Spring Real Estate 2003

Publication Date: Wednesday, March 12, 2003

Up market, down market
Within each town neighborhoods vary

by Carol Blitzer

Photos by Don Feria

Neither lack of jobs, school budget fears, nor threat of war with Iraq are totally depressing local home prices.

Recovering from price rollbacks in 2001, the cost of housing was pretty stable in 2002, with most cities coming up slightly, according to statistics offered by the Silicon Valley Association of Realtors.

And those going up are often driven by multiple offers.

This home on Emerson Street in Palo Alto was listed at $989,000 in mid-February.

"It's starting to get busy again. People are starting to buy and we're running into multiple offers," said Coldwell Banker agent Eric Fisher-Colbrie, adding that if a house is sitting on the market for three to four weeks, it's priced too high.

"I'm so strong about Palo Alto; it's always a good time to buy, particularly if you're going to be here three years or more. Time after time I've seen that prove out," said Tom Foy of Midtown Realty, Palo Alto.

In the first quarter, it's often hard to tell what will happen in real estate in the year ahead, Realtors said.

"Each January, the market kind of takes on a direction," Foy said. But by mid-February he couldn't gauge which way it's going this year.

"Last year the market started off very strong, with multiple offers on many properties," he said, adding that midyear all that changed, with a lot more negotiations over price.

Properly priced property sells

Prices are "a bit lower than last spring. Considering the economy that's to be expected," said Tom Hilligoss of Encore Property in Menlo Park.

Mountain View home prices held steady in 2002; this home on Gilmore Street was on the market in early March for $760,000.

The basic issue is how properly priced a property is, not a matter of price range. "There are a tremendous number of properties priced in fantasy land," he said, adding that those with pending sales have either listened to good advice in the first place or reduced appropriately.

"Buyers and sellers are definitely getting together and finding more common ground," he said.

Things that are well priced and well presented, that appear to have value to consumers, are moving, Palo Alto-based Coldwell Banker agent Nancy Goldcamp said.

Neighborhoods are micro-markets

Since the heady days of 1999-2000, prices have come down and stabilized in virtually every nearby community. But there are exceptions in all cities.

Take Belle Haven, for example. The average price for a typical three-bedroom, one-bath home built in the 1950s on the eastern edge of Menlo Park was $344,190 in 2000, $403,600 in 2001 and $418,000 in 2002. Other neighborhoods on the rise include Fair Oaks, Linfield Oaks, Menlo Oaks, Suburban Park, Flood Triangle and The Willows.

In early March, this three-bedroom, two-bath home on Windsor Drive in Menlo Park was on the market for $995,000.

This contrasts with Allied Arts, on the west side of Menlo Park, with average prices dropping from $2.2 million in 2000 to $1.2 million in 2002.

"Every little niche in the market, every little street, each has its own micro-market," said Fisher-Colbrie, who works out of Coldwell Banker's Midtown Palo Alto office.

Palo Alto neighborhood prices are even more scattered. While the median home prices in May rose from $815,000 in 2001 to $940,000 a year later, sales in individual areas varied widely. Prices went up in Crescent Park, Old Palo Alto and Southgate. Prices dipped in Professorville, College Terrace, Duveneck, Evergreen Park, Fairmeadow and Ventura.

Mountain View saw median housing prices drop from $778,000 in January 2001 to $625,000 in January 2003, according to statistics pulled together by Nancy Stuhr, a Coldwell Banker agent who works out of Los Altos. She also found that when sales got rocky, certain neighborhoods held their value better than others. Monta Loma topped out at $911,000 in 2001, but fell to $540,000 by 2003. Old Mountain View dropped only $30,000 (from $660,000 to $630,000) in the same time period. Of course, with only two homes sold in a month in Monta Loma, it's difficult to pinpoint a trend.


Multiple offers on 'best values'

This three-bedroom one-and-a-half-bath home on Beech Street in East Palo Alto was listed at $419,000.

In Midtown, there's not a lot on the market today. On Feb. 12, for example, there were only two homes listed, both for less than $1 million. Fisher-Colbrie sees the high end of the market ($1.5 million and up) as very soft, "but there are homes available and price reductions are common."

He pointed to a 4-year-old home on Tennyson priced just under $2 million that sold in the first few days on the market. Another on Tasso also sold quickly. "This wouldn't have happened three to six months ago. It gives indication that there are buyers out there," he added.

Coldwell Banker agent Ethel Green agrees. While she works more in Los Altos, Los Altos Hills and Mountain View, her listings span from $379,000 to $3.5 million.

"I had multiple offers on a house in north Los Altos at $1.8 million. There are buyers out there. What they perceive to be the best value they're buying," she said, while acknowledging that some are very nervous about the marketplace and their jobs.

