Thursday, May 21, 2009

A bit of advice for buyers

I've already posted my opinion that buyers need to be realistic and they should realize that sellers and the banks behind them will not dump a property just to sell it. However, I ran across another article written by a local Realtor that appeared in the SJ Mercury News.

Here's the article:
http://www.mercurynews.com/ci_12272237?IADID=Search-www.mercurynews.com-www.mercurynews.com

Tuesday, May 19, 2009

New Trend: Not Reporting Sale Prices

There is a new trend in Los Altos and Los Altos Hills - not reporting the sales price of a newly sold home. Why? Simple: It prevents showing the gap down in prices.

The irony is that most of the actual sales prices, viewable by agents and not the public, is off the list price so little as to wonder why the buyer and seller bothered worrying about it. I've seen a few of these transactions and the final sales price doesn't seem low enough to warrant withholding it. So if withholding the price is supposed to prevent people from seeing a price that the buyer and seller feel is too low to show the rest of the market and yet the prices really aren't that low, then why bother?

Good question. There are a couple of impacts these decisions have; not having data for comps or appraisals and skewing the "final sales price as a percentage of ask price" statistic.

Not having data for comparables is an issue because it means that another home coming on in the area may be priced too high to sell. That will hurt all the other homes in the area.

Skewing the percentage of ask price statistic is also bad because it is a valuable indicator of how well the local market is doing. Los Altos homes, for example, typically sell for 96-104% of asking price depending on the property, location, and price - on a historical basis. However, with missing data that statistic could be artifically high which would indicate a stronger market in Los Altos than really exists. This could actually help the local market but do so artifically. If additional inventory comes on the market based on an unreal, perceived strength - prices could start trending down again.

Monday, May 18, 2009

Open Houses Get Real

I held two open houses this weekend in two different geographies and two completely different price ranges. Both had excellent traffic and serious buyers ready to move. What was on their minds? Missing a great opportunity!

The first home was in San Carlos, in the hills, a nice 2/2 fully remodeled in a great neighborhood with good schools close by - 637 Dartmouth Ave priced at $928,000. Visitors were impressed with the quality of the home and made comparisons to others based on "bang for the buck". Two visitors indicated they would look at the disclosures and consider an offer. Why? They considered the home a good value.

The second home was in Los Altos Hills at 25045 Oneonta Drive priced at $3,695,000. Visitors were impressed with the quality and made similar comparisons as the property above. One visitor indicated they would call to follow up to discuss an offer. Why? The considered it a good value.

So, what's the point? The market is truly starting to recover now. Homes at the low end in this area and other areas are starting to get snapped up fast. That leaves buyers in the mid-range and high-end considering that prices will not get lower and may start to move up. The result is that business is strongest at the low end and getting much better everywhere else.

Monday, May 4, 2009

Still a few dreamers

Yesterday had two great open houses; one in San Carlos and one in Los Altos Hills. The one in San Carlos (Priced at $928,000) had 15 groups through and two interested parties who talked about downloading disclosure packages and making an offer. The one in Los Altos Hills had 7 groups through, a couple who liked the home and at least two who said they felt the market would drop more in the Fall. So, why the contrast?

It all comes down to price range. The collapse of local real estate prices started at the low end and slowly impacted the high end. Now, the recovery is starting in the low end and will finish in the high end. Make sense?

Inventory in the "Under $1 million" range is selling like crazy. Why? Because the financing is available, prices are reasonable, there are plenty of buyers. Investors are buying the fixers and multi-unit properties, regular buyers are snapping up the rest. There are lots of multiple offer scenarios all around the Bay Area (some homes with up to 40 offers!). I believe we'll have a balanced market (no negotiating advantage for buyers or sellers) by the Fall.

In the high end, the perception is still about "getting a deal". It's still possible but the inventory is starting to move there too. However, buyers need to be realistic. While prices for high-end homes have dropped close to 20% in Saratoga, they have only dropped a bit over 10% in Los Altos Hills. So, comparing what kind of deal you can get from one town to the next requires some analysis.