Spring Real Estate 2008

Publication Date: Friday, April 18, 2008

Love 'em, so don't leave 'em
Local residents slow to offer their homes for sale

People love their homes, their neighborhoods, their towns.

That's why one local Realtor says they're not putting them on the market. "Where would they go that was better than where they are?" he asks.

That could be one explanation for why fewer homes are on the market this spring, so fewer homes are being sold.

Those listed are barely seen in an open house before they're snatched up, often for more than the asking price.

While typically there would be 20 to 30 homes listed over the Christmas holidays, last year there were under 20, noted Nancy Stern, a Coldwell Banker, Palo Alto, agent. "People can't move up because there's no place to move to."

"There's supposed to be a recession and housing prices falling, but not in Palo Alto. Palo Alto is one of the most recession-proof communities around," she said.

Brian Chancellor, an agent with Alain Pinel in Menlo Park, doesn't find this spring much different than earlier years.

"What we have experienced is low inventory historically for the last decade. If it bumps up, it doesn't stay up," he said, adding that "everybody is still trying to get a feel for transitions in the financial sector of the economy. They know the guidelines will be altered, but not in what fashion."

Many buyers are simply not impacted by what the Federal Reserve does. "We're not completely insulated from national factors, but we are an entrepreneurial hub. ... The difference between the dot-com boom and bust [is] people seem to be much more under the radar.
"The reality is, not everyone is walking around with boatloads of stock options, but there still are enough people who are putting significant amounts of money down. Prior to the last six months, 68 percent of buyers were getting interest-only loans. That doesn't mean they couldn't afford to get a 30-year fixed. They wanted financial flexibility," he said.

Multiple offers are still common.

Ken Reeves, a Cashin Company, Woodside, agent with a Sharon Heights condo listing in February, said that "Cashin is still getting multiple offers on six out of 10 deals. ...

"I can remember bad markets back in the '80s. This is not a dead market. When I put out a sign on a condo, and don't even have disclosures ready, [we] still got 12 people on Saturday and 15 on Sunday. There's a lot of people asking questions, which leads me to believe they're thinking of putting theirs on the market."

"It's not exactly doom and gloom in Los Altos," said Denise Ewings, an Alain Pinel, Los Altos, agent who had a listing on Gordon Way in February. In early March she reported 1,093 hits on the video tour, more than 200 agents walking through on the Friday tour, and another 100 people at the weekend open house each day. After six days, the house attracted six written offers, with a selling price of $1,951,000, almost 9 percent higher than the asking price.

Ewings is concerned that potential buyers are getting scared off by what they read about the housing market in newspapers or see on TV. She's even heard of buyers so disillusioned about finding a home in Los Altos that they've headed south to Willow Glen (in San Jose).

"The media says 'this is down, that is down,' but we're having lots of multiple offers," she said, acknowledging that most reports do not cover this real-estate microcosm. "We can't just give a broad brush in the Bay Area. ... We're not seeing the effect of foreclosures here."

Alain Pinel Realtors in Los Altos is actually ahead of last year in sales, she added in early April, noting that one house had 16 offers on it.

Suzie Provo, an Alain Pinel, Palo Alto, agent who recently sold a house on Saint Francis Drive in Palo Alto, finds the market normalizing. "It's not so much a seller's market; many houses are getting multiple offers, but not at blow-out crazy, way-over prices. ... We're still a strong market, but not a crazy market," she said.

While far fewer homes were sold in Mountain View last year compared to either of the previous years, Eric Fischer-Colbrie of Intero Real Estate Services, Los Altos, sees Mountain View as stronger than the market further south.

"Mountain View is not as strong as Palo Alto and Los Altos, but it's holding its own. Inventory is up -- nothing dramatic," he said.

Certain hot pockets -- such as Old Mountain View or Whisman Station -- can barely keep a listing for longer than a couple of weeks.

