Silicon Valley Real Estate Blog

"The kids miss you."  Those weren’t the words he expected to hear that night but it didn’t come as a complete shock.  After all, he was gearing up for his commute tomorrow and it was going to be the same as it always was on Monday mornings.

"Besides, what if there’s an emergency?" she said.  He passed the commute time listening talk radio and audio books, and he’d learned enough French to get him through his last business trip without accidentally ordering snails at local restaurants.  (See the article How Long Will My Silicon Valley Commute Take?)  But he knew that when the tide flowed anytime after 3pm, there was no such thing as a person in a hurry: there were just kindred spirits parked on the highway.

They could afford it now and the extra time would help better their standard of living.  She knew he had work-a-holic tendencies and had a freelance job herself.  So it just made sense to move — but not only because of the extra time.  While this part of Silicon Valley was closer to other opportunities for both of them, she also said off-hand that she liked that it was a more prestigious neighborhood with stronger schools and less cars parked along the street.

We talked earlier about the logistics of moving up to another home.  (See the article Keeping Your Sanity While Moving Up to a Larger Home.)  Because it’s such an important decision both financially and emotionally, it’s important to understand what you’re getting when you upgrade.  (Also see the article Emotions in Real Estate: From Fear to Elation.)  Here are some of the factors to look for.

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Categories: Home Buyers, Home Owners

It wasn’t so much about the squirrels.  This Silicon Valley development was advertised as brand new — which is technically true because no one had lived in these homes for sale.  But the first proverbial "for sale" sign had been put up almost two years ago and the developer still had leftover inventory.

The first to move in, though, weren’t the people who had signed their contracts.  The first occupants were actually a set of long-tailed friends using the attic as a roost. 

Indeed, uninvited guests in the attic are annoying, but there was a good chance they wouldn’t have been more than an irritating nuisance to be taken care of "soon".  Except they brought their own uninvited passengers, which were so great in number that they fell from the ceiling. 

The owners were obviously unhappy with an indoor rain made up of mites landing on the bed, couch and kitchen table — especially in their new home.  And you can bet that the threat of a lawsuit was broached more than once. 

Prevention is the best cure and knowing your rights when buying a new home will help you sidestep major headaches down the road.

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Categories: Home Buyers

To everyone who attended or organized the event, it was an honor and a pleasure to be a part of the panel speaking in Los Gatos on real estate blogging today.  I sincerely hope you took away tips that will help with your success and I’m happy to follow-up with you. 

Many expressed interest in the e-book.  If you are a real estate agent or attended the event, please email me directly instead of using the email form for sign-up.  And thank you again for being such great hosts.

Categories: Silicon Valley News

I hope you all had a great holiday season and New Years!  Looking back, it seems that 2007 was the year of the mortgage for real estate here in Northern California.  A screenshot from the New York Times mortgage rate chart illustrates how buyers (and sellers) were impacted by the dynamics of the mortgage industry this year.

This chart shows the change in jumbo mortgage interest rates during 2007.  Put in historical context, the jumbo interest rates over the summer didn’t approach the level of rates in, say, 1981, but since 2002, the housing market has benefited from mortgage rates that are historically low.

It wasn’t 2005 or 2006, though.  In May and July, some buyers discovered the home they were interested in just became about 5% more expensive at the same price because of another interest rate bump.  (A $1,000,000 P&I mortgage costs $5,996 per month at 6% and $6,321 at 6.5%.)  All the more reason to better understand how rate locks work.

Some homeowners with adjustable rates found themselves in a similar situation and ended up attempting a short sale.  Many neighborhoods were unaffected, others were peppered with short sales — where the available homes may or may not have real estate signs indicating a sale.

But many of the markets around Silicon Valley didn’t behave like one would expect from reading the news reports.  It’s the sales transaction information that tells the best story.

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Categories: Market Updates, Silicon Valley News

There’s an opportunity here for my clients looking for a good elementary school district.  For single-family homes, the news is almost exactly the same as last year.  There were six sales in 2006 and five this year in Redwood Shores.  Small statistical sample. 

The median number has dropped 7.8% year-over-year in October from $1,192,000 to $1,100,000; the average stayed almost the same going from $1,145,500 to $1,145,000, with eight new listings in both periods and an inventory of 14 and 13 in those respective years.  The news, though, is in townhomes and condominiums.

In Redwood Shores, there were only three were closed in October 2007 (compared to 15 the year before) with inventory levels similar to 2005 and 2006.  The percent of list received went from just above asking to 93.36% this year. 

