_{(single-family home data from MLS listings Inc.)}

Because Palo Alto has a wide range of home prices, the entry-level market remained strong as buyers looked for bargains and the high-end market slowly recovered through the second quarter of 2010.

The median sales price in Palo Alto is 5.3% lower than the same period in 2008, at $1,468,000. A huge jump of 82.2% from last quarter and just 5.5% lower than in 2008 was realized in total sales volume, at $205,188,388. Average days on market is just over a month and there were 123 sales this past quarter, similar to 2008.

Palo Alto holds its title as a premier housing market with the highest total sales volume of our four comparison cities, and will continue to become increasingly difficult for buyers to enter the market as the sales price to list price ratio continues its rise to 100%.

_{(Redwood Gate houses)}

The corner of El Camino Real and West Charleston Road has undergone a lot of real estate development in the past few years. First it was the 181-unit Arbor Real on the corner and now on the old Elks Club property, beside Arbor Real, is the new Redwood Gate by SummerHill Homes development. (map.)

The properties are listed as detached and attached single-family homes, which are unlike the the condominiums and townhouses available at the previous housing developments we have reviewed, Altaire and Sterling Park.

Redwood Gate may have better features, a better location and more square feet than its “competitors,” but it also has a higher price tag – $1.15 million to $1.499 million. Continue reading to find out more about this Silicon Valley real estate development and see if it lives up to the old adage: you get what you pay for.

overview | pricing | highlights | concerns | comparables | takeaway

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Overview

_{(Half-acre park at Redwood Gate)}

Redwood Gate is one of the smaller real estate developments in Palo Alto with just 35 detached and 10 attached single-family homes, plus a half-acre park.

Construction of the single-family homes at Redwood Gate started in 2009 and will be completed by the first quarter of 2011. The neighboring Elks Lodge is also under construction and will be completed by October 2011.

As of June 2010, 26 homes have sold and nine homes are currently available; in the future, the five homes in the park location, two of the attached homes and the three remaining model homes will be available.

The development is located in the Charleston Meadows neighborhood and close to the neighborhood’s three schools — Juana Briones Elementary, Terman Middle School and Gunn High School — that are all less than a mile away, and off of Arastradero road.

As a further incentive to visit Redwood Gate, receive a $50 Visa gift card for scheduling a tour of the properties with one of our agents in the month of July.

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Details and Pricing

Redwood Gate properties are listed on MLS Listings Inc. as either attached or detached single-family homes, but sold to homebuyers under condo ownership and approved for loans under the detached condo category. This is the only way that developers could get approval in Palo Alto for building homes that have a large living space on a small lot. Otherwise, the residences resemble the single-family homes they are priced at — the median price for homes in Charleston Meadows in 2009 was $1.25 million; condos were $801,000.

Being in a single-family home, instead of the condos and townhouses found at Altaire and Sterling Park, means that the homes do not share walls (even the duet-style homes, which are connected but have air space between walls), and the homeowner owns the house along with the land underneath and the yard for 10 feet. Homeowners, also, own a percentage of the common area through a $202 monthly HOA fee, which includes landscaping, all water usage, garbage collection, exterior property insurance.

Along with a difference on paper between Sterling and Altaire, is the difference when you see the property. Redwood Gate properties are about $500,000 more than a comparable townhouse at Altaire, but also have a two-car garage, large patio space, high ceilings, an extra loft room and 500 square feet more.

All seven floor plan options are still available at Redwood Gate as of June 2010. Plans range from three bedrooms two-and-a-half-baths and two stories through five bedrooms three-and-a-half-baths and three stories. Residence 1A has 1,7775 square feet all the way through residence 7B with 2,380 square feet, and listed at $1.15 million through $1.42 million, respectively. Upgradeable features are also an option.

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Highlights

_{(Model home interior of a Redwood Gate home)}

New and modern homes. We’ve already mentioned the extra space and privacy that Redwood Gate allows, which means there is more flexibility for growing families. A new build means modern features, including Kohler sinks and faucets, GE stainless steel appliances, maple cabinetry, granite countertops, volume ceilings. Homes are also designed to be GreenPoint Rated, which help in energy efficiency and are environmentally friendly.

Smaller development size means a closer community and less hassle over parking spots, including the 14 guest spots. It is also surrounded by another housing development, the Elks lodge, and a pleasant residential area on Wilkie Way in the rear.

