart below, the bottom was clearly in 2009.  The interesting thing was that consumers (many asking questions on Trulia and Zillow) made it clear that based on "paired sales", the market was still declining or likely to decline.  At the time, I pointed out the flaws in the paired sales analytic approach.  There were those who said I was crazy because that analysis is the basis for "Case-Shiller".  Again, look at the chart, the markets rose.

Why did prices rise even in the face of market uncertainty?  Very simply, it's a matter of supply and demand.  The economy bottomed in 2009 and the recover picked up steam in mid-2010.  Since Los Altos is a high-demand town (just as Palo Alto is) with top schools and nice neighborhoods, buyers came back.  What you don't see in the chart is that sales of high-end homes really came around at the end of 2010.  Those sales were the basis for much of the increase in the "average sales price".

Going into 2011, the level of inventory was relatively low and pent-up demand created a fervor in the spring unlike anything seen since the 2005 boom market.  More importantly, the extreme high-end (homes in the $3+ million range) got much more action and that continued to pull up the low end.  What made things worse was the fact that many homes were selling with 6-10 offers with many from all-cash buyers.  That dried up a bit when the national economy was holding it's breath in August 2011.  The loss of Fannie and Freddie loans up to $729K made people wonder if the rest of the markets would have an issue.  That lasted about a month.

Now, as we're going through 2012, the trend is still to see slow and steady gains in sales prices.  I expect this will continue based on current activity.  Last year prices rose about 4.9%.  I expect this year we'll see about the same, perhaps a little higher.

I had predicted that the market would rise substantially in 2012 and it has definitely done so in the last 2 months.  The average selling price for single-family homes in Los Altos increased to $2,012,642 in February.  That's about a .3% increase from last month.  This continues the trend from January when prices rose over December.  The trend is a slight increase each month.  Keep in mind that these increases are coming before the "hot" Spring market.  You can expect this trend to get more pronounced going into March.

Sales were very strong for February with 17 homes sold compared to 7 in January.  There were 35 new listings which means that almost 50% of what was listed sold in the same month.  There were 17 expired listings.  That means that the inventory in Los Altos was effectively flat for the month.  The lack of inventory is what is driving price increases.  Toward the end of February, there was an increase in two distinct areas - "off MLS" listings and buyers at the $2 million price point (give or take 5%).  The off-MLS listings are getting sold quickly but without the hassle of open houses, expensive marketing, and multiple-offer chaos.  The increased buyer pool at the $2 million price point seems to be growing based on how many requests for homes I'm seeing.

What homes are selling in Los Altos?  For the most part, the homes selling the fastest are homes with 4+ bedrooms, 2.5 or more bathrooms, 2000+ square feet that are fully remodeled, new, or newer.  I know one home that sold over asking before the open house was done - all-cash.  That home was slightly over $2 million but priced lower.  The bottom line is:  nice, clean, turn-key homes are selling.  The buyer profile is usually:  all-cash (or almost all), fast close, no contingencies.  Homes needing work are taking a little longer to sell but not much.

My suggestion for buyers who have been looking for a long time is to jump into the market as soon as possible because prices are likely to continue their trend up.  If you're looking for a pull-back, it's unlikely to happen.  The trend is up.  Your best chance of getting a relative deal is to focus on off-MLS properties or write preemptive offers on homes before they hit the market.