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Example of housing insanity

Original post made by Chris Zaharias, Crescent Park, on Apr 6, 2013

If the editor will permit me, I want to illustrate the level of PA real estate craziness by comparing two homes for sale at the same price, one in Old Palo Alto, and one in La Jolla:

Old Palo Alto: 450 Lowell Web Link

La Jolla (2 minutes from UCSD campus, 15 minutes north of downtown San Diego): Web Link

The first home is a 2BR/1.5BA home one can only describe as a mangy dog among overbuilt McMansions, while the second is a modern, bright well-situated thing of beauty overlooking the Pacific.

$1898ft/2 vs $755ft/2

Anyone want to venture a guess *if* there is an upward limit to the $ft/2 PA can see, what that limit it and when we'll hit it?

Comments (8)

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Posted by palo alto parent
a resident of Embarcadero Oaks/Leland
on Apr 6, 2013 at 11:52 am

Chris - in the case of the Old Palo Alto home, it was the lot that was selling, the house is pretty irrelevant. Depending on what the house sold for, its actually a good price for a 7500 sq ft lot in Old Palo Alto. Especially when you consider that a house a block over is on the market for 17.2 million.

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Posted by Not an issue
a resident of Community Center
on Apr 6, 2013 at 12:31 pm

It's called the free market, Chris.

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Posted by Lot size!
a resident of Community Center
on Apr 6, 2013 at 1:48 pm

It is not just two random houses in comparison, it is where those houses are located in each individual city. Also, lot size can be as much as 2/3 of the price of a house.

Other than that, due to demand, number of job opportunities, supply of houses, Palo Alto is one of the most expensive markets in this country.

Truthfully, though, if there were appropriate jobs available there, I would rather live in La Jolla!

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Posted by OhlonePar
a resident of Duveneck/St. Francis
on Apr 6, 2013 at 5:28 pm

The San Diego area was overbuilt and seriously crashed in the housing bust. I don't expect it to recover for a while.

Palo Alto, on the other hand, was pretty unaffected by foreclosures. I read here once that a huge percentage of the houses in PA were fully owned (i.e. no mortgages). This means that when the market's down, people simply don't sell. Demand nearly always outstrips supply.

Other factor, of course, is that this area has some very wealthy people in it, so they can pay a premium as can, apparently, our new flood of overseas buyers.

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Posted by Two Houses
a resident of Another Palo Alto neighborhood
on Apr 6, 2013 at 5:44 pm

My son will inherit my grossly over-valued home in Palo Alto. He married a girl from La Jolla so when her folks pass on they will inherit that house also. Everything will even up for them in the end!!!

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Posted by TK
a resident of Evergreen Park
on Apr 8, 2013 at 12:17 am

I think the valley is way overpriced.

Facebook is a fad.
Google is mature and not growing as fast as it did.
Apple is flat lining.
Chinese money is disconnected from the workforce. They are buying to park money and to school their kids but not because they have jobs here. Real estate is connected to the local economy and these current prices are too much, so will come down.
Renting is a way better deal, and as more people buy for speculative reasons or to park overseas money, more houses will be available to rent, so less people will want to buy.

I think this is an insanely overbought market and there will be a big correction some time in the next year or two.

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Posted by Native
a resident of Palo Alto High School
on Apr 8, 2013 at 8:30 am

Chris: Are you considering moving to LaJolla so you can own a home instead of renting in Palo Alto? No more Chinese cash with empty houses on the streets. No more NIMBYs. You don't have to stay here just because you are a Paly alum. I too, think we get a bum deal with the square footage in Palo Alto, but enjoy the location and people.

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Posted by Silly valley
a resident of Menlo Park
on Apr 9, 2013 at 4:40 pm

Actually, there are many nice houses for sale with 7500 sq ft lots within 10-15 miles of PA and decent schools, neighborhoods.

Inventory is lower than normal right now, but it will come back at some point.

One need not pay $2.59m for a 7500 sq ft lot.

It is truly silly, even to locals.
It only takes 1.

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