Editor's Note: As late September and October bring bright hot days and brisk nights, the Midpeninsula real estate market might do the same. Will it be hot? Chilly? A buyer's market or seller's? Over the next two weeks, two regular Weekly real estate columnists will weigh in on what to expect the rest of the season. This week, Hadar Guibara, of Sereno Group in Palo Alto, brings data, her experience and knowledge of how buyers and sellers think, to her forecast. Next week, Xin Jiang of Alain Pinel Realtors in Palo Alto, will give her insights. --Elizabeth Lorenz
As summer comes to a close, buyers and sellers want to know what to expect this fall. Will the market heat up, kind of like late summer temperatures often do in the Bay Area? Will home prices continue to rise, stay the same or decrease? Does a market like Silicon Valley even slow down?
Multiple factors can affect our market and even slight changes can be hard to anticipate. But I can tell you what we typically see in the fall and how that compares with what we've experienced this summer.
Usually the summer months bring a market slowdown, as school is out, families are on vacation and many potential buyers take a break from house hunting. But once Labor Day is over and kids are back in school, we typically have what I call a "second spring" market from September through November. We usually see an increase in both inventory and demand, often making the fourth quarter the busiest of the year.
What will that mean for this fall? Let's look at our starting point.
For the majority of 2018, inventory levels for Silicon Valley have hovered around one month's supply. Historically speaking, these numbers are very low. But in July, inventory levels crept up a bit to almost one-and-a half-month's supply. This still doesn't indicate a buyer's market, but it does mean buyers had more homes to choose from in July than they've had the rest of the year.
Accompanying the increase in supply was a drop in the median home price for single-family homes for both Santa Clara and San Mateo counties as a whole, and many of the individual markets they encompass. In July, the median home price in Santa Clara and San Mateo counties fell from second-quarter numbers of $1.4 million and $1.65 million respectively, to $1.35 million and $1.6 million. This represented a 4 percent (Santa Clara) and 3 percent (San Mateo) drop in median home prices. The markets that bucked this trend and saw an increase in median home prices were: Woodside, Los Altos Hills, Cupertino and Menlo Park.
Most homes, except those in Los Altos Hills and Cupertino, took longer to sell in July than they did in the second quarter.
This was good news for buyers who stuck around for the summer market. The good news for sellers was that in July, homes in every market except Woodside and Portola Valley sold above listing price.
Going into fall, we are likely to see a brisk market with increased competition. At least early on, buyers will have more homes to choose from than they've had all year. This increased competition means property preparation, marketing and pricing strategy will become even more important for sellers. Buyers will need to partner with an expert who can position them to be successful with a strong offer out of the gate.
Hadar Guibara is a Realtor for Sereno Group in Palo Alto. She can be emailed at hadar@serenogroup.com.
Comments
Evergreen Park
on Sep 17, 2018 at 4:45 pm
on Sep 17, 2018 at 4:45 pm
Looks like the Housing Bubble 2.0 has started to explode. You mean 0 interest rate for decade and 10 Trillions printed money didnt solve the debt crisis but made it worse by blowing bubbles everything!
Los Altos
on Sep 17, 2018 at 5:11 pm
on Sep 17, 2018 at 5:11 pm
RE sales traditionally slow down as we approach Thanksgiving/Xmas time.
Most families prefer to do their prospective home shopping in the spring with move-in dates occurring during the early summer months.
No biggie. We'll rake in the commissions later down the road come April.
Have a nice holiday season.
Another Palo Alto neighborhood
on Sep 18, 2018 at 9:03 am
on Sep 18, 2018 at 9:03 am
Anybody have a pointer to what the average yearly real estate price/inventory cycle looks like around here? For the last 40 years, I've always heard that prices are highest and sales quickest in the spring/early summer here. It was alleged that it was because of the school cycle, and, cities where schools are perceived as "better" attract parents who are likely to want to move during summer vacation. So, if prices are declining and inventory rising, isn't that what happens -every- year?
Crescent Park
on Sep 18, 2018 at 9:26 am
on Sep 18, 2018 at 9:26 am
QUOTE: RE sales traditionally slow down as we approach Thanksgiving/Xmas time.
QUOTE: For the last 40 years, I've always heard that prices are highest and sales quickest in the spring/early summer here....So, if prices are declining and inventory rising, isn't that what happens -every- year?
Bingo. No need for any charts and graphs or Powerpoint presentations. Like the RE Agent mentioned, they will cash-in 'later down the road'.
Home prices around here may eventually stabilize a bit but they aren't going to go down in the near future.
Another Palo Alto neighborhood
on Sep 18, 2018 at 4:58 pm
on Sep 18, 2018 at 4:58 pm
Maybe it isn't Thanksgiving. More likely there is a holiday or other event in China that is slowing things down.
