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Elena Talis' Blog

By Elena Talis | Broker in Palo Alto, CA
  • MARCH 2014 — SPRING SELLING SEASON BEGINS

    Posted Under: Market Conditions in Palo Alto, Home Buying in Palo Alto, Home Selling in Palo Alto  |  April 14, 2014 7:52 PM  |  297 views  |  No comments

    On April 1st we opened our daily Palo Alto Online e-mail and were greeted by an article claiming that “a surge of homes coming on the market in Palo Alto have flipped the local real-estate scene upside down, creating a panic among real estate agents about an exodus of millionaires and an impending housing glut.

    The article continued: “Facebook founder Mark Zuckenberg to sell his historic Edgewood Drive home for six Bitcoins, a new foosball machine and an app to be named later.  Fortunately the author put a “Happy April Fools Day” note at the end.

    The article can’t be further from reality — the demand for housing in Palo Alto is definitely outpacing the supply.  While 50 single family homes and 13 condos were listed in March, the inventory remained low with only 25 homes available for sale at the end of the month.

    The average number of days on the market dropped to 6, the shortest time on record.  The number of accepted offers jumped to 55 for single family homes and condos combined, a 50 percent jump from 30 new contract in February.

    The influx of new listings marked the beginning of real estate spring selling season.  The sellers remain firmly in the driving seat and buyers are competing for the available properties.  Multiple offers are common and the average overbid in March rose to 16.5 percent.

    Call Elena and Michael at 650.714.4784 to talk more about these unique market conditions.

  • SAN JOSE PLANS 70 URBAN VILLAGE DEVELOPMENTS

    Posted Under: Market Conditions in Santa Clara County, Home Buying in Santa Clara County, Home Selling in Santa Clara County  |  April 14, 2014 7:50 PM  |  292 views  |  No comments

    A recent study by Business Journal found that Palo Alto has the highest number of jobs per housing unit in Silicon Valley.  This pushes housing prices far over the affordability levels for many area workers forcing them to endure long commutes.

    San Jose, the largest Bay Area city with population exceeding 960,000 people, is taking a stab at balancing job and housing requirements in the Envision San Jose 2040 General Plan.

    The General Plan envisions the creation of 70 urban villages that will combine residential, retail and office space, will be friendly to walking and well connected to the rest of Bay Area with public transit.

    San Jose is already home to a host of urban village developments like Santana Row, The Alameda, Lincoln Avenue and Evergreen Village Center.  The city planners are working on details of West San Carlos Urban Village that will include 1,245 housing units and 980 jobs.

    According to 2010 Census data there are more than 314,000 housing units in San Jose.  The five largest San Jose employers (Cisco, eBay, IBM, Hitachi and Adobe) account for close to 27,000 jobs in the city.  But all these companies have called San Jose home for 10 years or more.  Attracting more high-tech employers and their affluent workers will be a key for San Jose becoming the southern urban anchor for Silicon Valley.

    The urban village plan is not designed for fast implementation and will require cooperation between the city and developers.  "Every urban village area will be different,” city spokesman David Vossbrink said on April 1st.  “A lot of this stuff is going to be driven by the economy.  We’re not marching down the road saying, 'We need to create 70 urban villages over the next 5 years.'”

    San Jose is evaluating different ways to pay for the necessary infrastructure and transportation projects including developer agreements, impact fees, Business Improvement District (BID) pay-ins and Public Development Rights (PDR) systems.

  • Deferring Capital Gain Taxes With 1031 Exchange

    Posted Under: Market Conditions in California, Home Buying in California, Home Selling in California  |  February 11, 2014 7:42 AM  |  945 views  |  No comments

    California real estate is known as an equity market.  Property values are growing more quickly than in the rest of the country: according to the National Association of Realtors, the national price of a single family home increased by 12.5 percent in 2013, while Santa Clara County’s median home price went up by 22.3 percent.  The side affect of this fast growth is that in case of sale your proceeds may be subject to capital gain taxes.

    Most of us are aware of the home owner exemption of $250K, $500K for couples, in case of primary residence sale. For the investment properties you can use 1031 exchange to defer or completely avoid your income tax liabilities.  In order to qualify, the owner should exchange a property for a “like-kind” property and almost any real property in United States is recognized as “like-kind.”

    The owner should declare the property they are selling as subject for exchange before closing the sale, identify the replacement property within 45 days of closing and acquire the replacement property within 180 days.  It is also possible to purchase the replacement property before selling by using a reversed 1031 exchange process.

    1031 exchange will help you consolidate your real estate investments, move your holdings to a different area or state, or divest out of particular property types without incurring any income tax liabilities.  Multiple properties can be exchanged for a single property or multiple ones as long as all properties are used for business purposes.  Not all proceeds from the sale of the relinquished properties need to be reinvested into the replacement property.  The remaining funds will be transferred to the owner and will be taxable when received.