Good location in Palo Alto. If you ignore the busy El Camino Real intersection, Redwood Gate is better and more centrally located in Palo Alto over Altaire and Sterling Park. It is walking distance both to schools and Robles and Briones Park, and one mile from Charleston Shopping Center and San Antonio Shopping Center.

Strong home values. Because Redwood Gate properties sell as single-family homes their value will be more stable over the condo and townhouse market. In addition, Palo Alto, as we have seen, is one of the strongest real estate markets in Silicon Valley.

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Concerns

Traffic on El Camino Real can be difficult, but noise shouldn’t be an issue because the Elks Lodge lies between Redwood Gate and the street.

Limited parking could be a pain if you plan on having more than two cars. Besides the 2-car garages, there are only 14 guest spots available here.

It is a high purchase price for condo ownership at Redwood Gate when considering that the median selling price in 2009 for homes in the Charleston Meadows neighborhood was $1.2 million. Having said that, the homes have been selling at a rate of two a month, so demand is clearly there. Another consideration is that standard homes under $1.2 million in Palo Alto are not going to be new and most likely need repairs or upgrades, and lack the premium build and features that a new development like Redwood Gate has.

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Comparables

Altaire and Sterling Park aren’t comparable since price and features differ so much as we covered under the pricing details category. The locations of these properties are less than ideal since both sit near 101 and at the edges of Palo Alto. Another option for homebuyers in this price range would be to consider an entry-level home.

In the past three months (April, May, June 2010), the median price in south Palo Alto for single-family homes has been $1.26 million. Of those homes that have sold, the average age is 56 years old, average interior square footage is 1,779 and average lot size is 7,200 square feet.

So Redwood Gate homes have equivalent interior space and come with all the advantages of a new build and low maintenance, but on the other hand, lack in lot size and ability to customize when compared to a traditional home in Palo Alto.

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Takeaway

These homes are generally targeted for people that are moving up from a condo or townhouse and need the extra space for a growing family. The residences offer the benefits of a new community development but also the future stability in home values that a single-family home has in Palo Alto. Of course, Redwood Gate prices reflect these criteria and it certainly is a quality development, but the high-price tag could be a determining factor for a lot of potential homebuyers.

Feel free to contact us for more specific information and an opportunity to tour Redwood Gate in-person (plus a $50 Visa card if you visit in July), or just to find out more about our unique Silicon Valley real estate services.

_{(Sterling Park exterior)}

Sterling Park is another of the recent housing developments in Palo Alto, which also includes Altaire and Redwood Gate. Located in the Midtown neighborhood, the use of mixed housing and two on-site parks helps Sterling avoid the compact feeling of standard developments in Silicon Valley and lets its residents enjoy some extra space. Click through to find out more about the property.

overview | pricing | highlights | concerns | competition | takeaway

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Overview

Parallel to the 101 freeway and on the corner of West Bayshore Road and Loma Verde Avenue, 96 units compose the new Sterling Park development, which is slated to be completed early 2011.

The development is broken down by 28 detached single-family homes, 39 townhouses and 29 condominiums. Potential buyers should be aware, however, that all its single-family homes are sold out, and only one remaining three-bedroom and two remaining two-bedroom townhouses are available as of June 2010. That leaves the 29 one-and three-bedroom condominiums left, which will be released for sale this October.

The six and a half acre site accomplishes a neighborhood feel with wider streets, mixture of home types, focus on the two central parks, and a nose mitigation wall beside the 101 freeway to reduce the noise and view of passing traffic.

The Midtown neighborhood, which Sterling is located in, is known for its small-town feel and there is a variety of positive things to say about the nearby schools — Palo Verde Elementary, Jane Lathrop Stanford and Henry Gunn High School.

For basic information, available floor plans, features and sales information about Sterling you can visit their web site.

If you are ready to visit the property for your first time, consider representation from a local Silicon Valley real estate agent who can provide information about local comparable properties and help in sales negotiations. The second half of an older post I did goes over these considerations.

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Details and Pricing

_{Sterling Park site map (Click image to enlarge in new window.)}

The two remaining two-bedroom three-bathroom and one-car garage (floor plan 4) townhouses start just under $800,000. The last three-bedroom three-and-a-half bathroom and two-car garage (floor plan 5) townhouse is selling for under $900,000.

The upcoming 29 condominiums will start at approximately $600,000 when released late 2010. They will have either one or three levels, with a respective amount of bedrooms; and range from 1,050 square feet to 1,800 square feet.

In addition, all properties include either a one-or two-car garage. Street parking will be limited to the 39 visitor parking spots and reserved spots that are estimated to sell for $5,000 each.

