Real Estate

Riding the wave

When real estate rebounds, downsizers and first-time homebuyers step up

To call 2010 a very good year in local real-estate parlance, you'd have to be looking at 2009.

But local Realtors, including John King, a Realtor broker with Keller Williams in Palo Alto, say the market is definitely bouncing back.

"All of a sudden homes went pending with multiple offers. ... The wave starts in Palo Alto. We're the last to fall, but the first to come back. We'll see where it goes from here."

King, who's been in the real-estate business for 27 years, asserts, "There has never been a five-year period where (homeowners) lost money in Palo Alto real estate." For the state as a whole, that statement is true over a 10-year period, he added.

Homes are starting to sell again, he said, but "that doesn't mean we're back to 2007 highs. We're probably 15 to 20 percent off, but we're creeping up."

Chris Iverson, a Realtor with Intero Real Estate Services, Los Altos, doesn't attribute the bounce back to pent-up demand.

Rather, he said, there's a strong imbalance between the number of homes on the market and the number of buyers seeking them.

"There are about two-thirds as many homes on the market than a year ago at this time," he said.

With more people looking at homes, that leads to a "frenzied, multiple-offer situation," he said, pointing to a recent home in Midtown -- in poor condition but in a great neighborhood -- that was priced around $900,000. Fifteen to 20 offers bid the house "above market value," to about 10 to 15 percent over the listing price.

"There's definitely demand," he said, even in the pricier areas.

"Wealth is moving around. We're seeing high-end homes selling in Woodside, which has been dead for a long time," he added.

With interest rates poised to go up and uncertainty in the lending market, Iverson said, "Uncertainty creates activity and opportunity. (People are thinking) maybe now's the time to get in."

Iverson, who's based in Los Altos and lives in Mountain View, sees something positive about all of the local markets.

"Palo Alto's safe; you don't have to worry about schools, crime, all those things that hurt property values."

Mountain View offers more bang for the buck, he said. "For a million dollars in Palo Alto I get something barely habitable; in Mountain View you get a nice house in a great neighborhood" in a city with a large tax base, thanks to Google and Microsoft, among others.

A "country boy" at heart, he's a big fan of Menlo Park with its sleepier, more residential feeling. "It's undervalued for what you get," he often points out to faculty coming from other areas to Stanford. "We always look at Menlo Park because of its proximity to the university but also (because of) lifestyle and what they can afford."

Iverson stresses the Realtors' mantra: If you have something mainstream and it's priced well, it'll sell.

Among the buyers are first-time homeowners and people moving from larger to smaller quarters.

Jane Marcus was chatting amicably at a sewing bee in February, quietly cutting out fabric to make tote bags for a fundraiser. As she was pinning and snipping, she casually mentioned that she and her husband just bought a condo at Menlo Commons.

Since the sale was closing in early March -- and the condo association wouldn't allow them to rent it out -- they planned to put their Palo Alto home on the market sooner than they'd originally thought.

Another member of the group spoke up.

"Do you mind my asking what you're asking for it? My daughter and her family recently moved to Palo Alto and are renting. They'd like to buy."

Marcus was soon on the phone to the daughter, describing the home and arranging for a viewing and a meeting with their mutual Realtors. And so, negotiations began.

Marcus, who retired from Stanford University as an administrator in the computing center two years ago, said she and her husband, Lew Mermelstein, thought they'd ultimately retire and live in Fort Bragg, where they've owned a second home since 2002.

After spending long weekends there, Marcus concluded it was "too remote, too quiet. ... I could not live the rural life."

But a dual life -- split between Fort Bragg and here -- had tremendous appeal.

The only catch was being able to afford two mortgages on retirement income. And then Mermelstein began to segue into retirement by cutting back to 60 percent time as a NASA facilities engineer.

"We knew one of them (the houses) would have to go. I wasn't willing to give up the Fort Bragg dream.

"It's peaceful, gives serenity, clarity, the spirituality I need, but it's not easily accessible," Marcus said, noting that it's about a four-hour drive.

Having a pied-a-terre here could make financial sense if they sold their Duveneck/St. Francis neighborhood house, where they'd lived since 1983.

Once they opted to downsize, they started to look in earnest. They'd already missed an opportunity last year when they found a different condo at Menlo Commons. Although the sellers were eager to accept their offer, they lost out when the condo board turned them down because they weren't ready to move in and wanted to rent it out.

This time they looked further afield, from Mountain View to Redwood City. Price was a factor, but "location was important and ultimately that's what did it," she said.