    You also may be able to convert your primary residence into an income property and then use it in a 1031 exchange.  The replacement property then has to be rented out for a period of time before allowing the owner to move in and claim it as their new primary residence.

  • January. 2014 — a Slow Start for the New Year

    Posted Under: Market Conditions in Palo Alto, Home Buying in Palo Alto, Home Selling in Palo Alto  |  February 7, 2014 4:08 PM  |  382 views  |  No comments

    In a recent interview with the Business Journal Silicon Valley Leadership Group President and CEO Carl Guardino identified housing as the number one business challenge of operating in this region.  Market statistics support this assessment.  For the last 3 months the housing inventory has been hovering at historically low levels in Palo Alto and the surrounding communities.  There is an abundance of motivated buyers and most homes sell in less than 2 weeks.  Out of 11 single family home sales closed in Palo Alto in January, 9 were sold in 10 days or less.  Two of the homes were on the market for 115 and 151 days, pushing the average time on market to 29 days.

    The January median sale price dropped comparing with last month and comparing with the same time last year.  With a small number of sales during the winter months, January is not very indicative of the direction the market will be taking this year.  Open houses are extremely busy, with some homes attracting more than 200 groups in a single weekend.  Multiple offers are still very common — 9 out of 11 Palo Alto sales closed at or above the asking price.  A home at 1547 Walnut Dr. sold for $2,857,000, $1,007,000 above the asking price (54.4 percent price increase).

    Due to the explosive growth in the last two years the real estate prices are at the highest level ever and some experts are warning about a new market bubble.  If you are thinking about selling your home or buying a real state investment call Elena and Michael at 650.714.4784 to talk more about these unique market conditions.


    Month, Year

    Listed

    Sold

    Median Price

    DOM

    Oct. 2013

    47

    42

    $2,300,000

    9

    Nov. 2013

    13

    43

    $2,200,000

    17

    Dec. 2013

    14

    21

    $2,175,000

    15

    Jan. 2014

    20

    11

    $1,996,000

    29



    Month, Year

    Listed

    Sold

    Median Price

    DOM

    Jan. 2011

    33

    16

    $1,220,000

    64

    Jan. 2012

    36

    20

    $1,515,000

    35

    Jan. 2013

    28

    14

    $2,250,000

    38

    Jan. 2014

    20

    11

    $1,996,000

    29


  • 2013 — Palo Alto Housing Recovery Ahead of the Region

    Posted Under: Market Conditions in Palo Alto, Home Buying in Palo Alto, Home Selling in Palo Alto  |  January 17, 2014 9:59 AM  |  397 views  |  No comments

    2013 was an amazing year for the real estate recovery!  The median single family home price shot up by 21.9 percent for the Peninsula Region - including San Francisco, San Mateo, Santa Clara and Santa Cruz Counties.  The highest gain was recorded in San Francisco County where the median price of a single family home increased by 28.4 percent to $700,000.  The price grew by 24.1 percent in San Mateo County to $912,000 for a single family home, 22.3 percent in Santa Clara County ($780,000 median price of a single family home) and 20.1 percent in Santa Cruz County ($605,000 median price of a single family home).  The whole region experienced a shortage of inventory and posted a decrease in the number of sales in all price ranges and all property types comparing with 2012.

    Palo Alto's median single family home price increased by 21.7 percent in 2013 and reached $2,100,000 for a single family home.  While last year, Palo Alto's housing price rate of increase was in line with the regional growth, the Palo Alto home values ended at 35.5 percent higher than the boom prices of 2007-2008.  Four consecutive years of home value growth put Palo Alto way ahead of the region as a whole where the median home price is still 8.2 percent below the peak pre-recession level (in 2007 the median home price was $850,000, vs. $780,000 in 2013).

    The outstanding Silicon Valley economy combined with the mature Palo Alto development created a severe shortage of homes for sale in the city.  According to MLSListings.com, there were 569 new listings in Palo Alto last year resulting in 406 single family home and 112 condo sales, a 14.3 percent decrease comparing with the previous year.  Most properties were sold with multiple offers — on average Palo Alto homes sold at 10.3 percent above the asking price and in only 18 days.  Last year, average sale price was 6 percent above the asking price and average time on market was 23 days.  During the recession the average time on market was up to 54 days and homes were sold on average1.8 percent below the asking price.

    According to Freddie Mac’s Primary Mortgage Survey the average 30-year mortgage rate was 4.53 percent for the week ending January 2nd 2014.  While the interest rate increased by almost 1.2 percent since the beginning of 2013, there was no significant decrease in the demand for housing.  Mortgage rates remain affordable by historical standards and many buyers have chosen to borrow money to buy their new homes even when they have had sufficient cash holdings for the purchase.