Homeowner’s association fees will initially be $325 a month, but reduced to under $200 once all the homes sell out, which should occur upon the developments completion by mid 2011.

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Highlights

Lots of space. Because Sterling is composed of single-family homes, townhouses and condominiums, two parks and a community recreation center, the scenery is more pleasant than the dense row housing we usually see in developments. Traffic shouldn’t be a problem on West Bayshore Road and most parking inconveniences have been reduced since every property has their own garage.

Affordable, luxurious, green. Prices starting at $600,000 for a condominium in Palo Alto are a strong draw for many first-time buyers. But Sterling also has luxury features such as gourmet kitchens with General Electric appliances and granite countertops, and large master suites. Standard green and energy-efficient features reduce utility bills and result in quieter homes.

A location in the Midtown neighborhood means Sterling is only one mile away from fulfilling basic shopping and restaurants needs at the Midtown shopping center, which includes Longs Drugs, Safeway, Starbucks and Mike’s Cafe. And only half a mile from Greer Park, Seale Park and the Palo Verde Elementary School.

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Concerns

Beside two office buildings and the noisy 101 freeway. The developers did their best to mitigate both these issues by, first, focusing the real estate development inward and towards the parks. Second, noise levels have been reduced by a wall built along the freeway. Lastly, for condos located on Bayshore Road, the developers have taken extra measures to reduce the noise through sound insulation like double-pane windows.

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Competition:

Two other currently competing real estate developments in Palo Alto are Altaire and Redwood Gate. Comparable properties at Altaire are about $100,000 higher and Redwood Gate is mostly detached homes starting above a million. So expect nicer overall building quality and features at those two developments, but both are located at crowded intersections. Redwood Gate has the advantage of being centrally located in Palo Alto, while nearby Altaire is at the boarder of Palo Alto and Mountain View.

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Takeaway

Most buyers looking into Palo Alto already know about its strong real estate market and fantastic school district and API scores. But most are taken aback by the steep Silicon Valley real estate prices, and is why many developments in Palo Alto make it possible for new homebuyers to break into Palo Alto’s prestigious market.

Sterling Park reflects this demand and doesn’t skip on features that should enable the properties to hold their value in the coming years.

Feel free to contact us for more specific information and an opportunity to tour Sterling Park in-person, or just to find out more about our unique Silicon Valley real estate services.
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_{(Altair exterior/flickr)}

Altaire, the newest townhouse development in Palo Alto, should be on anybody’s shortlist when looking for an entry-level opportunity to move into the area without forgoing quality accommodations. We’ll cover some important details you should know about the property in this post.

overview | pricing | highlights | concerns | competition | takeaway

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Overview

The 103 urban-looking townhouses are set along open walkways and adjoined to the recently constructed Taube-Koret Campus for Jewish Life, which, together, create a feeling that is unique from traditional high-density developments. The whole complex site is right off the 101 freeway at 3901 Fabian Way.

Construction on Altaire is expected to be completed by late 2010. As of June, 59 of the 61 townhouses already completed have sold, and developers are currently in the last phase of construction for the remaining 42 homes, which are expected to be sold out by the end of the year.

For a quick description of Altaire, floor plans and features visit their website. You can also take a YouTube tour of the residences and view example show homes on their flickr page.

Also of note, when considering a property, especially a new build, representation from a real estate agent can help provide the buyer with a larger knowledge base in areas like negotiating a final sales price or showing comparable properties in the area. The second half of an older post I did goes over these considerations.

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Details and Pricing

Image shows the entire layout of Altaire residences in yellow on the left, and the rest of the campus and fitness center on the right. (Click image to enlarge.)

Available properties include one, two, three and four bedrooms; and prices start at $479,000, high-$600,000s, $739,000 and high-$800,000s, respectively. The typical three bedroom unit is around 1,300 square feet, while a four bedroom is around 1,900 square feet.

Homeowner’s association fees are from $375 to $475 a month and include: water, disposal, landscaping, insurance, two underground parking spaces and storage, and maintenance.

Also included in the purchase price is a free year membership to the JCC fitness center — a 33,560-square- foot space that includes an indoor and outdoor pool, basketball court and gym, and an expected membership of 10,000. The campus also has a preschool, senior living residences, and cultural arts center.

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Highlights

Altaire is an upscale townhouse community. New owners can expect spacious and contemporary designs, stainless steel Bosch appliances, in-home laundry, high-efficiency air and cooling, secure underground parking, and high-speed Internet connections. The townhouses were designed to meet both ENERGY STAR and GreenPoint Rated programs for energy efficiency and eco-friendliness.