The most active segment of the market is for homes priced under $1 million, but even above $1.5 million there are still offers "if the property is in excellent condition. Fixer uppers are still selling in Atherton, but prices for the "lots" are adjusted at least 10 percent since last summer," added Janet Dore, a Coldwell Banker agent who works out of the Menlo Park office.

The market is active

Stuhr sees today's market as pretty active. "We are seeing multiple offers on the more affordable homes, homes that are priced really well," she said, adding that there were 42 homes available in Mountain View in mid-February.

Stuhr anticipates another busy spring this year. "Spring motivates people in a lot of different ways," she said, pointing to the looming April 15 tax deadline.

Her buyers tend to be well educated in the real-estate market, people who understand it's OK to sell when the market's not at its peak.

This Blueridge Avenue home in Menlo Park offered three bedrooms and two baths for $965,000 in early March.

"It doesn't hurt as much to lose a little on the house you're leaving if you're saving it on the new one," she said, adding that housing demand remains strong here and "buyer's confidence is strong."

Dore is seeing "a good market with multiple bids in the lower ranges," mainly in Redwood City in the $600,000 to $700,000 range. "In Menlo Park or Atherton, if houses are priced right, we're seeing interest as well," she said.

In Palo Alto's lower range, under $900,000, Goldcamp observed a lot of activity, with a similar inventory to last year. As many as one-third of those homes attract multiple offers. And, she added, it's not unusual to have 70 to 100 groups of people go through an open house in an afternoon "in any price range." And at least 15 to 20 are real buyers, rather than neighbors, noted Coldwell Banker agent Judy Bogard-Tanigami, adding "that's more than we were seeing last year."

Still, Dore sees a number of buyers on the fence - they know that interest rates are low, but they fear house prices could get even lower.

"There are a lot of very qualified buyers out there, in all ranges," she said.

Hilligoss said his office has been "very, very active" since November. Business for him is brisk in homes under $1 million, slower for those above $3 million, but with some activity in between.

This Garden Street home in East Palo Alto was listed at $379,000.

He points to a certain confidence about an upturn in the economy, the result of last November's Congressional elections.

This is quite a contrast to the crazy times between 2000 and right after Sept. 11, 2001. Since then, Palo Alto prices (in the under $1 million category) have come down between 25 and 30 percent, said Fisher-Colbrie. Prices edged back up early last year, then cooled again by summer.

What's different now?

"The global factors combined with local elements appear to cast this shadow over the market, yet the truth is that the market is actually doing well for both sellers and buyers who meet some basic considerations of good value," said Steve Bellumori, a Menlo Park-based Coldwell Banker agent.

Last year the market was moving very rapidly, Green added, "Everyone was in a state of depression after 9/11, then people realized that we were going to go on. They pulled money out of the stock market and bought houses," she said, at least through the end of May. She said corporate scandals and layoffs made people more cautious about entering the market.

"But people are buying if they feel it's the right house at the right price," she said.
Green finds these interesting times, and a return to a negotiating market, where a buyer makes an offer and the seller counter-offers, often multiple times.

"The interest rates are the lowest in 40 years. It's a perfect time to buy a piece of property," she said.

When things were moving rapidly, the buyer had to take care of everything, she added. "Now it's not the case. It's more of a win-win for both the buyer and seller."

Dore, who also works with some investors on the higher end, agrees that this is indeed an "interesting market." Her investors "see it as a safer investment than the stock market at present. They're looking for depreciation and tax deductions.

"Generally, it's an excellent market. Real estate has always gone up in the long term, so people see this as a buying opportunity."

Looking at the local real estate market over the longer term makes more sense than just comparing this year to last year, noted Bellumori. He likens today's market to the early '90s, when so many external factors were affecting people's decision making - the S & L bailout in Texas, major layoffs at Lockheed and Ford Aerospace, trouble at Apple Computer, the Loma Prieta earthquake and a six-year drought. Today people are dealing with major layoffs, threat of war with Iraq, energy scandals and threats to local Basic Aid school districts.

"It's easy for people (who invested) in the stock market to speculate on the bubble bursting because it happened to them," said Sunny Dykwel, an agent with Alain Pinel Realty. But, she said, that bubble's unlikely to burst here because of three key reasons: supply still outpaces demand for housing, historically low interest rates and continuing uncertainty about investing in the stock market.
"The housing market has performed remarkably well. It's a bright spot in our economy," she added.

Janet Dore agrees: "Even though there are layoffs in the high-tech industry and the economy appears to be sluggish, low mortgage rates and consistent demand and declining inventory are keeping prices up."

Carol Blitzer can be reached at cblitzer@paweekly.com.