Charleston Meadows
on Sep 18, 2018 at 6:44 pm
on Sep 18, 2018 at 6:44 pm
^^^^^ Or maybe some of them have second thoughts about buying a home in Palo Alto since many of their predecessors have pushed the median home prices up to the point of being overvalued and overpriced.
To lose money on an expensive house (if later sold) would be cause for great distress.
Another Palo Alto neighborhood
on Sep 19, 2018 at 9:15 am
on Sep 19, 2018 at 9:15 am
Posted by A View From the Orient, a resident of Charleston Meadows
>> To lose money on an expensive house (if later sold) would be cause for great distress.
I hate to break it to you, but, -every- investment is subject to "market risk". People who bought houses here at the 1989 peak had to wait until 1997 to break even. Anybody selling in 1996 lost out on the next boom. etc. And, real estate prices around here have been quite a bit more volatile than elsewhere due to the successive different waves of tech booms (aircraft/defense, semiconductors, computer hardware, internet/web, next generation software/internet-based services).
IOW, better not buy here in the first place if a significant price drop will cause "great distress".
Mountain View
on Sep 19, 2018 at 9:56 am
on Sep 19, 2018 at 9:56 am
[Post removed.]
Another Palo Alto neighborhood
on Sep 19, 2018 at 10:37 am
on Sep 19, 2018 at 10:37 am
Posted by Hwang, a resident of Mountain View
>> Bad feng shui to be near traffic
Traffic is a.e. (almost everywhere) in Palo Alto now, so, better off not buying here.
>> and do not want to buy house where someone has died.
In the past, many people died at home. In fact, it was a considered a good thing to die at home in your own bed. And, still is, by some people. Also, any older houses are subject to the Historic Preservation process. So, better off not buying older homes in Palo Alto:
Web Link
I suggest Cupertino: founded in 1955, with less than 500 voters, and virtually all houses there were built after 1960. The schools are now as good as Palo Alto.
e.g.
Web Link
Web Link
Web Link
Leland Manor/Garland Drive
on Sep 19, 2018 at 3:05 pm
on Sep 19, 2018 at 3:05 pm
Title of the PA Weekly article: >More inventory may be good news for buyers
Only if you have the money to buy. If not, nothing has changed in terms of affordability or availability.
It's like a car dealer saying his car lot is filled with inventory and all models currently in stock are priced to sell.
Makes no difference if one can barely afford the hubcaps.
Another Palo Alto neighborhood
on Sep 23, 2018 at 2:31 pm
on Sep 23, 2018 at 2:31 pm
All 5 sales in the weekend paper sold for $3-5 million dollars and all sold to Asians.
That's been the reality for a long time. No slowdown for billionaires. So obvious.
Leland Manor/Garland Drive
on Sep 23, 2018 at 2:40 pm
on Sep 23, 2018 at 2:40 pm
[Post removed.]
Adobe-Meadow
on Sep 23, 2018 at 5:06 pm
on Sep 23, 2018 at 5:06 pm
Posted by Hwang, a resident of Mountain View
>> Bad feng shui to be near traffic.
For an enlightened, advanced, and so called superior society, why are the Chinese so much into feng shui and superstitious about numbers?
Another Palo Alto neighborhood
on Sep 23, 2018 at 10:33 pm
on Sep 23, 2018 at 10:33 pm
I can't remember a time when the economy was in good shape and Palo Alto prices didn't track more with Los Altos and stay high when things were high. There have been signs of Palo Alto real estate not holding as well as it should for awhile. But even during the Bush recession, Palo Alto prices held pretty well because of the schools.
Overdevelopment gains us nothing and has negative consequences.
I don't know why no one is talking about this, but there are a lot of middle-income California homeowners who are having to make tough choices because of the consequences of the big federal tax increase they were handed at the end of last year. We're trying to hang on until HS graduation, but now that we are doing actual calculations, the damage appears to be much worse than we expected and we are dipping into retirement savings (and getting help from family in Red States, ironically) to stay afloat.
There are millions of Californians whose absolute incomes seem really high but when $117,000 is considered low income because of the cost of living, the fact that the new tax law didn't take cost of living differences into account is going to mean the changes will have a brutal effect on many families' finances. Red States have a narrative where they believe California and New York are expensive because of taxes, ignoring the principle of supply and demand that they supposedly ascribe to, i.e., way more people want to live here. The media, of course, followed the bouncing ball of orange yarn away from the story, even calling them cuts and omitting mention of the increases very early on.
It both became significantly harder to buy an average-priced home around here and when the tax increase is such a major percentage of disposable income after housing, it's not surprising that more people than usual are deciding to move. Especially since quality of life has dropped so much in the last ten years from overdevelopment.