Being located in Palo Alto means residents can expect some of the best schools (Fairmeadow Elementary, Jane Lathrop Stanford Middle School and Gunn High School) in California, a bustling downtown, Stanford University and Shopping Center, and a strong local government. Altaire is ideally located near the Baylands Preserve, Shoreline Amphitheatre, Century 16 Theatres, and retail developments Charleston Plaza and Rengstorff Center, which includes Costco, Best Buy, and REI.

Strong home values will continue in Palo Alto as we have seen in the 2010 quarterly post on the real estate market.

The adjoined Community Center creates a convenient neighborhood environment. Just outside the door is the previously mentioned fitness center that also has a soccer field, tennis courts, and Pilates and yoga studios. There is also a cultural arts center, cafe, preschool and day care, meeting rooms with planned adult programs and lectures, and senior living residences.

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Concerns

Area originally zoned for commercial buildings. Altaire and the community center was built atop the old Hewlett Packard site, which means that the surrounding scenery is mostly corporations like Space Systems/Loral on Fabian Way and the 101 freeway nearby.

Being at the edge of Palo Alto means a longer drive to downtown, schools or other popular spots in the city. Conversely, though, it is located near two big shopping centers, the movie theater and concert venue, and Baylands Preserve.

Expect more traffic and noise from the busy intersection at San Antonio Road and East Charleston Road, and also when the Community Center holds events — an expected trade-off of living in a more urban environment. Buyers also get two underground parking spaces with storage, but not the convenience of an attached garage.

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Competition:

Sterling Park is another new housing development on 1080 Loma Verde Ave., which is a mile north of Altaire and separated from the 101 Freeway by West Bayshore Road.

The development has sold out of single-family homes, but the remaining townhouses are priced and have a contemporary style similar to Altaire, though different floor plans and amenities available. Sterling Park has attached garages and is adjacent to a residential neighborhood and near Greer Park, but on the other hand, there are commercial buildings on two of its sides. Lastly, most of the remaining townhouses available sit on West Bayshore Road.

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Takeaway

As with any home purchase, there are positives and negatives that the buyer must personally weigh in their final decision.

Palo Alto’s strong real estate market and outstanding school district and API scores is a draw for many buyers, and combined with today’s depreciated market increases the attraction. Additionally, Altaire makes the most of its location, offers premium townhouses and a Community Center that other developments cannot match. For these reasons, first-time buyers and anybody interested in a new build should take the time to consider if Altaire is the right place to settle down.

Feel free to contact us for more specific information and an opportunity to tour Altaire in-person, or just to find out more about our unique Silicon Valley real estate services.

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^{(Downtown Palo Alto on University Avenue)}

Palo Alto is one of the premier real estate markets in California, but that doesn’t mean it was able to pass through the mortgage and housing crisis, just two years ago, without a scratch.

Like most of the Bay Area, Palo Alto home prices and inventory dipped following the crisis but are now showing signs of recovering.

Comparing first quarter results between 2008 and 2010, the number of single-family homes on the market went from 81 to 68, and the median sales price from $1.681 million to $1.518 million. First quarter results in 2009 were even lower, with 66 homes sold and a median sales price of $1.275 million.

Again, because of a location in the Silicon Valley, neighboring Stanford University and a top performing school district (news link), Palo Alto homes are some of the last to be hit by a recession and a bellwether out.

When considering a home in Palo Alto, homebuyers have over 14 distinct neighborhoods to consider and home values that range from $800,000 to tens of millions.

Entry-level market

I am seeing a lot of homebuyers trying to take advantage of the dip in local home prices and trying to secure a low mortgage rate right now. As a result, buying an entry-level home in Palo Alto can be a very competitive market.

Most entry-level homes in Palo Alto can be found south of Oregon Expressway, in the Midtown and south Palo Alto neighborhoods.

The median sales price this quarter for the area was $1.27 million; and the average days on market, excluding Midtown and two outlier homes, was 24 days.

Good family homes exist under one million, and I recently sold a three-bedroom, one-bath in south Palo Alto for $950,000 this quarter. But buyers should be aware that strong competition for entry-level Palo Alto homes results in many going above list price after multiple offers are made – sometimes as close to 20 offers.

High-end market

The mortgage crisis has slowed the sales of high-end homes because sellers can afford to wait until home values return. Buyers are also more cautious with their money and may find it difficult to get approved for a jumbo loan under today’s stiff mortgage regulations.

