SPRING REAL ESTATE 2012 Days on Market for Single-Family Homes
Single-family homes sold Homes Sold 2011
Homes sold 2010
Homes Sold 2009
2010
2011
2009
East Palo Alto
East Palo Alto
Los Altos
Los Altos
Menlo Park Menlo Park Mountain View Mountain View Palo Alto Palo Alto
Redwood City
Redwood City
Atherton
Atherton
Los Altos HIlls
Los Altos Hills
Portola Valley Woodside
Portola Valley
30 Woodside
60
90
120
150
*Information provided by the Silicon Valley Association of REALTORS® from the MLS Listings Inc.
0
100
200
300
400
500
600
*Information provided by the Silicon Valley Association of REALTORS® from the MLS Listings Inc.
Google stock vs. buying a house
Chris Ricketts
Built in 2008, this four-bedroom, six-bathroom home at 2950 Alexis Drive in Palo Alto was on the market for $7,895,000 in April.
Veronica Weber
Entry level in Palo Alto in April included this one-bedroom, one-bath home built in 1928 at 3370 Park Blvd., offered at $508,888. not an overnight phenomenon,” he said. “A lot of sellers who are in a posi(continued from page 6) tion to pick their time certainly are A year after Google’s IPO (after balancing whether now is the right any lock-up period preventing early time — and I think it’s a very good sale of stock), Atherton values detime for sellers. It begs the question: clined by 5 percent. Yet Menlo Park Will a year from now be better? No had a strong market that year (see one can answer,” LeMieux said, addchart). ing his speculation that the market “I spend a fair bit of my day trying will be the same or better a year from to dampen down the over-excitement now. about this. I do think it’s positive, but
‘Facebook effect’
Page 8 I Spring Real Estate Special Section
“I’d like to believe that our market is driven by many more fundamentals than one or two high-profile IPOs — by NASDAQ, how well firms are doing in the Valley,” he said. That’s what leads to the optimism his clients are feeling now. LeMieux is seeing the most action in Palo Alto in the under $2.5 million range, along with a resurgence at the higher end. “Atherton had two sales above $10 million in 2010” but had nine last year and already one so far this year, he added. But other things besides Facebook’s hoopla are impacting prices, mainly low inventory, Taylor said. On a sunny day in February, there were only 30 properties on the market in Palo Alto, with even less in Menlo Park. He pointed to the difficulty in qualifying for loans, especially if they’re looking to move from a $2 million house to a $3 million house. “It’s a painful process. (People say) rather than go through that, I just won’t move,” he said.
5
hose brave enough to test the market are finding a fastpaced atmosphere. Nicholas said she’s seeing “multiple offers on most properties,”
Google stock price
What 10K shares was worth
Median Palo Alto house price
Median Atherton house price
August 2004*
$85
$850K
$1.15M (2004)
$3.0M (2004)
February 2005
$204
$2.04M
$1.30M (2005)
$3.0M (2005)
March 2012
$615
$6.15M
$1.43M (2011)
$3.29M (2011)
If you received 10,000 shares of Google stock at the IPO price of $85, it was worth $850,000 in August 2004, but that rose to $2,040,000 six months later when most shares were eligible to sell. If you didn’t sell the stock until March 2012, that stock would have gone for $6,150,000. Meanwhile, if you’d invested your Google stock in Palo Alto real estate in 2005, you could have bought roughly one-and-a-half medianpriced Palo Alto homes at $1,300,000 each. The value of those homes could have increased to $2,246,350 by 2011 (again, roughly one-anda-half median-priced homes of $1,431,500 each). If you had made a down payment on one house in Atherton in 2005, you would have paid $3,000,000. If you’d held on to the stock and bought a home in 2011, when your stock was worth $6,150,000, you could have bought a median-priced Atherton home free and clear for $3,290,000 million. *most shareholders not eligible to sell stock until six months later
noting that she’s seeing a large increase in off-market sales “getting tremendous prices.” Of 14 sales to date, eight were off-market, she added. And that competitive environment comes right back to lack of inventory. “We traditionally have had an undersupplied market here; there are no more large tracts of land to add to the supply, LeMieux said. “We also have an area that people like to stay in. If you sell, where are you going to go?” he added. Nicholas is in total agreement. “I don’t foresee that much more inventory coming — more, but not to levels that we’re used to. A lot of people are unsure of where to go,” she said, noting that the area doesn’t have a lot of senior housing. She contrasted this to 20 years ago when people would hit a certain age and move. “(Lack of inventory is) causing everyone to go, ‘Uh oh, are we go-
ing to get in?’ The market has always been strong,” she added. LeMieux agreed that inventory was the biggest obstacle to sales. “Over the last 10-15 years it’s been harder to be a buyer than a seller,” he said. In 2008-09, the “playing field leveled a little bit; now that seems to be tipping again toward the sellers,” he added. Some may be encountering challenges in financing, but LeMieux pointed to the “higher-quality buyer where financing is not a problem.” Taylor noted that he’s been seeing many more cash sales — one way to get around the financing difficulties. “Now it’s all income and credit; equity is irrelevant,” Taylor said. “If you’re downsizing, as long as you don’t need a loan, you’re fine.” “We do have a fair number of cash buyers,” LeMieux said, but noted that, “One buyer could pay all cash but is almost incentivized (continued on page 10)