It is not likely that a home you bought in 2006 is worth as much today as it was then. That being said, different segments of the market have declined &/or stabilized at different rates. The under million dollar market is very hot and shows some price improvement since last year. The over 3 million market is still very slow and depreciating. So depending on what price range you are in you could be down anywhere from 15-25% since 2006. You can try to modify your loan, but if you need to sell and are short that is an option for you. However, many sellers who have to sell do have some equity and are trying to preserve as much as possible. If you are in that position I would advise you to price the house as close to market as possible, make sure it looks great, and fix any problems that are easily fixable. If you have to sell short, price aggressively and see what happens. There are some banks who are actively trying to make short sales work, and others that are more difficult. If you have more specific questions about short sales please feel free to ask me.
Best of luck!
I noticed that some posts have been removed from this thread.
All these posts noted that matthew holder has changed his position about the market place. Moreover, he has also deleted previous posts from his history presumably to gain credibility.
Both observations are accurate.
Why have these posts been removed?
If trulia moderators remove quotes that are truthful and happen to make a realtor unhappy, what is the point of anyone posting here?
Now, the non-realtor civilians have almost disappeared, and this board has pretty much become one big advertising site for realtors pitching their services. In this context, Trulia's deleting postings unflattering to some realtors is revealing. Plenty of us here are quite familiar with the business world, so Trulia's apparent strategy to cater to revenue-generating realtors in order to boost the bottom line is quite obvious. What you guys don't understand, though, is that if the boards become as biased toward the realtors as they've become, they lose all credibility and become useless to civilians like us.
So you'll just end up with a big echo chamber of realtors yelling loudly to each other about all the great service they'll provide while the rest of us look for other places to get useful advice. You guys might want to re-think your strategy.
I wonder if this posting will get deleted by the powers-that-be!
You are back! So tell me did you follow your own advice and houses here I PA, rent them out and sell them at a profit?
Underwater, I am sorry to say you bought at near the peak of the housing bubble that was 10 years in the making.
If you need to sell, sell now. There is nothing wrong with cutting your losses.
You can expect, in the best of neighborhoods in the Bay Area, to be selling around 2003-2004 prices. This would include parts of Palo Alto, Menlo Park, and Atherton. This is due, in my opinion, to the fact that there is a lot of money flowing through those towns...not just because of the past 10 years of wealth in the area but long established wealth spanning several generations. That combined with much longer term residencies by a large amount of residents has helped these area prop up prices.
Nevertheless, they aren't immune. Other areas, the hardest hit by foreclosures, are down to 1998 levels. That, combined with a greater ability to get cheap financing in these areas, has made that market red hot for the past year.
If you really are troubled, the first step is to talk with a mortgage broker to discuss your options; to see how long you can last or if there is another route you can take aside from selling.
If not, your best bet will be to start looking into putting your home on the market and seeing what you can salvage. If you truly are underwater, that will mean a short sale. If you are on the cusp, my best advice is to find a broker who can get you great results for a reduced commission - and try an keep as much equity as possible. Try http://www.atlistings.com for local agents who can do just that, but see what you can do to keep the home first.
1.1M does seem a bit low for the place, but not that low in my opinion; the listing photos show a serious need for full bath and probably kitchen renovations. I walked by the other day and the landscaping is a mess too. Tear down candidate.
Moral of the story: don't throw good money after bad on a property that is way underwater ;-)
BTW, the book "The Big Short" is an fascinating book that explains how and why banks like WaMu and Chase made such ridiculous loans.
MORAL OF STORY: DO GET BEHIND IN YOUR PAYMENTS OF A PALO ALTO PROPERTY.
From what I see, the long term trend between current inventory and closed sales is still diverging - inventory is rising and sales are falling. The data looks very similar to 2002-2005. The trends lines started diverging in 2009 and if it follows the same pattern as before (hypothetically), they won't start converging until the beginning of 2012.
