Home Buying in Palo Alto>Question Details

Marco, Home Buyer in Palo Alto, CA

Home sales over $3M in palo alto?

Asked by Marco, Palo Alto, CA Sat Apr 12, 2008

Looking at online records,there have only been 9 sales in the past 3 years greater than $3M during the peak of the market in palo alto. Yet there are 18 listings in this price range currently. What is driving these perceived valuations during a downturn?

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Everyone is hurting, even the supposed "affluent". I know because I have clients in that class. If you are seeking to low-ball, don't waste time. If you have $3M to spend, raise a couple more million and I can show you how to really make mega bucks!

Lending guidelines have tightened so much that a buyer needs to have excellent credit (720+), lots of cash in the bank and income to prove in order to get a loan. That's a major reason homes are sitting longer. Anyway, the debate goes on for other reasons (i.e., recession, foreclosures, etc.) .

If you are seeking to buy, do it because you have always wanted to and this is a good opportunity, but keep in mind that investors are getting smarter this time around backing loans.

Real estate economics is different from "regular" economics because the products are not all the same and demand in every area is not the same. This trend started in 2005 when homes priced $550,000 and above were affected by slower sales while homes costing less were selling in many areas. It's great to talk statistics because they are predicting factors. With real estate, cycles have typically been every 2 to 5 years and appreciation continues. The Bay Area has not been hit as hard as other less desirable areas.
0 votes Thank Flag Link Wed Apr 23, 2008
Marco take a look at the stats and trends for palo alto here in trulia.
It shows both median and average prices for 4 bedroom homes has increased 9 and 20% respectively. However this is based on only one sale during the Jan-Mar 08 period. There were 10 sales during the same time period in '07, indicating sales volume is going away.
More telling is that the average selling price for all homes is decreasing 4.9% with asking prices for 4+ bedrooms going down 3.6%.
If you drive down university avenue, there are a number of homes that sit empty which were on the market in '07 and never sold. My guess is that home owners in this segment can hold their prices longer or take their home of the market if there is no interest. However, inventory seems to be increasing which will drive prices down in the long run. Negotiate aggresively if you wish to buy now.

0 votes Thank Flag Link Sat Apr 12, 2008
Hi Marco
It seems some sellers and realtors are in denial concerning the market in palo alto in this price range. I've been keeping track of listings. Although average time on the market may be about a month, this is because the homes are NOT selling and the listings are removed. There are plenty of homes listed in excess of 6 months with no takers.
Also my research with the county office shows sales in the price range you mentioned to be less than 10 homes in '07.
Hope this helps,
0 votes Thank Flag Link Sat Apr 12, 2008
There has always been a huge demand for homes in Palo Alto. As Mark mentioned below the number of homes sold are MUCH greater than what you've found. The important fact here is how long each home stays in the market and in the last 6 months the average days on the market for home over $3Mil is ONLY 31 days. This is what is driving the prices UP in Palo Alto.
0 votes Thank Flag Link Sat Apr 12, 2008
My research shows 51 sales over $3M just since January of 2007. I would be happy to email you this list and provide my detailed real estate market report for Palo Alto. markmena@gmail.com
Web Reference: http://www.MarkMena.com
0 votes Thank Flag Link Sat Apr 12, 2008
Even though I am not in the Palo Alto area (I'm in San Luis Obispo County), logically I would assume that the 18 listings that you mention being on the market currently in the $3M price range WERE NOT $3M three years ago. Am I making myself clear. Values have decreased across the board, whether they are $5K homes or $100K mobile homes. You might look at how many sales there were in the past 3 years in the $3.5K to $4.25K range. Let me know, I'd be interested in the stats. Connie Winstead @ Signature Properties CWinsteadSLO@aol.com. 805.441.4601
0 votes Thank Flag Link Sat Apr 12, 2008
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