The number of high-end home sales, like in Palo Alto’s Crescent Park neighborhood, are returning back to normal levels this year. In the first quarter of 2008, seven homes sold in Crescent Park at a median price of $4.25 million. In the first quarter of 2009, only two homes sold, the higher one selling for $1.7 million. And in 2010, five homes sold for a median price $2.75 million.

What sold for $1.25 million in 2009 and 2010

A 2,091 square foot, four-bedroom and two-bath, two-story house was originally listed for $1.495 million but sold for $1.25 million in the first quarter of 2009.

The house was built in 1963, sits on a 7,688-square-foot lot and is located at Barclay Court, a cul-de-sac in the Charleston Meadows neighborhood. Inside are oak floors, a combination living and dining room with a fireplace. The house is located next to Robles park and part of the Palo Alto school district.

During this past quarter, a 1,324 square foot, three-bedroom and two-bath house was listed for $1.198 million and sold for $1.27 million.

The house was built in 1954, sits on a 9,009-square-foot lot and is located at Fairfield Court, a cul-de-sac in the Green Meadow neighborhood. Inside is hardwood floors, stainless appliances, new fixtures and a combination living and dining room with a fireplace. The large rear yard features a patio.

Market Snapshot – May 3, 2010

There are currently 69 single-family homes and 44 townhomes and condos available. Out of the69 single-family homes, the prices have a wide range from $760,000 to $8,000,000.

We’ll take a look at how school rankings and Silicon Valley real estate prices are related, but first let’s look at how to read the information.

Number of Students. In the first column, you’ll find the number of students whose results were included from that school.  It’s pretty close to the total number of students, less any excluded students.  The rules for excluding students are listed in the API Base Documentation Information Guide found on the CDE API page.  Surprisingly, the number of students has little to do with how well the school did in its API scores (almost, see epilogue).

Base API, Statewide Rank, Similar Schools Rank. The Base API score is like an SAT score except it’s from 200 to 1000.  Higher is better.  To make comparing schools easier, the CDE provides a statewide rank from 1 to 10 (ten is best) and a similar schools rank that rates schools (again from 1 to 10, ten being best) that have similar demographics and characteristics.  Apples-to-apples in a way.

Growth Target, API Target. The growth target is the number of points California wants the school to improve in the next year.  That added with the current base API score equals the API target.  The CDE doesn’t set a target for schools above the current statewide performance target of 800.

Silicon Valley School District Scores

I’ve assembled information from the CDE site and the Palo Alto Daily News to provide a table of school district API averages for Silicon Valley and Bay Area elementary and middle schools.

Here are the API values for these Silicon Valley school districts:

Comparing School Districts and Housing Prices

Remember the chart of median Silicon Valley single-family home prices in February 2007 from my article Determining Your Must-Haves When Buying a House?

Combining the chart for Silicon Valley school district rankings with the one for Silicon Valley median single-family real estate prices brings up some surprises.  (I used a simple ratio between how far the API score was above 700 and the median single-family home price.  The resulting number isn’t really that relevant, it’s the visual comparison I was looking for.)

Regarding Schools and Value in Pricing

First, while Cupertino and Foster City housing prices are very similar, there is a vast difference between the performance index of their school districts.  On school rankings, compared to Foster City, Cupertino represents a much better value based on the median sale price of single-family homes.

Second, while Los Altos has the highest API scores, it also had a much higher median price putting it on-par with other elite school districts like Palo Alto and Los Gatos, but well-below Saratoga which had both higher test scores and a lower median home price.

Third, it is possible to cherry-pick good schools in average school districts.  For example,  you can search around Sunnyvale’s Cherry Chase Elementary, which has a base API score of 941, if you’re looking for a good elementary school.  Stay tuned.

(c) Alex H. Wang for the Silicon Valley Real Estate Blog at 1SiliconValley.com

Recommended Reading:

• Determining Your Must-Haves When Buying a House
• Silicon Valley School Information
• Mortgage Rates Are Low Without Exclamation Points
• Why the Perfect House Wasn’t So Perfect

[ed.  This is the CYA: The data in the report is considered accurate but not guaranteed.]

Epilogue

There’s a quirk in the ratings system where only test scores for “statistically significant” groups (read: ethnicities) are counted.  Some schools, none that I can find documentation on, were accused of reclassifying lesser performing students into groups that weren’t statistically significant to prop up their overall test scores.

There is a measure of transparency, though, because if you drill down on the individual schools, it will show which groups were counted, which weren’t, and how many were in each.