I have been blogging for almost 2 years now on the number of active listings vs pending sales in Palo Alto. We hit a high of about 150 active listings in Feb of 2009, if I recall correctly. The low was Dec of 2009 when we were in the 60's. The spring market saw active listings falling between 70 and 80 for most weeks, then I stopped the blog a efw weeks ago. This was not on purpose, but I got swamped with some other work and will blog again this week-end. The inventory this week is over 100. That is the 20% increase I was talking about. SF markets do not always follow the Peninsula, but in this case it seems to. It looked like we were headed towards a decent recovery in teh over million dollar market a few months ago, but I am not particularily bullish on that point right now.
Granted this is all SF, but it is interesting nonetheless, especially with the anomalous trendline showing listings increasing significantly during the summer when typically they decrease or at least stay flat.
I remember this place was listed for many months last year. Pretty much zero curb appeal and an interior that seem to date back to the 1920s construction date. What the heck were the buyers thinking in 2007?
Is it just me or has there been a swell of SFH listings in Palo Alto these last few weeks as the chatter about a housing double dip grows louder?
The good news--It sounds like "Underwriter" wants to buy your house and Marcy is the buyer's agent. The bad news--you're probably going to lose thousands. Everyone else, wait another year to buy, save more money, prices are declining. Good Luck
Funny how you read Marcy's post and didn't see the words "bu buy buy buy"
"it is better to buy now than it was a few years ago..."
"If you want to own a home then you should buy"
"there probably won't be too much more depreciation in this segment" ( ha ha then it went straight down..)
"There is a lot of competion so you need to have not only a high price, but also a lot of cash and few if any contingencies."
OK those are just a few examples from your preselected ones to convince me she is not a bull in the RE market. It's understandable that it's the realtor's job to make their own money, but I think they collectively have crossed the line. How many people are underwater now?
Also funny is how many posts there are in response to my post about market is going down. No one seems to want to discuss the truth. Discussion always seem to be about market going up and about how my soul won't be saved, if I don't buy now.
People in this generation who bought houses they can not afford will have no house at their retirement. No cash either. What a sad story! Go ahead, keep your chin high and be proud of what realtors do!
I have no idea when the real estate market will improve, but I do know that is is lower now than it has been in a number of years, and if you are buying a home for the long term investment it is better to buy now than it was a few years ago. Will it be better to buy next fall or next year? Who knows? If you want to own a home then you should buy. That is my happy side. I also know that there are economic forces that lead me to believe, and I mean believe, not know, that we have not hit bottom yet.
If you are looking in the 1 to 2 million dollar range in Los Altos or Palo Alto, the inventory is going down and the pending sales are going up so there probably won't be too much more depreciation in this segment. If you are buying in this range in Mountain View, there are still too many homes and not enough buyers so waiting is probably not going to hurt you. If you are buying over 2 million while there is more activity there is not appreciation so waiting won't hurt. Over 3 million I would suggest waiting as this segment still has a long way to go before hitting bottom.
Dec. 20, 2009
1. Buying a home under 1 million in a good location in Palo is not that easy. There is a lot of competion so you need to have not only a high price, but also a lot of cash and few if any contingencies. Last week there was a house listed for $723,00 on Bowdoin that sold with 20 offers over $900,000. For now, that end of the market seems to have bottomed out and is starting to appreciate a little as of now.
2. The 1.5-2.0 million market is stable, and not quite as frenzied as below 1.5. It is a relatively balanced market between buyers and sellers.
3. The 2-2.5 million dollar market is not as active as under 2, but there are still some sales. It is still leaning towards a buyer's market, but not as heavily as the higher end.
4. Over 2.5 is not doing well at all, and I expect it to continue to do poorly for a few years. There is little appetite or money for homes that are so expensive in our current economic environment. Of course there will always be a few people who buy in this segment, but those numbers are very few and in 2009 no home in Palo Alto sold over 5 million and only 12 out of 369 single family home sales were over 2.5 million.
So while I agree that a 900K townhome will probably not appreciate much in the next 2 years, if I were making the decision it would be based on the price range that I wanted to buy into. If that price range is 2.5 or above I would wait, because I think the best deals in that market are yet to come. If it is under 1.5 I would buy soon, and between 1.5 and 2.5 I would buy when I found the house I could not live without or when that market showed a little more increase in activity
I really think Marcy, along with her colleagues, tried to answer this question in good faith without trying to steer the end result.
