News


Palo Alto property values surge

Since last real estate peak in 2007, home values up 23.8 percent

The market value of a single-family home in Palo Alto went up 10.8 percent in 2013 and has more than recovered from the last real estate peak, according to the Santa Clara County Assessor's Office.

As of Jan. 1, local single-family home values were 23.8 percent higher than in 2007, around the time of the last market peak, the office said.

The assessor's office released on June 4 city-by-city charts showing average median price per square foot each January since 2007. Palo Alto led the county in the category for single-family homes, recording an average median sale price per square foot of $1,110, followed by Los Altos at $1,003. For Palo Alto condominiums and townhouses, the median sales price per square foot was $568.

(View Palo Alto's chart here.)

The greatest appreciation in value occurred on properties in the Fremont Union School District and the Mountain View-Los Altos High School District.

Assessor Larry Stone released county-wide market trend assessment data for 68,000 residential and 2,000 commercial properties in which the assessed values previously were reduced due to the decline in property values during the recession.

"In 2013, Santa Clara County led the sate in the growth of assessed values, and we are once again on track to lead the state this year," Stone said.

This is the second straight year in which there has been sharp decline in the number of properties assessed below their purchase price, a phenomena caused by the collapse of the residential real estate market.

In 2012, 136,000 residential and commercial properties were assessed below their Proposition 13 value. In 2013, this number dropped to 81,000 as market values continued to improve. Stone said this year, "even with surging market values," as many as 40,000 properties are expected to remain below their Proposition 13 value.

For more information, see the county assessor's website.

Related content:

•: Real estate: a way to diversify

— Palo Alto Weekly Staff

Comments

 +   Like this comment
Posted by Wondering?
a resident of Another Palo Alto neighborhood
on Jun 9, 2014 at 5:55 pm

Market values, or market prices? Seems that the Assessor has become captured by the real estate jargon--which does not have to reflect any economic reality.

Wonder if the Assessor realizes that values don't equal prices? Certainly watching the prices go up and down for the same properties makes one wonder if the Assessor is going to explain why he is using the term values, when prices would make more sense?


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Posted by what it means
a resident of College Terrace
on Jun 9, 2014 at 6:31 pm

This isn't a particularly useful statistic. The assessed value largely reflect the sales price due to Prop 13. For those properties purchased in the 1980s and 1990s, the assessed value is typically MUCH lower than the actual market value. The fact that Palo Alto assessed values increased substantially this year likely reflects the recent turnover of multiple mulit-million dollar properties.


 +   Like this comment
Posted by musical
a resident of Palo Verde
on Jun 9, 2014 at 7:59 pm

>> single-family home values were 23.8 percent higher than in 2007

S&P500 peak in 2007 was 1576 on Oct 11. Today's close was 1951, a climb of 23.8%.

Coincidence? You decide.


 +   Like this comment
Posted by bought in 2001
a resident of Duveneck/St. Francis
on Jun 9, 2014 at 8:03 pm

We purchased our home in 2001 and our property taxes are almost unaffordable. We are just about out of here. I worry if Prop AA passes and City of PA and PAUSD demand extra bonds, we already pay through the nose to live here. Oh, and don't forget, they want to raise our county sales tax!!


 +   1 person likes this
Posted by Wondering?
a resident of Another Palo Alto neighborhood
on Jun 9, 2014 at 8:18 pm

> PAUSD demand extra bonds

It will be a while before the PAUSD claims it needs more bond money--but they will be back with a demand for a bigger parcel tax every four or five years. It's only a matter of time before the parcel tax is about $1,000 per parcel, and then starts it march towards $2,000/parcel.

There will be a never ending demand for more money for government in the coming years. Special interest groups will see that by getting their needs on the ballot, they will be able to stick it to the property owners for just about everything that they can dream up.

Palo Alto has an allegedly $550M infrastructure backlog, which if financed via bonds will cost the property property tax payers somewhere around $1B to payoff. And it's hard to believe that there will not be hundreds of millions of dollars of new infrastructure projects that will be promoted by the various special interest groups that have managed to lead the City Council around by the nose for so long now.

