It has been an UNreal first half of 2013 for home prices on the Peninsula and Silicon Valley residential real estate markets. The median price for homes has increased from just 1 year ago by anywhere from 10% to 30% depending on which marketplace your home or property is located. In many cases during the past 6 months, there have been some recently UNprededented results of as many as 40+ offers and as much as 40% over the asking price. There is no doubt that the market has significantly improved over the past year and in many cases the values are now slightly higher than in the peak of 2007-2008.
This rise in values is great for sellers now considering selling their homes as inventory also remains historically low. Buyers are challenged now by higher prices and continued low inventory. Does something have to give here? Recent evidence has show that some buyers are deciding to wait and see what happens with the market at this point. The number of offers has seemingly come down as buyers who realize that the listing price may not be what they would end up having to pay for the home. These buyers aren’t willing to participate if they cannot go over the asking price so therefore, they decide not to make an offer.
This is an important time for the residential market as there are many factors pushing and pulling at the market. The best advice is to get some good advice from your real estate professional.
UNbelievably, the majority of homes on the Peninsula or northern Silicon Valley, such as in Palo Alto, Mountain View and Los Altos are now around 60 years of age and more. A tremendous number of homes in Palo Alto, Menlo Park and Redwood City are now 100 years of age or more. The Palo Alto/Stanford Historical society awards homes that have reached their centennial with a plaque celebrating their 100th birthday. I recently sold a two unit property in downtown Palo Alto with one of these nice plaques attached to the outside of the structure. It did have an interesting history but the property itself was in need of significant rehabilitation.
These properties may have a look and feel that blends with the neighborhood and preserving the home might be a benefit to the neighborhood, but what does it mean to a home owner? There are entire neighborhoods such as Professorville in Palo Alto which consists of shingled craftsman style homes and now an area of north Palo Alto which consists of Eichler homes. Can you believe that now Mid-Century Modern homes are historic? more in part 2…
Let’s analyze what has happened in a couple of cases:
In an off-market case, two agents discovered they had a common interest in a property. One represented the seller and the other the buyer. It took 6 months for them to agree on terms and in that time the price point went from $1.2 million to $1.4 million. The seller did not need to prepare the property and saved $25,000. It took time to sell but it did result in a successful sale.
In an on-market case the property was prepared for sale. It took about a month to prepare and the seller spent $25,000. The home was exposed on the Multiple Listing Service & held open for one weekend. The list price was $1.3 million. The result was 8 offers it sold for $1.7 million.
In the Off-Market case the seller netted 19% over the initial asking price but took 6 months to find the right buyer. In the On-Market case, the seller netted 28% over asking in a shorter period of time but took the risk of spending the money to prepare the home.
So which way is better- you decide!