Kps

I'm familiar with west lake hills in austin, and if you are looking for something similar, you decidedly will not find it in palo alto. Homes in PA tend to be on small lots and most are below 4K sqft.
If you are commuting to SF you should consider looking in Hillsborough. It is much closer to the city and you will get much more home for your money, both in sqft and lot size. Schools there are comparable to PA, if you look at scores alone they are actually better.
Another thing, the whole peninsula is undergoing a slow correction. PA is coming down, but lagging the rest of the cities. You will likely face more downside risk if buying in PA at today's prices.
If you are not familiar with the bay area, you should consider renting your first year here. It will give you a sense of where you would like to live and likely secure a better price when you decide to purchase a home. - Tue Nov 17 2009, 10:40

matthew,

You miss the point of my post concerning building in los altos hills. I'll have a 5k+ square foot new construction home on a 1+ acre lot for ~2M all in. I challenge you to find a similar buy in palo alto. Also it is an excellent time to build; construction prices are very low and dropping. Everyone told me to expect 50% run ups in cost. I am seeing closer to a 20% savings from my initial estimate. - Wed Aug 12 2009, 18:31

Hi 828,

I hope you realize that everyone telling you here that it is a good time to buy has either a direct or indirect interests in keeping sales volume up in the peninsula.

Besides, some the answers are simply astounding in their idiocy...Take Kimberley Brandon who claims that interest rates have no relation to housing prices. Now that I have gathered the pieces after my head exploded after reading this, the fact that we have NATIONAL housing bubble that is now in the process of correcting is precisely because of the reckless availability of credit at very low interest rates.

Also take the comments of other realtors here that claim that prices are low in palo alto. I beg to differ. Take a look at pricing in crescent park and use 1 crescent as an example:

Year # of Sales Median Price Median Sq. Ft. Median $ per Sq. Ft. This Property at Median $ per Sq. Ft.
2009 32 $1,538,000 1,793 $823 $3,972,678
2008 124 $1,950,000 2,024 $1,050 $5,066,898
2007 30 $1,542,500 1,849 $914 $4,411,936
2006 31 $1,475,000 1,595 $913 $4,406,981
2005 45 $1,550,000 1,816 $809 $3,906,095
2004 46 $1,080,000 1,710 $666 $3,213,548
2003 45 $1,095,000 2,207 $551 $2,659,337
2002 47 $925,000 1,782 $609 $2,939,146
2001 25 $830,000 2,116 $540 $2,605,124
2000 29 $1,025,000 1,882 $641 $3,092,064
1999 42 $702,000 1,736 $446 $2,155,545
1998 37 $695,000 1,587 $435 $2,099,825
1997 41 $750,000 2,210 $375 $1,809,431
1996 34 $480,000 1,723 $337 $1,627,168
1995 36 $485,000 2,167 $304 $1,467,583
1994 38 $490,000 1,778 $302 $1,457,499
1993 40 $420,000 1,641 $281 $1,356,468
1992 30 $541,000 2,296 $280 $1,351,742
1991 25 $499,000 1,957 $256 $1,236,243
1990 24 $480,000 1,946 $313 $1,513,814
1989 22 $650,000 2,196 $314 $1,515,423
1988 31 $490,000 2,039 $270 $1,306,096

It has been stated many times in this forum that pricing started to deviate from historical norms circa '96 with a CAGR of 8% to date. Prior to this (prior 50 years!) the CAGR has been 4%. The median price per sqft is $823 today. It would have to drop to $537 next year to reach again a historically fair price. So prices indeed are still very high. I do feel sorry for anyone who paid $1K/ square foot during the boom...They will never get their money back.

Finally Pietro is probably right that Palo Alto will simply correct very slowly. It could very well stay flat for the next four years, which will also enable pricing to reach historically fair values. Flat prices, however, do not mean that you are not losing equity. When you take into account the full cost of ownership: taxes, interest expense, and the opportunity cost of not renting, you are losing on average 9% a year.

If you really wish to jump into the market, you could consider building your own home. I was in a similar position to you earlier this year, and was willing to wait out the market and continue to rent. I did find a good opportunity to build a home in los altos hills. This recession has affected contractors disproportionately and you can get very competitive rates $/sqft today. To give you some numbers, I'll have a 5000K+ property at ~$410/sqft. The price is well below the historical value for a comparable property, and I have exactly the home I want to live in. - Thu Jul 30 2009, 16:40

Looks like foreclosures are starting to materialize. There are two scheduled for this month. If they don't sell at the starting bid, they become REOs? - Fri May 15 2009, 16:04