The City and the school district have both claimed that the housing prices are going to double every 10 years or so--meaning that those moving in here in the years to come are either going to have to be very rich, or they will be here mostly so that their children can attend high school--and then move on to somewhere where the land prices, and property taxes, are much lower.

The real estate agents, the lawyers, and many of the government workers are doing quite well--the rest of us are finding out how hard it is to live in a Liberal's paradise.


 +   Like this comment
Posted by HUTCH 7.62
a resident of Old Palo Alto
on Jun 9, 2014 at 8:21 pm

I here you... Taxes are outrageous. Between California's crazy laws (the average citizen now commits 7 felonys a day in CA) and the god awful high taxes anymore. Probably gonna move out of state, business is booming in Colorado, North Dakota and Texas. Just got to figure out what state I like.


 +   Like this comment
Posted by Tennyson avenue neighbor
a resident of Old Palo Alto
on Jun 9, 2014 at 8:29 pm

[Post removed.]


 +   Like this comment
Posted by Real Estate Reality
a resident of Another Palo Alto neighborhood
on Jun 9, 2014 at 11:35 pm

@Wondering:
"Market values, or market prices? Seems that the Assessor has become captured by the real estate jargon--which does not have to reflect any economic reality."

A home's value is exactly what the highest bidder is willing to pay for it, and the value of any asset is what you can get for it in cash. Therefore, the market value is exactly the same as the sales price. Of course that value/price fluctuates with the market, just as other non-cash assets such as gold and silver do.

@what it means:
"This isn't a particularly useful statistic. The assessed value largely reflect the sales price due to Prop 13. For those properties purchased in the 1980s and 1990s, the assessed value is typically MUCH lower than the actual market value. The fact that Palo Alto assessed values increased substantially this year likely reflects the recent turnover of multiple mulit-million (sic) dollar properties. "

While I agree the assessed value is (thankfully) typically lower than what the home could sell for, it is because of a conservative assessment based on "average" home sales in the city. High-priced homes actually appreciate at a slower rate than the mid-priced homes, so the multi-million dollar homes are likely not driving up the assessed value of typical homes. There are so many variables that affect home values, it simply cannot be a simple factor of price per square foot. That metric is just an average.


 +   Like this comment
Posted by Wondering?
a resident of Another Palo Alto neighborhood
on Jun 10, 2014 at 8:53 am

> A home's value is exactly what the
> highest bidder is willing to pay for it

Values are extremely subjective, and are unlikely to be agreed upon across a group of people who might be asked to consider the worth of a property (or item). The price is a simple number which can not be considered as "transcendent", or have different meanings to different people. For this reason, it is being suggested that the Assessor should be promulgating data that is as solidly based in reality as possible. The term "values" is less realistic than the term "prices".

> High-priced homes actually appreciate at a
> slower rate than the mid-priced homes

Evidence, please.
----


 +   Like this comment
Posted by Amontillado
a resident of Professorville
on Jun 10, 2014 at 9:07 am

We did some remodeling recently and it wasn't even two weeks before we got a bill from the assessor's office for additional taxes due ( the improvements increased the property value ). Doesn't really encourage people to take care of their property does it?

Most countries give tax CREDITS for home improvements!


 +   Like this comment
Posted by Jim H.
a resident of Duveneck/St. Francis
on Jun 10, 2014 at 10:51 am

Can't wait for the next PAUSD budget meetings. Guaranteed they've already spent the additional tax dollars coming in and will claim they are just scraping by and depend on PIE donations to keep the classsrooms staffed with aides and maintain the level of extra programs. In 2004, the PiE donation was $2M, in 2013 it was nearly $5M. Of course this doesn't include the millions of dollars given to the athletic programs and the other clubs and art programs that also ask for money.

Money continues to pour in to PAUSD, yet somehow, they find ways to spend it all and then throw their hands up in the air when they run out.