I thought the top-level townhome was in pristine condition considering they had a Cujo, until I peered into the room and saw a tiny 10-pound pug sitting attentively in front of the television!

There were network connections wired into every room, and this being Silicon Valley, we asked the owner if it was standard CAT-5 or CAT-5e.  The gentleman, in his decidedly French accent, said with a bit of sheepishness, "You know, I'm not sure."  (He was a little redfaced because we'd talked about his job at Cisco.) 

So I asked whether he had a wireless network and his face lit up.  He hopped over to the storage closet in the entryway and eagerly showed off the router, neatly and carefully wired into the connectivity panel.  He didn't check for CAT-5e because he didn't need it.

The network drops were a "nice-to-have" for my client who does a lot with multimedia.  They weren't a dealmaker (and as he discovered not a dealbreaker) but given that this was the first home he'd seen as a potential buyer, he was eager to get some experience looking at houses under his belt so that he could really experience firsthand what his requirements feel like.

In the back of people's minds, most people start off with a list of requirements that I rank order informally using the "MoSCoW" method:

• Must: What they know they want
• Should: What they think they want
• Could: What they don't have strong feelings about
• Won't: What they don't want

For any number of reasons, what people say they want doesn't always line up with what they really want in their minds and hearts. 

A lot of times that's because of the difference between theory and application: being able to actually drive the commute or experience how many flights of stairs there are gives people a clearer picture of "could" vs. "won't".

The tricky part is separating the borderline "must-haves" from the "shoulds."  And with my client in the early stages of his home search, we needed to setup a stable foundation so that we'd learn those differences from every property he would see on the rest of his search.

You Can Learn a Great Deal From a Rant

I sat in the office of another client, across from him and his dustless mahogany desk.  I briefly peered out towards the Silicon Valley hills through the shades of the window behind him before he lifted his brow from thought.  He muttered cautiously, "That's a good question…" and placed his chin on his hand in the universal position for "I don't have an answer for that yet."

He wanted to tell me something but the way his eyes focused into the distance, you could see a little fear, as if to say, "People will think less of me for saying what I'm really thinking."   

I'm not judgmental and I don't remember saying anything at that point, just tilting my head to the side a little.  But what I got back, I never would have expected from this formal and staid lawyer.

"I WANT A HOUSE!" he exclaimed.  "I want a place where the neighbors respect where we live.  If they see trash on the ground, they pick it up because they feel ownership.  I want to live in a place where I don't have to be ashamed to say, 'I live here.'  I want my neighbors and I to be peers and for them not to look at my car and go, 'Who does he think he is?'  I want my wife and kids to feel important.  I want to be able to carry on a meaningful educated conversation with the people living around me.  I WANT A [ed. deleted] HOUSE!"

That joke one of my clients made about me being an iceman must be partially true because with a hint of a smile in my expression, I winked a little and asked in an ironic, almost dry manner, "So, what did you want again?"

Home Search Criteria People Don't Like to Say Out Loud

I wanted to share this conversation because it's critically important when buying a house.  There are things people never say they're looking for during a house search, but actually really need.  This gentleman was brave enough to share some with me:

1/  Prestige.  This is a really sensitive subject.  On the one hand many people want to be regarded and respected.  On the other hand, people fear that by wanting to be regarded and respected, that people will actually think less of them.  But the root cause is that sometimes people judge others based on a mental picture of where they live.  What do you think of when I say New Jersey or Alabama?  Or East Palo Alto?  (I'm from Louisiana: insert stereotype here!)  If prestige is important to you, then that should be included as a criteria in your home search without emotional prejudice.

2/  Owner's Mentality.  I have a personal story here, all this over a simple piece of paper.  I lived in a large apartment complex that was in a good location, was kept in decent condition, and had below market rents so I could save money and buy a house.  I stepped out of the elevator next to the trash chute and noticed a crumpled piece of paper lying there on the ground.  As a renter, my first instinct was, "Oh, the maintenance people will take care of it."  I eventually did throw that paper away but it left me wondering whether I would have thought twice if it were in front of the home I lived in.

3/  Neighborhood Pride.  Have you ever been to a sleepy old manufacturing town whose plant closed long ago?  Where people can't wait to find a way out?  Or a town that's languishing under the weight of its own lack of culture.  The transient nature of people living there is much different than the sense of community an identity engenders. 

