|Spring Real Estate 2003
Publication Date: Wednesday, March 12, 2003
In search of trophy homes
by Carol Blitzer
Photos by Don Feria
While the glory days (for sellers of high-end property) of 2000
are long gone, that doesn't mean homes selling for more than $5
million aren't moving, say local Realtors.
"There are many buyers that are looking in the upper end. Similar to the stock market, there is a lot of money just waiting for the opportune time to purchase," said Mary Gullixson, an agent with Alain Pinel Realtors in Menlo Park.
Last year there were 18 sales of homes over $5 million in Atherton,
up from 15 the year before, but nowhere near the 55 sales in 2000,
Instead of dot-com instant millionaires, buyers of the more expensive
local properties are often involved in the Silicon Valley high-tech
economy - sometimes as CEOs, venture capitalists or patent attorneys.
"There are still a lot of buyers, with cash," said Jim
McCahon, a Woodside-based Coldwell Banker agent, noting that many
pulled their money out of the stock market and are hesitant to take
another risk. Instead, they're waiting for the right property at
the right price.
High-end buyers are looking for what everyone else is: more bang
for the buck, Realtors agree.
"Buyers are particular, they want a house that's unusual but
must have a certain level of class and elegance. They're going to
be selective about where they put their money. When you buy a trophy
home you take more time to do it," said Miles McCormick, a
Menlo Park-based Coldwell Banker agent.
"What a high-end buyer is willing to pay for is value. They're not waiting for foreclosures, but they have a very keen sense of value. The properties that are priced appropriately are getting activity," according to Peter Cowperthwaite, of Cowperthwaite & Co., Portola Valley.
"At the high end, there is often a large gap between what
sellers anticipate they can get for their home and what buyers are
actually willing to pay. In the last quarter of 2002 and early 2003,
there were a number of properties that initially listed in the $4
million-$5 million range that finally sold in the $2.5 million range
after being on the market for many months," said Hanna Shacham,
a Palo Alto-based Coldwell Banker agent.
How long property sits on the market seems to vary widely. "It's
a bizarre market because some things sit and some things sell,"
noted McCormick. "It generally means that if a buyer is financially
and emotionally ready for it, there's enough inventory out there."
Local buyers who already own a $3 million home can take their time
choosing what McCormick calls their "trophy home."
"They have to find the right house and feel they're paying
a fair price to make the change. When they find the right house,
right location, right style for them, then they're motivated. Until
then, they can stay in their $3 million house," he said.
Coldwell Banker agent Tom LeMieux, who specializes in high-end
properties in Atherton, Menlo Park, Portola Valley and Woodside,
sees uncertainty in world affairs affecting the local market. "Buyers
can't get a trend line. We need the Iraq decision to be made and
hopefully get behind us. It's not that sales are not happening and
buyers have withdrawn; there are plenty of buyers out there,"
But buyers are making what he calls "cautious offers. They're
concerned what the market's going to do going forward. I don't see
our market returning to a strongly appreciating (one) soon, but
there's not much downside risk either," he said.
Will rapid appreciation ever come back?
"In 2004 we'll see the appreciation again in high end,"
predicted McCahon. If 2003 is a recovery year and corporations report
better profits, people start reinvesting in the stock market, and
whatever happens in Iraq happens and is over, then more buyers will
enter the high-end market, he said.
"That doesn't mean a repeat of 1999-2000, when people were
throwing money at properties. I don't think we'll see that ever
again," he said.
Ed Kahl, who sold the priciest property in Woodside last year at
$27.5 million, said "there are many people in this area who
have a great deal of money and some of them realize this is the
bottom of the cycle and the time to invest in top-quality locations.
Historically, properties appreciate 200 to 400 percent every decade.
So they feel Silicon Valley will come back sometime in the next
five or seven years and they're willing to put their money where
their mouth is."
Carol Blitzer can be reached at firstname.lastname@example.org.