College Terrace
on Sep 24, 2018 at 9:46 am
on Sep 24, 2018 at 9:46 am
> For an enlightened, advanced, and so called superior society, why are the Chinese so much into feng shui and superstitious about numbers?
It has something to do with luck, prosperity and health. Goes back a long ways and old habits are hard to break. Good luck brings prosperity (money) and good health allows one to enjoy their prosperity.
Based on their unique Zodiac and the season one was born, good/bad luck comes with the territory. A feng shui expert is a consultant of sorts who instructs those born with bad luck how to correct matters and for those born with good luck how to ensure more of the same.
[Portion removed.]
Another Palo Alto neighborhood
on Sep 24, 2018 at 2:03 pm
on Sep 24, 2018 at 2:03 pm
Posted by The Feng Shui Way, a resident of College Terrace
>> It has something to do with luck, prosperity and health. Goes back a long ways and old habits are hard to break. Good luck brings prosperity (money) and good health allows one to enjoy their prosperity.
Whether it is a fad, aesthetic, lifestyle-related, or an actual religious belief-- the result is the same. If I were building/remodeling a house in the area, I would at least fix the design so it would be easy to accommodate Feng Shui.
Why? Simple. I've met people who clearly didn't believe in Feng Shui, who were still doing it for the simple reason that they didn't want their house to sell for 12% less just because. So, it becomes a transitive requirement, since nobody buying wants to buy something that they might not get full value for, even if they personally don't care. That is how a transaction between two people who don't care ends up requiring a Feng-Shui-capable house.
Another Palo Alto neighborhood
on Sep 24, 2018 at 2:17 pm
on Sep 24, 2018 at 2:17 pm
>There are millions of Californians whose absolute incomes seem really high but when $117,000 is considered low income because of the cost of living,
>>It both became significantly harder to buy an average-priced home around here and when the tax increase is such a major percentage of disposable income after housing
Paying high-figure property tax is almost like paying rent or so it seems. Wife and I each make over $117K but are unwilling to commit financially to both high mortgage payments and high property taxes.
So like many in PA, we bought a used motorhome and park it wherever we are allowed to. We've been saving money and watching our joint bank accounts grow significantly.
Though it's a transient lifestyle, we don't mind the inconveniences. Only a fool (or wealthy Chinese person) would pay $2.5M+ for a dumpy-looking house that still needs some work.
Another Palo Alto neighborhood
on Sep 24, 2018 at 4:51 pm
on Sep 24, 2018 at 4:51 pm
Posted by Get An RV, a resident of Another Palo Alto neighborhood
>> Wife and I each make over $117K but are unwilling to commit financially to both high mortgage payments and high property taxes.
You do realize that property taxes are the financial foundation for road and street repairs (where you park), fire and police departments (which we all hope we never need, but, most of us do sooner or later, including people in RVs), and schools (which the rest of us pay for even if we never had kids or if our kids have already graduated). The bottom line is that you benefit from all these services without paying your full share of them.
>> So like many in PA, we bought a used motorhome and park it wherever we are allowed to. We've been saving money and watching our joint bank accounts grow significantly.
It would be nice if you would donate some of that money locally. Lots to choose from. e.g. Web Link
>> Though it's a transient lifestyle, we don't mind the inconveniences. Only a fool (or wealthy Chinese person) would pay $2.5M+ for a dumpy-looking house that still needs some work.
If you don't want to be part of a neighborhood here, why do you live here? At least, I hope that you don't inconvenience people who live in a neighborly neighborhood.
Downtown North
on Sep 24, 2018 at 5:20 pm
on Sep 24, 2018 at 5:20 pm
>>> I've met people who clearly didn't believe in Feng Shui, who were still doing it for the simple reason that they didn't want their house to sell for 12% less just because. So, it becomes a transitive requirement, since nobody buying wants to buy something that they might not get full value for, even if they personally don't care.
Is this not simply catering to prospective buyers from China who believe in the practice of feng shui?
Ironic how some residents complain of this 'new money' from overseas yet they grovel for maximum dollar when it comes time to sell their homes. As a result, home prices in Palo Alto escalate to the point of being overvalued.
So pull out your feng shui compass and realign everything for maximum dollar return.
Another Palo Alto neighborhood
on Sep 25, 2018 at 7:14 am
on Sep 25, 2018 at 7:14 am
Posted by Feng Shui = $$$$, a resident of Downtown North
>> Is this not simply catering to prospective buyers from China who believe in the practice of feng shui?
Partly. In addition there are people who might want to sell to such buyers in the future. And people who might want to sell to someone who might want to sell to someone who ...
>> Ironic how some residents complain of this 'new money' from overseas yet they grovel for maximum dollar when it comes time to sell their homes. As a result, home prices in Palo Alto escalate to the point of being overvalued.
