Hello Tony and thanks for your question.
Unfortunately, that darned crystal ball of mine is on the blink, and while I can see "backward" quite clearly, the "forward" portion of things is pretty fuzzy. However, let me say, this as I'm working with several buyers now who are looking for homes in the Los Altos and Palo Alto areas, home prices have not fallen drastically in the past two months--and, in some cases, in the $1.3-1.8 million territory, I'm not sure I can say I've seen much of any changes in the price. I am seeing less inventory on the market now, but homes that are appropriately priced for the area are still getting between 3-10 offers on the property from very qualified buyers. Remember, though, that sellers in Los Altos as in Palo Alto and Saratoga are often not in the same socio-eco demographic as in other areas, and they can afford to "wait" until the prices are at levels they deem acceptable before selling the home; thus, the need to move (a factor in pushing prices lower) is not present here.
It is still a "buyer's market" certainly, but as far as prices are concerned, I'm not prepared to say that they'll not trend down much for the remainder of the year especially with the $8K incentive for home purchase and the lower interest rates. In fact, I do expect that prices will increase again by Spring 2010, but only very slightly as the economy stabilizes.
As far as traffic is concerned, we typically find summer time (late June-August) to be lighter "traffic" periods due to the number of families on vacation. As a result, traffic patterns lighten and you should see an increase in late August and September when school resumes. In the meantime, I'm also finding (since I have access to over 3000 homeowners in the valley) that many more of my clients are working from home--a compromise to lower wages while maintaining the job--so traffic is easing from changes in our economy as well as changes in our work lifestyles.
Just my thoughts.
Grace Morioka, SRES, e-Pro
Area Pro Realty