I also think that the fact that you asked the question in a forum where the whole idea is that Realtors provide free advice to the public seems to indicate that you weren't going to be happy no matter what the response was.
In support of Marcy, there's a lot of clearly verifiable data that shows that thre have been noteable improvements in the market in the first part of this year. In contrast, there are suspicions, but no hard data to prove beyond shadow of a doubt that this trend won't continue. I'm not saying that everything is rosy, simply commenting that we only have past information, not future.
My point is that I'm very sorry that you have such a low opinion of Realtors in general. Yes, there are some unscrupulous people in our industry, but I think that is true of any industry. But, honestly...we're not all here to feather our own nests at your expense.
I personally, would like to thank Marcy and other realtors who give freely of their time to answer questions and provide advice free, and with no obligation.
And I'd like to thank the public participants of these forums who ask real questions and genuinely appreciate the answers they receive.
Generally, the system works.
I, for one, am proud of the role that Realtors play in advising, assisting and protecting our clients in this, the most litigous and volatile real estate market in the world. (And yes, I have experience of overseas markets as well.)
At this point, the public is essentially looking at the same data we (Realtors) are. The difficulty is that the data is inconsistent and very incomplete.
Just because the average price per square foot or the median home price rises or falls doesn't mean the market is actually moving up or down. It could be due to the mix of homes being sold.
For an example, Menlo Park is mostly known for its near Downtown neighborhoods; however, after Oct. 2008 the Eastern portion of Menlo Park started to get heavily affected by foreclosure. This not only causing many more homes to go on the market for sale but also the average price of homes in East Menlo Park to fall considerably. When, at the same time, homes in the Western portion of Menlo Park weren't selling as fast and so many more in East Menlo Park selling, the median price in Menlo Park dropped.
Did that mean all homes in Menlo Park were all now worth 30-40% less than they were two months ago? Not necessarily but the stats would sure make you think so. That doesn't mean Western Menlo Park wasn't affected, just not as much as East Menlo Park.
Your best bet is to do the research, consult professionals you trust, and think about if the statistics you are looking at tell the whole story.
In stead of saying value has decreased in houses over 3 M, you said "This year the values have increased in all segments except over 3 million."
BTW, how do you justify saying the values have increased this year? The houses in the market within my budget look better and better each week. Values must have gone down. Also Palo Alto has a lot more supplies in these a couple years including the whole Altaire city and around that area. When supply is up, prices are sure to go down.
Do you also conveniently forget to mention about the prolonged time on the market. And about those houses that could not sell and eventually dropped from the listing? How about increasing foreclosures.
I personally don't care what you do to your children and I don't think parenting style has anything to do with one's style of making money.
You're so nice and perhaps that's why you're underwater. No pun is intended. Just good wills to other inexperienced buyers out there. Realtors are not different from people working in Wall Street. They suck blood out of people until the system collapsed.
What I do tell people to do (and break my just the facts mold) is that if you are going to buy a home, then you should actually buy it. Get a 30 year or better yet 15 year fixed rate loan and pay it down or off. If you are going to only make interest only payments you are only renting the house from the bank.
I think the problem may be is that last year the PA market was not good, and the high end was particularily soft. Since then, the lower end of the market started to improve first, and now all segments of the market under 3 million are quite strong. There are many more buyers than there are homes to buy right now. As a result, it is not nearly as interesting for people to have long discussions about how bad is the market is because right now it is not bad for sellers. Is this a blip or a trend? If it is a blip then it is better to sell now and buy later. If it is a trend it is better to buy now and sell later. I would be very interested in knowing what other people, and not just realtors think. I agree, it is much more interesting to have consumers on this site and not just realtors.
VBP, as a correction, I was definately not a bull last year. Not sure why you think I was.
No only Matthew did that. If you follow Marcy's and Arn's posts, you will notice they had been the major bulls in Palo Alto Market on Trulia until recently. I am sorry for those who followed their "advice." If you need to sell, do it on your own this time.
