|Fall Real Estate 2009
Publication Date: Friday, October 9, 2009
Sink or swim?
Prospective homebuyers are starting to dip their toes in murky real estate waters, but few appear to be willing to take the leap into the pool -- yet.
Some of the lower-end properties are just odd ducks: That home on Embarcadero lies rather close to the Highway 101 onramp. Another on Park Boulevard backs onto the railroad tracks. In mid-September there were no offers, but plenty of expressed interest for the two-bedroom, two-bath home.
"The price ($797,000) is very attractive to people who want to get into Palo Alto. ... The house is small, but the lot is pretty good size," Cindy Hung of Intero Real Estate Services, Cupertino, said.
In Mountain View, the least expensive house on the market in early September was a two-bedroom, one-and-a-half-bath home on Jackson Street. At $389,000, Realtor Diane Schmitz from the Sereno Group, Los Altos, described it as a "teardown, really land-value only. The house is uninhabitable."
Sharon Lambert of Campi Properties, Los Altos, has been hoping to close an entry-level sale in Mountain View for months. First listed at $575,000, the price was lowered to $450,000 and was offered as a short sale, where the bank must agree to accept less than the amount of the mortgage. Two offers were sent on to Bank of America.
"It's been sitting at the bank for approval for about 100 days," Lambert said; it was due to go to a negotiator on Sept. 11. A few days before that, the bank called to say paperwork was missing, so she re-submitted it. Then the bank decided to send out another appraiser.
"I call every week. It's nuts, it's crazy. ... If we don't get approval, I'm done with the property," she said, adding that most agents won't work on short sales.
Schmitz eagerly anticipates the usual surge in inventory after Labor Day. "Buyers are a little bit more hesitant; they're worried, there's a lot going on in the world right now," she said, adding that she's been very busy this year.
Realtor Bonnie Biorn, with Coldwell Banker, Menlo Park, who is handling an Old Palo Alto home on Waverley Street, notes, "This year has been extremely different. The economy creates a lot of uncertainty. When they (homebuyers) are uncertain, they tend to hold off and wait to see what will happen before making a major move.
"We're really seeing this with a lot of the builders' houses."
While new construction has sold quickly in the past, today those homes wait, just as the older homes do.
"A lot of it is just confidence. We'll need to see better economic news before people are willing to step up," she said.
The four-bedroom, four-plus-bath house was originally offered at $6.4 million. "It's 99 percent new. They kept the architectural detail and flavor," she said, and marketing began before construction was complete.
Still, even with well-attended open houses, "no one has stepped up to make an offer," even at the reduced price of $5 million.
"I don't think it's the price as much as finding someone who really loves it and wants to live in a highly desirable neighborhood," Biorn said.
"If it had been on the market before October (2008), it would have sold; people are just not jumping up right now," she added.
Mountain View's high end is closer to Palo Alto's median.
A home at 970 Gest Drive was offered for $1.85 million in September. After four weeks and open houses with lots of traffic, there were no offers, according to Michael Kelley, a Realtor with Kinetic Properties, Los Altos.
"This home, if it were in a Los Altos ZIP code, would already have been sold," he said. While the Gest property has attracted lookers, Kelley notes that the price is high and the property is big for Mountain View. "The home works well, but it's a little out of character for the neighborhood," he added.
Kelley has been seeing challenges with the jumbo financing market -- difficult to obtain, stricter criteria -- that has "thinned the market. Even people capable of making payments do not qualify in today's market, or loans that they would qualify for are no longer available," he said.
Sometimes sellers simply miss their opportunity by clinging to what they thought was a fair price -- in a changing market.
Soli Saatchi, of Alain Pinel Realtors, Los Altos, thought she had sold a high-end Mountain View home a few months ago, which is listed for $1.73 million. "It's a very different house than all the others. It has the biggest lot, a gorgeous guest house. It's almost two homes," she said, but an offer fell through at the last minute.
Kathy Bridgman, with Alain Pinel Realtors, Los Altos, has been working on selling a high-end Mountain View home on Milton Court for more than six months.
Although the sellers got multiple offers, "extremely close" to the original asking price of $1.9 million, they turned them down, thinking multiple offers should translate to "over asking."
"Then the market just dropped. No one was looking at houses because of the lending situation and stock market," Bridgman said.
The house ultimately sold at close to the new price -- $1.7 million -- in September.
"They got an all-cash offer and they took it, because we don't know how many years it'll take to get up to the original asking price. It was a fair offer," she added.
Bridgman is optimistic about the current market: "Houses are selling and prices are fair asking prices; we've adjusted to the 20 percent drop."
Before, open houses brought lookers rather than buyers, but they were accumulating knowledge.
"(The market is) getting better: That's the good news. ...It was crazy when it was going up so fast, but at least it wasn't as painful coming down."
Not every property sits.
Lyn Jason Cobb was considering offers in early September for a four-bedroom, $6 million Menlo Park property on Roberts S Drive. Built in 1948, Cobb said, "It's original owners, in a phenomenal location, extremely well-built, a unique property in a unique location."
And Miles McCormick, a Realtor with Keller Williams, Palo Alto, had a slightly different take on the high-end market: Much of it is not reflected in Multiple Listings -- an online listing site maintained by REInfolink and updated every 15 minutes -- but is done through private sales. He estimates that in the over-$5 million range, private sales outweigh MLS sales by three to one.
Instead, he suggests looking at what's happened historically to negatively impact the economy in the past. Although the rest of the country may have been hit hard, during the savings and loan crisis in the early '90s, there was little impact in the Palo Alto market.
Associate Editor Carol Blitzer can be e-mailed at email@example.com.
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