They scored with another Menlo Commons unit. "It's west, but it's still our neighborhood. It's faster to get to (Congregation) Beth Am. We can still meet friends for coffee downtown."

Located near the corner of Sand Hill Road and Junipero Serra Boulevard, Marcus can even walk to work -- yes, she's been called back to Stanford -- or to her exercise class at SLAC National Accelerator Laboratory.

Last year, when the median price for a Menlo Park condo fell to $816,000 from nearly $1 million in 2008, prices for Menlo Commons condos were in the mid-$400,000s. The unit they lost stayed on the market for nearly another year and sold for $50,000 less than the original ask.

This year they faced a bidding war, paying $492,000, way more than last year's asking price.

"It's the same unit but in a better location in the complex," Marcus said. Now they've got a second-floor unit, overlooking the interior garden. It's what's known as a two-bedroom "stretch," which means there's an alcove in the master bedroom that can double as a home office -- handy since she works often at home and her husband is working on a novel.

"It's more quiet, safer. I'm claustrophobic," she added, but she loves the panoramic view of sky above the rooftops.

"It's very open, very bright. I could be happy here."

The jury is still out for her husband, who would have preferred a more energy-efficient unit and a flat place to do tai chi.

But what ultimately convinced him was not having to maintain two houses. "If we were spending an extended period at Fort Bragg, we wanted a place that's turnkey," she said.

The 1,200-square-foot condo is quite a contrast with their four-bedroom, three-bath home with a family room, two-car carport, tool and potting sheds and a vegetable garden.

But they do have a yard in Fort Bragg, where "we can do puttering and gardening. ... The storage will be in the garage in Fort Bragg," she added.

While negotiations quickly broke down with the sewing-buddy's daughter -- she wasn't keen on the busy street -- the house is nearly ready for market.

Candice and Darren Normoyle bought their first home together last August. Both are State Farm insurance agents, working out of the Palo Alto and San Carlos offices respectively.

When strategizing their purchase, they started by choosing two real-estate agents, John King, with Keller Williams, Palo Alto, and Chris Iverson of Intero Real Estate Services, Los Altos. At State Farm, they each work with many Realtors insuring homes.

"We felt like we didn't want to give business to just one. Picking two was very difficult," she said.

But, in hindsight, she wouldn't do that again. Despite her very positive experience with each of them, she said, "It confuses things, makes them complicated."

And buying a house can be complicated enough.

First they looked at where they wanted to live -- Palo Alto or Woodside -- then where they could afford to live. "That brings up a lot more options than two to three years ago. We looked at options, knew we wanted to be in a place with good schools ... and proximity to work," she said.

Although the newlyweds don't have children, they wanted a place with good resale value. They soon narrowed their choices to San Carlos or Mountain View.

"In San Carlos, they have a lot of hills. It seemed like we could get a little more bang for our buck, but you get more hills," she said, adding that it didn't seem that safe either for herself as a runner or for kids playing.

But Mountain View offered that combination of community and an outdoor lifestyle that they found ideal.

Normoyle described a day when she was moving boxes into their Cuesta Park home. One of her neighbors was driving by and turned around to come by and introduce herself and her two sons. Then she invited her over to an event they were hosting that night.

"I was blown away. You don't know what to expect. It was that small-town, welcoming feel," she said. And soon another neighbor dropped by with a spreadsheet showing who lived in each house on the block.

As someone who liked to deliver Christmas cookies but had been rebuffed by neighbors when renting in San Mateo, Normoyle was delighted to find her new neighbors appreciative of her baking efforts this year.

When the Normoyles started looking for their starter home, they knew how much they could spend but not exactly what they could get. Candice credits both Realtors with doing a great job of listening and showing both ends of the spectrum, from a home without a kitchen to a completely remodeled place.

"Then I knew I wanted something in the middle: The kitchen was remodeled but the rest needs work. It's a sturdy, wonderful home."

The Normoyles listened carefully to their Realtors' advice: "That's why we hired them. The best advice was, 'You found a house you're interested in, here's what we think it's worth.'

"They worked well as a team."

The house they ultimately purchased was an estate sale that they felt was listed way too high but had been reduced a number of times. So they put in a low-ball offer.

"They flat-out denied it," she said.

After a few weeks, Normoyle noticed the house was still listed. What had begun at $890,000 was now down to $850,000. They offered $806,000 but compromised at $830,000.

"If they had listed it at that, they probably would have gotten multiple offers," she said, adding, "We got lucky."

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