"Downtown Mountain View is really hot right now," Renee Levy, an agent with Coldwell Banker, Los Altos, said. "That kind of market is different than family-oriented Waverly Park," she said, adding that her team held open houses on Paul Avenue that drew 35 to 40 groups each day -- all for a two-bedroom, one-bath house with a carport. Within a month, that house sold with one offer for $915,000, about 4 percent less than the asking price, but higher than Levy had originally suggested to the owner.

"The thing holding it back was it only had one bathroom and no garage. It was darling, all brand-new inside," she added.

Not far away in Whisman Station, Yvonne Johnson Heyl and Jeffrey Gonzalez had a listing on Nicholas Drive. More than 70 groups tramped through on a Saturday in February, followed by 50-plus on Sunday. "It sold in five days with four offers," Johnson Heyl said.

Bill Reding, of Sereno Group in Los Gatos, closed escrow on a Mercy Street home in Mountain View in early March. With four offers, the home went for more than 15 percent above the asking price of $995,000.

With lending tighter now, Reding assures buyers that if they have at least 10 percent to put down, they'll be fine. "You can buy such great values. Even this house went below what it could have gone for, just two years ago," he said.

Calling the market the "golden pocket between Calderon and Castro," Reding notes "Even with a quick pace, it's not as frenetic. These are well-thought-out decisions, not knee-jerk reactions. We still have a number of pent-up buyers who just haven't seen properties worth stepping up for."

At the end of February, Steve TenBroeck, an Alain Pinel, Palo Alto agent, found "buyers are extremely nervous. They just don't know what to do. It's like the fog of war, everything is so hazy.

"The local market is so different from what [potential buyers] read. Most people in Palo Alto don't have to sell, Silicon Valley is doing very well, [there are] no massive layoffs. Most companies are hiring, not laying off, so there's no turnover in housing," he said, noting that inventory was incredibly low in February.

But TenBroeck found that his listing on Carolina Lane was a prime example of a less-than-perfect Palo Alto house: Technically, the four-bedroom, two-bath Eichler was underpriced at close to $1.4 million, but the floorplan was unconventional with a master bedroom converted from a garage. Additionally, it was on a busy corner, not far from Charleston Road, near the railroad tracks (and susceptible to train noise) and getting to schools required crossing El Camino Real.

Despite the most foot-traffic at an open house in the history of TenBroeck and his partner Jeff Stricker, no one bit until two price reductions. The home sold for $225,000 less than asking.

"Properties with issues are starting to decline in value. That's always the first thing to turn," TenBroeck said. "The more issues, the more vulnerable to price swings. In a hot market, there's very little discount for these issues -- they're just lucky to get something. But when buyers start to get nervous, which is directly related to consumer confidence, they avoid properties with issues -- and those properties have to reduce price."

The Carolina home sold for $1,175,000, "as is, non-contingent, with 50 percent down -- that's a big deal today," he added.

Arlene Gault and Ken Morgan, Coldwell Banker, Menlo Park, agents are seeing a similar picture. Their listing on Bryant Street in Palo Alto drew close to 200 groups one weekend in February and sold a month later with five offers at $1,250,000, nearly 14 percent over the asking price. Gault said the winning offer was actually the second highest, but the highest had a longer close and some contingencies.

The day in March when the Federal Reserve lowered rates by three-quarters of a percentage point, Gault expressed optimism. "The last three weeks, it's spring ... we see a trend that inventory is getting higher each week."

Morgan noted that there are two and half times the number of active listings in Palo Alto in mid-March compared to early January, what he called "like normal almost. It'll get higher as we go towards June or July.

"Prices are holding not going higher. The biggest uncertainty is the negative news we get in newspapers nationwide. It hasn't affected this area too much, making people nervous. Most people just hang on because it's a good investment.

"This is such a desirable location, people just don't sell. People want to live here."

Associate Editor Carol Blitzer can be e-mailed at cblitzer@paweekly.com.