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Steve TenBroeck

Bottom line: The real estate market is continuing to heat up as Silicon Valley begins to recover from the recession.

The charts below show the number of closed sales in the month of April of each year (‘01 through ’10) including the number of homes for sale on the last day of the month. At the bottom of each chart, you will see the number of months it would take for the homes to sell at that month’s rate of sales, plus the average percentage of list price received by sellers in April of each year.

* Months of inventory on the market
** Average percent of price received

SINGLE FAMILY HOMES

South and Mid-Peninsula Market Snapshot

A Significant Shift in Supply & Demand

Several factors – including improving consumer confidence and lots of rain – caused the number of homes for sale in our market area to decline by 20% on average from a year ago. Sales volume, on the other hand, increased by 55%.

The number of days it took for homes to sell (Days on Market) was essentially unchanged. This number can be easily misinterpreted. As the market heats up, homes that had been sitting unsold become more attractive and start to sell – thereby increasing the average number of “days on market”. Median sales prices also were basically unchanged. That figure has more to do with which segment of the market is selling in each community. For example, median sales prices were up by 40% in Sunnyvale and down by 40% in Los Altos Hills. Home values have not changed by those amounts. Folks are simply buying more expensive homes this year in Sunnyvale and less expensive homes in Los Altos Hills than last year.

The average percentage of list price received by sellers shows the impact of the reduced supply and greater demand. It increased to 98%, on average, in 2010 from 95% in 2009.

Can This Market Continue to Improve?

Yes, if the U.S Treasury and Federal Reserve Bank (with the assistance of Congress) are able to manage the massive financial de-leveraging that’s taking place. If they are able to continue to underwrite the staggering quantity of commercial and residential loans currently “under water” (without causing inflation and interest rates to spike) then yes, this rebound in our residential market will continue to improve.

ADVICE FOR SELLERS

Buyers are very motivated at the moment, particularly in the under-two million dollar range. As stated above there is dwindling inventory. However, buyers are extremely sensitive to any perceivable “negative” issues relating to condition or location and expect to pay less as a result. Improving the home’s condition prior to putting your home on the market is very profitable.

ADVICE FOR BUYERS

Interest rates will soon rise. How high and when? No one knows. Plus, home values in our area are rising. Although selection is very limited at the moment, buying soon and locking in a low 30-year fixed rate mortgage will most likely prove to be exceptionally profitable. Buying a home that is in need of surface improvements will also be profitable. One’s particular buying strategy, home selection, and ability to hold long-term are always critical to success.

It only took a slight improvement in consumer confidence to bring back multiple offers and over-bidding in the under-$1.5m market. The $1.5m to $2.5m started to thaw, too. Over $2.5m? Buyers are still tentative.

A beautiful, tree-lined setting and an open floor plan with tall windows make this a delightful home.  The availability of highly rated Los Altos schools completes the value of this offering.

The 1,985+/- sq. ft. residence includes four spacious bedrooms, two full baths, inside laundry area, and attached two-car garage.  A center-island kitchen is open to the living area and views mature landscaping in the rear yard.   Gleaming hardwood floors, fresh paint, new carpet, and recent landscaping provide for immediate living enjoyment. 

The home is situated on a 10,000+/- sq. ft. lot with mature landscaping, and offers highly rated Los Altos schools including Springer Elementary, Blach Intermediate, and Los Altos High. 

Offered at $1,299,000.

New Listing-935 Berry Avenue, Los Altos

The semi-circular drive, flagstone walk, shady front porch, and country-charming exterior are an invitation to make this your next home!  The many recent upgrades allow you to move in and enjoy!

 The 2,708+/- square foot floor plan includes 4 bedrooms, 3 full baths, family room kitchen, and separate dining room. 

Finished with crisp white tile and hardwood flooring, the large kitchen offers ample cabinetry and spacious informal eating area. 

The master suite is very large and includes custom storage cabinetry including media space, cathedral ceiling with two banks of bright windows, walk-in closet, and spa-like bath with dual sink vanity and large shower.  

 Offered at $1,500,000.

By the end of the first half of ’09, the number of homes on the market had increased by 40% from the same period a year earlier while sales volume was down by 20%. Median sales prices had dropped by 15-20% from the previous year and were falling.

But, by the beginning of the 4th quarter the trend reversed.

We believe two factors caused the 4th quarter to rebound.

First, consumer confidence improved. Buyers were more inclined to commit to a home purchase. Second, a significant number of sellers decided to wait until the spring of 2010 to market their homes.

Those two factors combined to cause a shift in the supply/demand ratio: there were more buyers and fewer sellers. As a result, multiple offers and over-bidding became commonplace once again.

Although the strong year-end surge didn’t entirely make up for the decline in home values of the previous three quarters, it certainly set the stage for a very strong start in 2010.

SELLERS HOLD THE KEY TO THE HOUSING MARKET
Will home sellers who chose not to sell in ’09 flood the market in ’10, causing the supply/demand balance to shift back in favor of buyers? This is the question of the New Year!

Buyers will certainly be motivated as interest rates begin to edge upward. Will sellers be as motivated when the press starts to broadcast these 4th quarter numbers? Or will they decide to wait for values to continue to improve? We’re betting that Q1 will be a good one for sellers.

ADVICE FOR SELLERS
Yes, buyers are motivated now, but we have concerns for later in 2010 due to rising interest rates. Accurate pricing is still extremely important- you do not want your home to sit unsold. Pre-sale planning and home preparation will certainly pay off handsomely. The sooner you start the process the easier it will be.

ADVICE FOR BUYERS
Interest rates will soon rise. How high? No one knows. Plus, home values in our area are stabilizing and are likely to rise. Although selection is very limited at the moment, buying soon and locking in a low 30-year fixed rate mortgage will most likely prove to be exceptionally profitable. One’s particular buying strategy, home selection, and holding long-term are always critical to success.

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                                                                                                                                         Supporting Village merchants is usually enjoyable, and such is the case at European Cobblery.  The charming little store has a talented staff that does a great job with shoe maintenance. 

As a Realtor I am particularly hard on the heels and soles of my shoes, so needless to say I go there often.  The shoes are repaired quickly and returned in immaculate, shined shape. 

The shop is well stocked with shoe supplies as well as shoes, sandals, etc.  Give ‘em a try sometime!

Have you had a good experience with a Los Altos or Palo Alto merchant?  Let us know!