4/  Belonging.  Whether it's being close to the culture of your parents or your parent's parents, to feeling like you can relate to your neighbors, that sense of belonging can be very important to your enjoyment of your home.  Sometimes it doesn't even boil down to culture.  If you're single, living in a family community with lots of kids around may not be preferable to being closer to other singles whom you can relate to.  And being a movie junkie with a huge home theater system (read: speakers) in the middle of a complex of semi-retirees might not make you any friends.

5/  Less competitive schools.  Some parents, even though they care about their children's education, don't want to put that much competitive pressure on their kids.  This is one I hear with increasing frequency. 

Common Trade-Offs

After we left the top-floor townhouse owned by the gentleman at Cisco, I told my client that, yes, you can have your dream house, but only if you know what's really important to you.  After all, since homes are so expensive, you don't want to have to pay for amenities and benefits that mean nothing to you.  Why would you spend your hard-earned money on something you don't need or want?

Here in Silicon Valley, people make trade-offs every day when buying real estate but it takes a lot of self-reflection and some experience actually going through the home search process for those priorities to really become clear. 

Single-Family vs. Multi-Family Properties

"Maintaining the lawn just sounds like work.  If I'm going to be doing work, it may as well be for work!" he said.  The land you get on a single-family house is valuable but if it hurts your lifestyle, then what are you paying for? 

According to RE InfoLink, in February 2007, the difference between buying the median townhome or condominium and the median single-family is between $200,000 and $300,000 in both Santa Clara County and San Mateo County. 

My client in this article chose to look for townhouses and condominiums because he can get more square footage inside the home for the same money and minimize the responsibility he has for maintaining the property.  He doesn't have any kids or need room for a swing set, but if he can get a small yard or patio for entertaining, that would be perfect.

Schools

Ever hear the advice, "You should always buy a home where there are good schools?"  There are advantages to this because these are neighborhoods which are (in general) the last ones to decline and the first ones to appreciate, but remember that if the neighborhood has a reputation for good schools, that reputation is already priced into the house. 

My client used the words, "I'm single and this isn't my last house.  Why would I want to pay for a good school district?" 

If you have school-age children, you may save money by buying in a less expensive neighborhood and sending your kids to private schools.  You will get more house for your money if you don't have to pay for the school district's reputation.  And you may get more upside from an ascending school district which is building a great reputation than one that's maintaining its high scores.  When the best kept secret in the area comes out, people will be looking for that good value.

Cupertino and Palo Alto, among other cities in the Bay Area, have prestigious school districts.  How do the median prices for single-family homes compare with other cities around Silicon Valley?  The chart of figures from February 2007 speaks for itself.  What are the best kept secrets in Silicon Valley?  That's a whole 'nother article.

Commute

I had a client say that he enjoyed a reasonable commute time to be able to "switch modes" and another wanted to catch up on reading while on the train.  I'd argue that most people consider commuting a necessary evil based on where they live and work.

Time is money, right?  Well, almost, because no matter where you were born, what your parents have, or what your opportunities are, everyone starts off with 24 hours in a day.

You can measure the value of your time in two ways.  Economists measure the value of time in terms of opportunity cost, the amount of money you can make with your time at its highest and best use.  Most people measure it in exactly the same way except with things they can be doing: activities like spending time with the family, and reading a book, to taking a second honeymoon. 

You'll have to help me determine the value of your second honeymoon, but I can show you the cost of your commute.  Let's say you've live in your home for five years and take the same commute each day.  You earn a conveniently round number $100,000 and work 50 weeks out of the year for 5 days a week.  Here's what your commute costs:

At only half-an-hour each way, the commute costs $62,500 over that period and $125,000 if your commute is an hour (two hours a day) each way! 

There's no value judgment behind these numbers.  Some people want to save money to keep their families fed, happy and well-educated so they will trade more commute time for cash savings.  Others prioritize spending more quality time doing other things and choose to allocate more resources to the problem. 

The beauty is that the choice is up to you and experiencing a house search with an expert is an effective way of truly understanding what you want and what you're willing to trade-off.

(c) Steve Leung for the Silicon Valley Real Estate Blog at 1SiliconValley.com

Recommended Reading:

• The Price of the Home Across the Street and Its Long Shadow
• Why the Perfect House Wasn't So Perfect
• Why You Need Real Estate Agents and Why You Don't Trust Them
• Silicon Valley Real Estate Buyers Guide
• Search MLS for Silicon Valley Homes

But Palo Alto, with Stanford University to the south, has grown into an upscale community complete with an active downtown area that boasts high-end stores, an affluent atmosphere, and great restaurants.