I'm not sure about the "grovel" part -- it is no different than putting in new turf in order the stage the house. And, it isn't "overvalued" until someone wants to sell and they lose money.
>> So pull out your feng shui compass and realign everything for maximum dollar return.
Or, don't put in the turf, don't repaint, don't re-roof, don't realign, and sell as-is for 12% less or whatever. It is a seller decision.
Charleston Meadows
on Sep 25, 2018 at 8:07 am
on Sep 25, 2018 at 8:07 am
Like church, feng shui depend on believer.
When buying house, most younger Chinese more concerned with getting good price.
Older parents more concerned with feng shui but if they live with children, they have no say in matter.
In modern China like America, money talks.
another community
on Sep 25, 2018 at 2:24 pm
on Sep 25, 2018 at 2:24 pm
How does one become a feng shui RE consultant? I've seen some books listed on Amazon.com but I'm not sure if they are comprehensive enough.
I don't speak Chinese but enjoy the culture and food. Would a prospective Chinese home buyer have any reservations dealing with a non-Asian feng shui expert who didn't speak their language?
I have extensive experience with various healing crystals and imagine that they would also be useful in conjunction with feng shui applications.
another community
on Sep 25, 2018 at 2:44 pm
on Sep 25, 2018 at 2:44 pm
> So like many in PA, we bought a used motorhome and park it wherever we are allowed to.
Yeah sure! The RV'er is no doubt having a good laugh at everyone's expense. Just a different angle on vilifying the RV's already amongst us. It sounds intolerant and mean to attack them, so we get politically-correct manufactured comments like this.
Seriously, how many Palo Alto citizens would really admit to selling their houses and buying an RV to continue to live here?
How many are "so many"? If there are any at all long-term Palo Alto residents who are in hard-times, it would make me feel more tolerant of RV'ers, not less.
I'm skeptical the number is even in the single-digits.
College Terrace
on Sep 25, 2018 at 5:16 pm
on Sep 25, 2018 at 5:16 pm
[Post removed.]
Los Altos
on Sep 26, 2018 at 1:37 pm
on Sep 26, 2018 at 1:37 pm
>> I have extensive experience with various healing crystals and imagine that they would also be useful in conjunction with feng shui applications.
^^^Sorry to disappoint you but feng shui & crystals won't make a bit of difference unless you are dealing with flakes.
Today it is all about value-added. In other words, if an older house is considered a 'teardown' or a remodeling candidate, will the incurred expenditures pay-off in the near future? Or will you now have a house that exceeds the typical asking price of other homes in the immediate neighborhood?
Sometimes it is best to simply opt for a house that has been updated rather than do it yourself by keeping in mind that in addition to the proposed costs, the home will also be unlivable while much of the work is being done.
So basically would you rather buy a 'ready to move in home' for say $2.5M or buy one for $1.75-$2M and do the necessary work?
Buy low and sell high is the basic axiom and a much harder goal to arrive at these days. As far as the overseas buyers from China are concerned, they scrutinize all of the economic factors involved before arriving at a decision to buy. Then many pay CASH in order to procure the property and 'seal the deal' thus avoiding escrow and any competing bids.
In the spring of 2019, many of you see an increased number of Asian neighbors and townspeople in the midpeninsula. Quality schools, shopping convenience and public safety are all key requirements in regards to their their home buying criteria.
If you happen to own a home in a nice Palo Alto neighborhood and it's in decent, livable condition you should have no problem selling it to the Chinese providing the home is also on a quiet residential street. That's about as close to 'feng shui' as one can reasonably expect these days.
Leave the healing crystals behind as they have no place in the real estate world.
Another Palo Alto neighborhood
on Sep 26, 2018 at 3:40 pm
on Sep 26, 2018 at 3:40 pm
Posted by RE Agent, a resident of Los Altos
>> providing the home is also on a quiet residential street. That's about as close to 'feng shui' as one can reasonably expect these days.
Good luck finding a quiet residential street. It seems like every street gets cut-through traffic now unless it is a cul-de-sac.
Leland Manor/Garland Drive
on Sep 27, 2018 at 1:17 pm
on Sep 27, 2018 at 1:17 pm
Cash money not a problem if you have it. The key is to find nice quiet house with enough room for both children and grandparents. Best if also be close to senior center for easy walking and senior lunch program.
Feng shui not critical unless front door face oncoming traffic from another street.
Palo Verde
on Sep 27, 2018 at 11:03 pm
on Sep 27, 2018 at 11:03 pm
I've lived here long enough to see house prices gain 100x. Someone born today will see average single-family homes in the $200 to $300 million range. It's baked into our future budget requirements. Of course dollars in 2075 won't be what they once were.