 +   Like this comment
Posted by Wondering?
a resident of Another Palo Alto neighborhood
on Jun 10, 2014 at 12:32 pm

> Money continues to pour in to PAUSD, yet somehow, they find ways to
> spend it all and then throw their hands up in the air when they run out.

Seemingly permanent school board member Camille Townsend has stated on many occassions: "the PAUSD can spend every penny it can get" (or words to that effect).

There are no salary caps for government employees. Pensions are linked to salaries. Is it any wonder the PAUSD spends every penny it can get, and then claims that it is "underfunded"?


 +   Like this comment
Posted by CrescentParkAnon.
a resident of Crescent Park
on Jun 11, 2014 at 2:28 am

Price means the numbers involved in sale,
value means implied price of the population based on the sale and trends of the current prices.
Palo Alto real estate prices are going up in most cases.
Perhaps at the very high end the dynamics are a little different, but for most houses it seems to me prices are going way up due to demand and shortage or supply.


 +   Like this comment
Posted by ChrisC
a resident of College Terrace
on Jun 11, 2014 at 8:11 pm

ChrisC is a registered user.

People complaining about pausd? Yet people do anything to get their kids in this school district. Let's face it: this is a city for the wealthy.


 +   Like this comment
Posted by Stuck here
a resident of Another Palo Alto neighborhood
on Jun 12, 2014 at 12:23 pm

We have a growing family and are in dire need of a larger house on a larger lot. We cannot possibly afford such a property in Palo Alto, or, we found recently, anywhere else...

We must pay capital gains tax even though we would roll over the profit into another property. That lowers our down payment so much that we cannot buy down the mortgage to an acceptable payment range.

So, we are stuck here, three adults, three small children, in a tiny home on a tiny lot in PA. Not a bad town or school district, just a bad house that was all we could afford all those years ago.

The current capital gains tax system has got to be bad for the housing industry. I know at the other end of the spectrum, older people are stuck in large houses and can't downsize because they lose 25% to the IRS right off the bat, ruining their plans to pay cash or have a very small mortgage for a smaller home.


 +   Like this comment
Posted by Cool
a resident of Adobe-Meadows
on Jun 12, 2014 at 12:49 pm

@Stuck here - I'm not sure your problem is taxes, it is just that the housing you want is more than you can afford. I would love to sell stock and roll it over into new stock without paying gains tax, but then the gains tax would never be paid. Great for me, not so much for IRS.

As you may know, there are substantial cap gains exclusions for sale of a primary residence available under many circumstances. Maybe you have maxed those out, in which case good for you!


 +   Like this comment
Posted by musical
a resident of Palo Verde
on Jun 12, 2014 at 9:18 pm

Cap gain exclusion of 250K every two years, 500K if married. That's a pretty good tax-free living.


 +   Like this comment
Posted by RPK
a resident of Ventura
on Jun 12, 2014 at 10:37 pm

@ stuck here

Your really are not stuck here opportunity abounds in other states, where axes are low and property huge. Yes you may have to take a pay cut but odds are yo can gain a salary higher than the median income in the area in which you choose.


 +   Like this comment
Posted by Stuck Here
a resident of Another Palo Alto neighborhood
on Jun 13, 2014 at 12:25 am

The most mortgage we can qualify for is 1.7 million. That is what we would have to be able to "buy down" to with a very large down payment. We need ( at the least) a 4 bedroom, 3 bath home on at least a 6500 square foot lot. We are crammed into a 1600 sf 3 bedroom, 2bath house on a 5000sf lot.

Unfortunately, I am deeply entrenched in a Silicon Valley tech career which would not exist outside the SF Bay Area. My wife, though, is a nurse who can work anywhere. But since I earn the bulk of the household income, we could kiss home ownership good-bye if I changed careers and moved to another state.

Makes me wish I had become a doctor. My wife knows of a doctor and her family who left here to move to southern Wisconsin in search of a better life for her children. For less than what they got for their small house north of downtown, they bought a huge house on acreage with a horse barn!