It appears Matthew flagged Underwater's post here last week that simply quoted back to Matthew his own statements in past years where he opined over and over that it was "a great time to buy" (or words to that effect) while in fact the market was tanking. Then Matthew appears to have actually take the time to comb through perhaps over a hundred of his own posts and edit out dozens where he said just that or some other statement he apparently don't want anyone to see now.
Well I think certain homes are down to 2004 or even earlier prices in PA but as always this depends on the location in the city and how the home has been kept up.
The data shows that inventories are down from last year and prices are stronger this spring by about 7% over last year in PA. I am not familiar with this particular listing , perhaps there has been a crisis and they need to move immediately.
Overall I believe we bottomed out last fall and things are looking brighter.
Hope this helps,
Sereno Group Los Altos
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I think Bay_area_II has a good point. I don't think fast is the right way to look at a sales strategy and there is a lot of money at stake. It seems houses up to about $1.5 Mil are selling when priced realistically. Houses priced above that seem to be sitting longer - maybe due to the higher difficulty in getting financing combined with drops in the buyer pool who can afford those homes.
If interest rates really were to climb and climb quickly then it seems reasonable that prices may drop and selling now would be something to consider - but it is hard to say that would happen. It seems that every time things slow down over these past two years the government steps in to resuscitate the housing market. It's hard to predict that outcome as well.
No matter a bad market or a good market, you don't want to be an active listing beyond to 90 day mark. This is when the listing becomes "stale", especially with price sensitive buyers these days. 90 days seems make buyers feel there is something wrong with the home - usually the price - and buyers look at it with suspicion. It is hard to overcome that.
I addition, the market has dropped around here by about 4% every 90 days on average over the past two years. If you are overpriced 10% to begin with, you'll have to drop 14% just to catch up with the market. Cutting ahead of the curve seems to produce stellar results in today's market of homes priced below $2 Mil.
Lastly, every listing gets about 80% or more of its buyer traffic within the first 30 days. You'll want to make the most of that time if you are serious about getting your home sold.
I'd be suspicious of anyone who tells you that you need to sell your house FAST.
A lot of money at stake in a million dollar plus sale so the advice may not always be in your best interest.
There's a lot of evidence that that over $1m market is artificially depressed right now due to lack of financing and job market which are both should be improving throughout the year.
I am in full agreement with Marcy's post, I would like to just add a point for you to consider, the Fed's have stopped buying Mortgage Backed Securities to keep interest rates down. If interest rates go up, then fewer people will be able to purchase and home prices will decrease, if you have to sell do so NOW before the rates go higher ( and they will). Get yourself a good agent who knows your area and at least get an idea of what you can do, and what you could possibly sell your home for. There are Very good agents right here that have answered your questions, I would check them out.
It's very difficult to give a specific answer on a broad question.
Homes that are well prepared, well presented, desirable, well priced etc. are selling well, and often with multiple offers.
The homes that seem to be most affected by price reductions are those which might have a black mark against them - being on a main road, maybe not a great floor-plan, maybe need some maintenance etc.
It's true that you purchased at a very active time in the market, and it's true that there has been some pull-back, but there are some signs of improvement out there, so don't despair yet.
My recommendation to you would be to build a relationship now with an agent who is prepared to not only be honest with you about your own expectations, but who is also prepared to provide you ongoing specific market information so that you can accurately reach your own conclusions. Knowledge is power :)
Here is closed sales data since 1998.
Average Sales Price Median Sales Price
1998 701,283 620,000
1999 852,118 715,000
2000 1,305,935 977,000
2001 1,144,776 860,000
2002 1,153,344 925,500
2003 1,096,315 900,000
2004 1,339,273 1,150,000
2005 1,537,287 1,300,000
2006 1,516,037 1,345,000
2007 1,872,850 1,555,000
2008 1,760,925 1,550,000
2009 1,516,480 1,334,500
This data shows that the average and median prices in Palo Alto have drecreased since 2007.
Of course, this is just overall generall data.
Each neighborhood in Palo Alto and each price range perfoms somewhat differently.
In general, I would say prices in Palo Alto are back to 2004 levels.
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The market does appear to be improving but anyone who bought in 2006 and 2007, current makret values may very well be below the purchase price.
Real Estate Broker
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