    In 2014 we expect the median price to continue to grow but at a slower pace.  A strong seller’s market will persist with the availability of homes for sale remaining low.  Well-priced homes still sell after the first open house weekend, and multiple offers will continue to be common.  Smart buyers will have to compete for available homes not only based on the price but also on other terms of the purchase offer.  Working with a local realtor and a reputable lender will help you successfully close a deal.

    Based on 2012-2013 data, we don’t anticipate strong seasonal trends.  Last year home sales were evenly spread from April to November, with the highest home prices being recorded in February.  If you are thinking about selling your home this year, the winter months will give you unprecedented opportunity to market your home to potential buyers with limited competition from other properties.  In a highly desirable community like Palo Alto there is no shortage of qualified buyers who are waiting for the right properties to come to the market.  Let us help you prepare your home for sale and get you the highest possible return on investment.

    Call Elena and Michael at 650.714.4784 to talk more about these unique market conditions.

  • Selling Your Home During Holiday Season

    Posted Under: Market Conditions in Palo Alto, Home Buying in Palo Alto, Home Selling in Palo Alto  |  December 18, 2013 8:35 AM  |  441 views  |  No comments

    When talking about the real estate in Silicon Valley, the shortage of housing and multiple offer situations immediately come to the forefront.  Cases when properties generate large number offers become urban legends.

    But, for the people involved in these sales, what does it really mean that there were 27 offers made on one particular property?  It means that there are 26 buyers out there who did not get to buy a home and are still shopping for a house.  These families were already preapproved by their lenders and got their finances lined up for the purchase, they have experience understanding market conditions and can quickly react to new opportunities.

    Putting your property on the market during the Holiday Season will attract the attention of these motivated buyers.

    Most of us are used to the idea of real estate being seasonal.  It is true — usually there is a spike in the number of sales during the spring months leading to July 4th and right after the Labor Day.  But the number of home sales does not always translate into lower prices.

    Historically some of the highest prices levels have been recorded during the winter months.  In February 2013, Palo Alto’s median sale prices were the highest for the year at $2,300,000 for a single family home and at $1,395,000 for a condo.

    Having your home on the market during the Holiday Season will also limit the competition from similar properties.  For the last 2 years, our winter open houses were the most active.

    Due to the lower inventories, these listings generated a high level of interest from well qualified motivated buyers as well as from other agents.  The limited competition from other listings will strengthen your negotiation position and help you get the best offer for your house.

    If the time is right for you to sell, don’t delay to fit the traditional seasonal trends. Qualified buyers are waiting for the right properties to come to the market and to purchase that dream place they will call home.

    Call Elena at 650.714.4784 to talk more about these unique market conditions.

     

  • Foreign Buyers Reshaping Bay Area Housing Market

    Posted Under: Market Conditions in Santa Clara County, Home Buying in Santa Clara County, Home Selling in Santa Clara County  |  May 14, 2013 8:00 PM  |  645 views  |  No comments

    Foreign buyers are flocking to places such as San Francisco, Silicon Valley and Los Angeles to invest in U.S. real estate, and this trend is beginning to have an impact on the housing industry.  According to the National Association of Realtors, U.S. home sales by international buyers grew an astounding 54 percent in just the past two years, reaching $82.5 billion in 2012. Interestingly, foreign buyers spend almost twice as much on homes as domestic buyers.

    One of the fastest growing groups of foreign buyers has been Chinese investors, who now are second only to Canadian buyers when it comes to purchasing U.S. real estate.  The percentage of Chinese investors has more than doubled since 2007 and now makes up 11 percent of all foreign buyers.

    Affluent Chinese residents are facing increasing limitations from their government on purchasing real estate as China battles inflation and faces a potential real estate bubble.  Properties in the U.S., even in more expensive Silicon Valley communities, are considered relatively cheap compared to escalating property values in China’s Guangdong Province, boasting 4 of the top 10 wealthiest cities in China, per a 2011 study.  A surprising number of wealthy Chinese investors are turning their eyes on America and are specifically focused on the best school districts.

    That combination of spiraling real estate prices and growing limitations by the Chinese government are prompting many well-heeled citizens to look overseas for places to invest and perhaps relocate.  Given the increase in off-shore buyers, it’s no wonder that the real estate industry is taking notice. A recent story in the Wall Street Journal reported that new home developers are trying to appeal to foreign buyers through the design of their properties.

    Given the challenges Asian buyers face in their own countries and the view of the U.S. as a "safe haven" for offshore investors, we suspect the trend of international buyers purchasing Bay Area properties will only grow in the years ahead.

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