 +   Like this comment
Posted by musical
a resident of Palo Verde
on Jun 13, 2014 at 9:54 am

Do I see a 1.79M listing on Louis for a 5 bed/3 bath on a 6900 sq ft lot?
Or is that just a low-ball that will go for 3.2?


 +   Like this comment
Posted by CrescentParkAnon.
a resident of Crescent Park
on Jun 13, 2014 at 9:14 pm

Stuck here .... focusing on capital gains is really a bogus argument. It may be the problem for you ... but when you think about it, people make money from capital gains ... that is, it is income ... and already capital gains is taxes much less and totally irrationally compared to earned income from working. That is what is unfair.

The answer would be to class all income the same, and make the tax rate dependent on among of total income ... i.e. the progressive tax we used to have when America worked to create the largest middle class in the world. But in order to please small but vocal or powerful sectors of the electorate we have a progressive tax system that is regressive. I guess that kind of goes with the misnaming over just about everything now, clean skies, healthy forests, smart growth, etc. We've done the wrong thing for so long it will hurt the "wealthy" too much to change, which has led to the US being number 1 in inequality.

I understand and sympathize, pretty much everyone here that is a working person at whatever level is in that situation unless you have have some windfall wealth.

However ... a house is most likely a long-term capital gain and I didn't think the LTCG tax rate is 25%.

From Wikipedia: The long-term capital gains tax rate is 15% (0% for taxpayers in the 10% and 15% tax brackets, and 20% for taxpayers in the 39.6% bracket).

I think you need to check your numbers and then you get a one-time homeowners exemption. My understanding is that also if you buy a house that is the same or higher costs, you can defer the taxes ... though I have not verified that, it is hearsay, but from what I believe was a reputable source. Plus you only pay capital gains tax on the GAIN.

I think home ownership in whatever form ... should be encouraged by the government. There are many reasons for that, one of them is to avoid what we see in the Bay Area, and that is people with lots of money buying up scarce housing to charge exorbitant rents ... based on what they proclaim is a free market. This is one of the cases of free market failure in my opinion, though I am sure landlords of potential landlords would disagree.

Musical ... could be a old Eichler in disrepair with a cracked slab.


 +   Like this comment
Posted by musical
a resident of Palo Verde
on Jun 15, 2014 at 9:50 pm

@CPA, LTCG tax rate jumps toward 25% when you include state of California.


 +   Like this comment
Posted by CrescentParkAnon.
a resident of Crescent Park
on Jun 15, 2014 at 11:39 pm

> @CPA, LTCG tax rate jumps toward 25% when you include state of California.

Thanks ... ( It's been a while since I had a big capital gain ) but where are you getting that number from? You assuming what income tax bracket at federal and state. I did a quick Google search and the things I am finding are all quoting the highest marginal rates to provoke maximum outrage. It's really dishonest ... and they ought to fix the whole tax system ... it would be pretty easy, but that would not necessarily help relieve real estate capital gains in CA.

I think CA lets you deduct Federal capital gains ... and the max rate state is like 33.3 ... the capital gains tax rate at the state level in California is 13.3 percent and the capital gains tax rate at the federal level is 20 percent, but I believe these are all maximum numbers.

This points out one thing that really bothers me. The way we get the tax system we have and and the way that people are fooled into not want to change that is that high earners past a certain point ... which is fairly low in terms of high earners ... and all lumped into the same tax bracket.

I call it "treating billionaires like millionaires". That is, we have plenty of what one could almost call middle income people living in the Bay Area that are actually millionaires, like the person we are discussing. A real estate millionaire, but not really someone who is rolling in the millions ... as far as we know. There are a lot of working professionals, business owners, entrepreneurs and investors that do well enough to live here, but they pay the same tax rates as the big boys ... because .... we treat billionaires like millionaires.

Like terrorists in the middle east hide among the regular civilians our economic billionaire ( and multimillionaire ) terrorists hide in the population of people who really have to work for their money and are not living ostentatiously.

