|Fall Real Estate 2006
Publication Date: Friday, October 13, 2006
by Jocelyn Dong
Denny and Alice Anne Chandler are in love -- with their brand-new home. Located at 800 High St. in Palo Alto, the Chandlers' 2-bedroom condominium offers them convenient access to Whole Foods Market, which sits a mere block from their front stoop, and the downtown area, with its movie theaters and restaurants galore.
The couple's found things to smile about within their complex, too.
"My favorite view is the fountain," Alice Anne said recently, looking out their back door at a cascading waterfall in the courtyard.
The Chandlers moved in at the end of July, joining thousands of local residents who have been snapping up condominiums, rowhouses and townhomes in recent years -- and forgoing the traditional picket-fenced single-family home.
Last year about 850 condos and townhomes sold in the cities of Palo Alto, Mountain View, Menlo Park and Los Altos, according to the Silicon Valley Association of Realtors, based on data from REInfoLink.
That's up 81 percent from just four years ago. Sales of single-family homes, meanwhile, rose only 28 percent.
What's more, condos and townhomes last year accounted for one-third of all home sales locally. In 2001, they accounted for only one-quarter.
(In this article, condominiums, townhomes and rowhouses generally refer to attached units that share common property and a homeowners' association. The exact definitions of condominiums, rowhouses and townhomes vary by city. Mountain View, for example, considers condos to be single-floor units and defines the types of homes in part by the number of units that fit onto a single acre.)
Price is one reason for buyers' rush to condos, availability another. Older condominiums can still be had for $300,000; a buyer would be hard pressed to find a single-family home for that little. And with condos and townhomes occupying less acreage per unit, they are increasingly the product of choice for profit-driven home builders.
New communities have been sprouting in recent years and continue to be developed.
In Los Altos, Redwood City-based Silverstone Communities is planning 78 townhomes and condos on El Camino Real in Los Altos.
In Menlo Park, a 135-condo project at the intersection of Oak Grove Avenue and El Camino Real was approved by the City Council in September -- although a group is seeking to overturn that approval by referendum. It's proposed to include eight three- and four-story buildings, retail and office space and underground parking.
Large-scale development is occurring in the southern area of Palo Alto as well, including hundreds of homes slated for construction on the former Sun Microsystems and Rickey's Hyatt Hotel properties.
And in Mountain View, more than 1,200 rowhouses and condos have either been recently completed or are proposed, including the massive 100 Mayfield Ave. project, under development by the Toll Brothers.
The broad appeal of attached homes -- with prices ranging from $300,000 for an older unit in Mountain View to nearly $2 million for a new luxury condo located near a downtown district -- has helped expand the market, according to developers.
SummerHill Homes of Palo Alto completed a multi-block residential project earlier this year that drew a mix of buyers, according to Elaine Breeze, a senior vice president for the company. The lower-priced Weatherly condominiums attracted "a broad range of singles and couples," from professionals in their 30s to retirees. Condos in the Woodmark community, priced from $1.1 to $1.9 million, attracted a similar age spectrum, but with a higher number of older buyers.
There's another, more sociological factor driving condo mania: a rising interest in the "convenience lifestyle," in which people seek to be close to shopping areas and transportation.
On a recent Thursday evening, the Chandlers ate at Gordon Biersch Brewery Restaurant in downtown Palo Alto.
"We weren't even going to eat there, but we walked by," Denny Chandler said, pleased at the spontaneous nature of their new lifestyle.
Developers have been observing the trend towards "convenience living" for awhile.
"Ten years ago, people were looking to move away from the city. Now people want to feel the energy of the city; they want to be part of what's going on around them," said John McMorrow, president of Silverstone Communities.
Those seeking a livelier lifestyle have been aided throughout the Bay Area by "a renaissance" in communities' downtown sectors, he said.
