The dizzying days of rapid sales with competing offers, plentiful loan money and no contingencies are long over, but the housing market is far from dead, panelists agreed at a community forum Tuesday night.
The slowdown in the Palo Alto-and-environs housing market has not been as severe as the national trend, according to Mark Duval, chief investment officer for Opes Advisors. But local trends tend to parallel the stock market, not the national housing market. He predicted a turnaround could impact the local housing market as early as the end of 2009.
Inventory is already starting to increase, and more than a hundred potential buyers have been turning up at recent open houses, noted Coldwell Banker Realtor Steve Bellumori.
The panel of four brokers, a CPA, and a couple of financial analysts had some specific advice for the 50 potential buyers and sellers who attended the meeting at Trader Vic's in Palo Alto.
Top of the list was changing expectations.
Gone are the days of slapping on a coat of fresh paint, setting out some potted plants and offering a home "as is." Instead, sellers need to assess what work needs to be done and either fix problems before the house goes on the market or be prepared to fully disclose any issues, the panelists said.
"This is the most difficult real estate market I've ever seen," said Bellumori, a Realtor with more than 30 years' experience.
Although the economic fortunes of this area are heavily tied to the stock market, "up to this point we've been an island of resiliency," he said.
Bellumori pointed to the lack of land, strong entrepreneurial business climate, good public schools and great weather as key selling points for real estate.
But much of his job today is serving as "a reality versus a realty broker," he said.
Although plenty of money is available, the guidelines for lenders have firmed up, Tracie Southerland, financial and mortgage advisor for Opes Advisors, said. "It's not much different than 15 years ago," she added.
Southerland compared housing accessibility in 2003 versus 2009, using a $1.5 million house as an example. In 2003, with 10 percent down, a 4 percent loan on $1.2 million and a second 3.5 percent loan on a $150,000 line of credit, one would need a $143,000 income to qualify.
Today, with 25 percent down and higher rates on the jumbo loan, one would need to earn $228,000 a year to buy the same house.
"The buyer pool has shrunk," she said.
Panelists spoke to specific issues, including pricing, negotiable terms, conditions and appraisals.
"Pricing is not an exact science," Alain Pinel Realtor Nicole Aron said, but the classic issues of location, condition of property, levels of inventory and availability of financing still come into play.
And it's always the kiss of death to overprice.
"Focus on the goal of why you're on the market," she said, adding that one could be paying less for a replacement home.
A home can be made far more desirable with attractive terms, such as the seller paying down interest points that could ultimately save both buyer and seller a bundle, Southerland said.
Other options include paying six months of homeowners' association fees, seller financing or accepting a variety of contingencies, such as locking in an interest rate, Alice Nuzzo, a Realtor with Sereno Group, said.
And when it comes to disclosures, honesty is the only policy, noted Alain Pinel Realtor Carol Carnevale. Even if a seller has replaced the roof, the fact that the roof once leaked must be disclosed, she said.
Duval, who keeps his eye on economic trends nationwide, suggested taking a longer view. For someone thinking of downsizing in three years, it might make more sense to sell now while prices are still high, he said.
"Long-term economic growth in the U.S. is positive," he said, and it "will keep a premium for housing in this area."
More real-estate news and home sales data are available at Palo Alto Online's Real Estate home page.