The thing we need is real fair tax change:

1) Class all income the same, and tax it on the sum of all income.
2) There are expensive that should be deductible that we cannot get rid of, but all the rest of it needs to be gone.
3) Break up earners into equal block of earnings, and find a segmentation that is enough to fairly graduate tax rates, where the rate below any given group pays a lesser percentage and the rate above any group pays a great percentage ... all the way up to whoever earns the greatest amount.

It is only when every expenditure affects everyone in a fairly equal way that we can find out where we as a country/state are, and what we want to afford to do, as well as bringing back the old ideal from way back to use tax policy to prevent dynasties that can challenge or corrupt the government.

Anyway sorry for the rant ... this is high, but that is the price we pay for making a lot of money and living in a place where very rich people can grab the land and set up rents/tributes that everyone has to pay to play the Bay Area game. It is not only hard, but it is impossible for many people ... not just the homeless, and I've seen many people give up and move out of the area .. and at some point I may do the same.


 +   Like this comment
Posted by musical
a resident of Palo Verde
on Jun 16, 2014 at 12:54 am

Let's also throw in the new 3.8% Net Investment Income Tax (Obamacare tax). Yes these are the higher marginal tax rates but $250K filing jointly is not really that high around here, and cap gain from selling a house would be on top of that.

At these levels, various deductions and exemptions phase out, so your overall bill creeps further upward. Yes it's a mess. Moreover, capital gains are often just inflation in disguise. If I made an investment in 1976 and have tripled my money selling it today, have I really gained anything?

The current system has evolved to maximize sustainable revenue. Every change affects production and consumption, so the targets are always moving. We'll see whether our transient occupancy tax is voted up to 14%, and Airbnb participants go underground.

Sure we can balance the Federal budget by taxing billionaires out of existence, but then what do we do next month?

I just listened to Bill and Melinda Gates today. Do you really think the government could spend their money more wisely than they will? Taxing foundations, universities and churches would end American life as we know it.

But we're going astray of the topic. Unaffordable property values are also a hot subject on the Mtn View Voice threads.


 +   Like this comment
Posted by CrescentParkAnon.
a resident of Crescent Park
on Jun 16, 2014 at 1:19 am

> The current system has evolved to maximize sustainable revenue.

Well, I don't think revenue is the main motivator. I think political stability is the main goal. If we cared about revenue we would not have 14 or 16 trillion dollars debt.

> Do you really think the government could spend their money more wisely than they will?

I think the point of just about all the new research is that there are no experts and that our most successful people got there by playing tricks and imposing monopolies. The book "Thinking Fast, Thinking Slow" is an incredible study in this. There is no justification to say that a person will spend money better than a group, or that private industry is less wasteful than government ... even if you total all the decisions up and it pointed to one or the other, there is no institutional reason, it's merely random.

I think that if you open decisions up it's definitely tricky, groups can be just as stupid as individuals, but right now the primary lack is democracy. American life as I knew it has ended, so there is that.

But ... back to real estate. I could not afford to buy any of my houses today if I had to today, so I sympathize with people who have to live in this area, and I think something should be done by government. I am not sure what but what would have been ideal for me when I was in school or saving up to buy a house would have been some ultra-affordable housing that was safe. My solution at the time was to live in the Western slice of EPA, and I and neighbors had some narrow scrapes in that environment, but it was not cheap either, but it was the best I could find in the area at the time.


 +   Like this comment
Posted by Homeowner
a resident of Old Palo Alto
on Jun 16, 2014 at 4:11 pm

When we were house hunting a few years ago, we had to make offers against consortiums of buyers from India and China. These groups had the buying power to go way over the asking prices. I thought it was unfair at the time, and still think it is unfair to people who need housing around here.

The government should do something about it.

Last week I met a young couple that work for Google. They currently rent a home in San Bruno, having given up looking for a place to buy/rent in the city.
They told me that they have no intention of raising their kids around here and plan to cash out their options over time, and move back to Georgia.

