I held open two homes this weekend; one priced at $2.7 million in Cupertino and the other at $2.5 million in Los Altos. Both were very nice homes, comfortable and casual living, and priced reasonably for their respective markets and locations.
Patterns: Who Are The Buyers
The traffic was average on both days but the types of buyers was similar across the board. Here are the types of buyers I see:
- Upgrade buyers moving from a slightly lower priced neighborhood, even within Los Altos, who are considering upgrading from the $1.5 million range to about the $2.5 million.
- Relocation buyers who have been looking at multiple local markets and are still trying to define where exactly they want to go. This type of shopper is also heavily considering how far their dollar will go in each town or neighborhood.
- Value buyers have been looking for a while and know the statistics. These folks have looked in several markets just like the relocation buyers. They are different because they know all the statistics and pride themselves on comparing one area to another. They'll typically make an offer when a property appears to be undervalued and they see a perceptual, if not real, bargain.
What's The Trend For These Buyers
Many buyers are taking a wait and see approach expecting to see prices drop. Unfortunately, that's not the trend. Good homes, priced well, as selling quickly. The misperception among most of the buyers is that prices are still dropping. That's not exactly true.
The list prices are dropping but the averages are increasing. What's happening is that sellers will list higher to provide negotiating room and they assume the market is moving up. Prices are increasing, but barely and not at the high end. So, they'll price a property at $2.7 million, drop the price to $2.5 million, and finally sell it. Buyers see prices dropping as a result.
As a buyer, you'll have a better pick of inventory if your agent does an market analysis and provides a range of values for the home you want to buy. I do this all the time. You won't end up overpaying because you'll pay a price in line with the current market. Plus, you'll get settled sooner rather than waiting weeks for a price drop initiated by the listing agent. Buyers can take control with the right information.
Inventory is low in Los Altos right now but there are plenty of options in the $2-3 million range. If you're shopping in this range, this is a good time to buy and get a good value if you're well informed.