"In Palo Alto, you've always had University Avenue, but it's gotten better over the last five years. Cupertino, Hayward and Concord have invested in downtown areas and made those nice in their own right -- comfortable and even cool to live next to. These downtown urban corridors, people want to be next door to them. There's Starbucks, Peet's. You can get pastries. BART's right there," McMorrow said.
"People are looking for a convenient lifestyle maybe now more than ever. There are so many things tugging at their attention span. They'd rather focus on quality of life than on things that aren't (quality), like mowing the lawn," he added.
Though one would expect on-the-go young professionals to choose the urban scene in favor of the circa 1950 American dream, they're not alone. Empty nesters have been flocking to the idea too. The Chandlers -- Denny's a manager at Yahoo and Alice Anne a longtime Palo Alto elementary-school teacher -- traded in their single-family home in south Palo Alto to embark on a new phase of life.
Their first inclination, more than a year ago, was to move to Los Gatos, where their son and daughter-in-law live.
But after doing so, Denny Chandler said, "we kept coming back here." Friends and activities beckoned.
So they returned to Palo Alto and are now closer to their daughter's family, who live in Redwood City. Each week, they get to babysit their grandchildren.
The Chandlers and others like them are called "move down" buyers -- in other words, people downsizing from a single-family home. Condominiums are attractive to many of that generation not only for the ease of maintenance but also in anticipation of possible health challenges later in life.
Linsey Pekelsma, a project manager for the M.H. Podell Company, knows that segment of the population well. She's receiving inquiries primarily from an older crowd for the company's 22 condo and townhome development near downtown Mountain View that will include an elevator and mostly single-floor units.
"When you have stairs and all these disjointed living areas (of two-story homes), it's hard for retirees and empty nesters who need an elevator," Pekelsma said.
Other developers agree, saying they've seen similar interest from older buyers in single-floor housing.
Taking a cue from the market, housing companies have been diversifying their offerings to attract as many kinds of buyers as possible.
Classic Communities of Palo Alto is building a West Evelyn Street project in Mountain View of about 95 to 100 homes that includes three different housing types, from townhomes to lower-density condo buildings, according to Scott Ward, vice president of the company.
"It has some benefits in terms of marketability. It allows homes to appeal to different segments of the market. It provides a more varied, diversified compelling product," he said.
Land availability, or a lack of it, also has driven the multiplication of condo and townhome projects.
"As you have less developable land, there's push toward (getting) the highest efficiency on those properties. That's why you're seeing more of this type of development," said Dan Carroll of Pulte Homes, which is planning to build 106 rowhouses on Ferguson Drive in Mountain View, starting in late October.
According to a number of developers, companies are still pricing homes for entry-level buyers, at the $600,000 to $700,000 range.
But it's the million-dollar price tags of luxury condos that has had people's tongues wagging.
Developers defend the costs.
Price, said Pekelsma of M.H. Podell, is commensurate with location.
"Two blocks off Castro Street in Mountain View, land's more expensive. You don't buy expensive land and sell it to first-time homebuyers. That's where we are. Real estate is expensive downtown," she said.
SummerHill's Breeze said that the scarcity of prime land, increasing construction costs and the company's standards of quality all explain the premium prices.
"For us, our commitment has always been for high-quality condos. The devil's in the details. That's our focus," she said.
For those considering the choice between a condo and single-family house, one developer cited sustained interest in and marketability of the attached homes as a reason to buy.
"We have seen in the longer term, condos are a better value over a set period than single-family homes," Silverstone's McMorrow said.
For the meantime, it is enough for Denny and Alice Anne Chandler to be enjoying their new abode. Since moving in, they've installed on their front stoop two wooden chairs and a small matching table, at which they can have a leisurely breakfast while observing the hustle and bustle of High Street.
"It's like eating on a Paris sidewalk," Alice Anne said.
Asked if they'd retire in their new condo, the couple was undecided. But, Alice Anne said while cradling her grandchild in her arms, "I can see us here for awhile."
Associate Editor Jocelyn Dong can be e-mailed at email@example.com.