I think it is sad that we are losing hard working younger kids like on account of the lack of housing.

And no matter how much housing is built, there will never be enough for the people who live/work around here when we have realtors actively marketing our real estate to India and China.

Something MUST be done to stop the madness.


 +   Like this comment
Posted by Rupert of henzau
a resident of Midtown
on Jun 16, 2014 at 5:09 pm

Homeowner-- so what you are saying is that homeowners should not be allowed to sell their homes for the highest price offered? You want the government to intervene in the housing market and limit purchases to US citizens? That sounds a bit xenophobic. There are plenty of young people in the Bay Area and plenty will choose to stay here. So the fact that a couple is moving to Georgia is not a big deal. Anyway if these people are working for google, I bet you they have plenty of money and buying a house should not be a real issue.
BTW, these comments about Chinese/Indian/ foreign buyers pop up all the time on this forum and you know what they sound like to me


 +   Like this comment
Posted by CrescentParkAnon.
a resident of Crescent Park
on Jun 16, 2014 at 10:46 pm

>> You want the government to intervene in the housing market and limit purchases to US citizens? That sounds a bit xenophobic.

Hardly ... most other countries do not sell land to foreigners. I love how people just seem to love criticizing the US based on some mythical and usually absurd notion of their ideals of fairness or rightness.

I think under most circumstances reciprocity is indicated and if a country will not let Americans own their land then we should not let their people own our land.

Since Homeowner did not make a specific suggestion as to what the government should do, saying the government should do something does not mean you can put words into his mouth.

I doubt the average or median wage at Google is enough to be able to afford a house in this area, particularly if they have to live here for long enough to save up a reasonable down payment while paying the exorbitant rents in the area. Maybe a family with two wage earners, but then they cannot afford money or time to have kids.

The way the rest of us have decided to live in order to allow the very rich the all the freedom and liberty in our country is just plain stupid.


 +   Like this comment
Posted by Homeowner
a resident of Old Palo Alto
on Jun 17, 2014 at 2:29 am

The Australian government wants to start restricting foreign nationals from purchasing real estate as it has become difficult for their nationals to find and purchase their first home.

The same issue has been discussed in Canada and the UK.

There was also concern about national security since large amounts of fertile cropland were also being sold to foreign nationals.

To Rupert - The wife of the Google couple was Chinese American.






 +   Like this comment
Posted by Vincent
a resident of Fairmeadow
on Jun 17, 2014 at 5:24 am

CPA-- read homeownersost. She clearly states that the government should do something about it. Rupert was asking what that something was. No words put into anyones mouth. Also note that she states that this couple will be cashing out their,options, so they have more than a salary.

Homeowner- you clearly complained about Indians and Chinese buying the housing. The wife you mentioned is an American. I agree with Rupert's and have seen the comments he describes on many many threads. Maybe you should,contact your representatives in congress to address the issue.


 +   Like this comment
Posted by CrescentParkAnon.
a resident of Crescent Park
on Jun 17, 2014 at 9:24 am

Vincent ...

>You want the government to intervene in the housing market and limit purchases to US citizens?

Clearly leading the witness and putting words in their mouth.


 +   Like this comment
Posted by Robert
a resident of another community
on Jun 17, 2014 at 9:33 am

Its crazy how in one thread regarding affordable housing, it can go unquestioned that "nobody has a right to live in Palo Alto" and "live within your means", while at the same time on another thread blasting tech money or foreign money, greedy landlords, etc., because prices are too high.


 +   Like this comment
Posted by Vincent
a resident of Fairmeadow
on Jun 17, 2014 at 9:48 am

CPA-fine. Whatever you say. However homeowner did state that realtors were selling our homes to India and china and said the madness must be stopped. What action do you think she was referring to?


 +   Like this comment
Posted by CrescentParkAnon.
a resident of Crescent Park
on Jun 18, 2014 at 4:03 pm

> What action do you think she was referring to?

Dunno, try asking instead of telling maybe? It's a hard problem.


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