This walking tour of Palo Alto (which means "tall tree" in Spanish) starts from its historical namesake and guides you through its historic University Avenue and many of the places that make up downtown Palo Alto's culture.

1. El Palo Alto
2. Palo Alto Southern Pacific Station
3. Digital DNA
4. The Stanford Theatre
5. University Cafe
6. Borders at the Varsity Theater
7. Robaii
8. The Cardinal Hotel
9. Palo Alto Creamery

First stop: El Palo Alto. Palo Alto Ave. and Alma St.

1.  El Palo Alto

El Palo Alto, the redwood after which the city is named, is in Palo Alto Park, at Palo Alto Ave. and Alma St., before it connects with El Camino Real. The towering tree is believed to be over 1,000 years old and originally had two trunks before the second was lost in a storm back in 1885. It served as an easily recognizable meeting point for Spanish explorer Don Gaspar de Portola who is credited for the discovery of San Francisco Bay by Europeans.

Next stop: Palo Alto Southern Pacific Station. Walk southeast down Alma St. toward downtown Palo Alto.

2.   Palo Alto Southern Pacific Station

Built as the Palo Alto Southern Pacific Station in the 1940s, this building is the current CalTrain station for downtown Palo Alto and a reminder of the dominance of the train as a means of transportation in California during the 19th and early part of the 20th century. This historic station is still a key transportation hub connecting Amtrak, CalTrain, Marguerite Shuttle, and VTA bus services.

Next stop: Digital DNA. Walk northeast down University Ave. to Pizza My Heart.

3.   Digital DNA

The "cyber egg" was created by Brazilian artists Adriana Varela and Nilton Marx and symbolizes Palo Alto as the birthplace of the technological revolution, and a centerpiece of Silicon Valley. The egg itself has electronic components welded into its shell of steel and resin and sits in a small courtyard where local bands often play during the summer.

Next stop: The Stanford Theatre. Across University Ave. from Digital DNA.

4.   The Stanford Theatre

The Stanford Theatre first opened in 1925 and is one of a dying breed of classically-designed movie houses. You'll find many old black-and-white favorites, beyond and including standards like Casablanca to Hitchcock, playing there. And, to add to the ambiance, you'll often hear the Mighty Wurlitzer organ during intermissions.

Next stop: University Cafe. Walk northeast down University Ave.

5.   University Cafe

This upscale cafe is the epitome of downtown Palo Alto. From its open-air arrangement in the summers, to their meticulously prepared dishes, to the expensive but never boring coffee selection, the University Cafe exudes high-end Northern California living with a cultured but graceful elegance. It's not so trendy that you go there to be seen, but if you're into that, it never hurts to be seen there.

Next stop: Borders at the Varsity Theater. Walk northeast down University Ave.

6.   Borders at the Varsity Theater

Unlike the Stanford Theatre, the Varsity Theater is a classic movie house that didn't make it. But while the only constant is change, the Borders bookstore uniquely fits its traditional selection into the lobby and showcase of the old theater, and uses the traditional Spanish courtyard and fountain to their full effect in greeting customers coming in from University Ave.

Next stop: Robaii. Walk northeast down University Ave. Make a right on Cowper and stop at Hamilton Ave.

7.   Robaii

Hamilton Ave. doesn't receive nearly the traffic of the main strip, University Ave. But there are a few places that make it worth the slight detour. The first is Robaii, which has the best falafels, baba ghanoush, and hummus in all Silicon Valley — and best of all, they have a combination platter that will give you all three!

Next stop: The Cardinal Hotel. Walk southwest up Hamilton Ave.

8.   The Cardinal Hotel

The Cardinal Hotel was originally built in 1924 and has evolved into an "old world" boutique hotel that carries itself with great dignity and nostalgia and even retains the neon which was added during the 40's. The Cardinal Hotel is a gentle reminder that there's still a haven for old charm of Palo Alto.

Next stop: Palo Alto Creamery. Walk southwest up Hamilton Ave.

9.   Palo Alto Creamery

The last stop on this walking tour is the sweetest, the Palo Alto Creamery. The Palo Alto Creamery makes some of the richest milkshakes in the Bay Area, from ice cream it makes a few blocks away. This diner has a traditional feel complete with red vinyl seats and stools at the counter, but you'll find interesting variations on your standard diner fare.

(c) Steve Leung

Related Reading:

• Silicon Valley Real Estate Buyer's Guide
• Downtown Sunnyvale Revitalization Gets Desperately Needed Kickstart
• Goodbye Vallco, Hello Cupertino Square
• Vision North San Jose Gets Boost