It’s sometimes difficult to be the first wave to adjust to a different landscape and changing market conditions, no matter how much data is available.  In this case, the initial valuation of these three townhomes was unrealistic, so the percent of list received is lower than it might have been if information about the shifting landscape were already digested.

There are good elementary schools in Redwood Shores.  Sandpiper Elementary, part of the Belmont-Redwood Shores Elementary School District, improved upon its elite test scores last year with a 17 point increase to 923.  When I last called Sandpiper just after the start of the school year, they were on the border of being over-subscribed, but were still able to take new students.

Obviously, it’s important to confirm availability before making a purchasing decision.  The Belmont-Redwood Shores district has two other schools over 900 API to choose from if there’s a wait list at Sandpiper (Central Elementary and Fox Elementary), and the others two come in at 875 (Cipriani Elementary) and 823 (Nesbit Elementary).

[ Median Home 2007, 2006 | Market Snapshot | How Much Home Can I Get? ]

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Categories: Market Updates

With continuous days-on-market numbers getting higher for many (but not all) homes in Silicon Valley, agents know they need to do a little extra to generate interest for a motivated seller — especially in areas and quartiles where inventory is high.

The technique goes by several monikers and it can be the difference between being a motivated seller and a motivating seller.  Some call it a "reverse offer", others use the term "preemptive offer", or even "seller-initiated offer".  In any case, the technique is the same: the listing agent draws up a purchase contract that specifies terms that the seller will accept and gives it to one or more buyers. 

The contract is the same one that a buyer’s agent would write up when making an offer, except written by the seller.  All a potential buyer needs to do is sign on the proverbial dotted line.

Most of the time, reverse offers are used to open a line of communication, hoping to create competitive a competitive situation between multiple buyers, or to attract the attention of one buyer deciding between several properties.  But there are key considerations when for both buyers and sellers when the seller writes a reverse offer.

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Categories: Home Owners

For families interested in Sunnyvale schools, the numbers are 900 and 901.  Those were the API scores for Sunnyvale’s Cherry Chase Elementary and Cumberland Elementary, the highest-rated schools in the Sunnyvale Elementary School District according to 2007′s API growth report. 

Cumberland joined Silicon Valley’s elite schools with 900 or above API scores this year with its 36 point increase.

As you might expect, homes in Sunnyvale that feed into Cumberland and Cherry Chase are more expensive than those that feed into Sunnyvale schools with lower test scores.  Here are some benchmark 3 bedroom, 2 bathroom homes that closed in the last two months, with their schools and API scores:

	$975,000 – 1144 Lynn Way 3br/2ba; 1272 sqft ($766 per) on 6098 sqft lot; 52 years old Cherry Chase (900) / Sunnyvale Middle (797) / Homestead High (838)
	$890,000 – 214 Clarence Ave. 3br/2ba; 1365 sqft ($652 per) on 5663 sqft lot; 51 years old Cumberland (901) / Sunnyvale Middle (797) / Homestead High (838)
	$766,000 – 426 S. Mary Ave. 3br/2ba; 1552 sqft ($493 per) on 5227 sqft lot; 53 years old Vargas (730) / Sunnyvale Middle (797) / Homestead High (838)
	$715,000 – 750 Carolina Ave. 3br/2ba; 1304 sqft ($548 per) on 6318 sqft lot; 54 years old Bishop (733) / Columbia Middle (712) / Fremont High (709)
	$667,000 – 465 Wilson Ave. 3br/2ba; 1100 sqft ($606 per) on 5227 sqft lot; 57 years old Ellis (816) / Sunnyvale Middle (797) / Fremont High (709)

(I was careful to ensure that the benchmark homes were all comparables — recently remodeled with similar upgrades and of about the same size and age — so the premiums can be ballparked using the per square foot price.  Mary is a main road which may have detracted from its home’s value somewhat.)

As you can see from the benchmark homes, Cherry Chase Elementary and its reputation have been built into real estate values.  Cumberland Elementary doesn’t have that same premium because it has been on the rise, from 845 in 2003.

Another steadily improving school is Ellis Elementary, up from its 773 in 2005 (though slightly below last year’s 822).  It could represent a good deal for young families who plan to upgrade after elementary or middle school.  And people not wanting to pay a premium for schools might consider the other representative homes.

But Sunnyvale Elementary isn’t the only elementary school district in Sunnyvale.  Because of the complexity in the way school district border lines are drawn, students in a large part of Sunnyvale actually attend schools in the Cupertino Union School District.  How much opportunity is there in the overlap?

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Categories: Sunnyvale

There’s an interesting opportunity in Menlo Park when you take into account that the city has multiple personalities.  I want to illustrate this using the median home chart below and a couple facts.  First, if you look at the homes that are available, there are just as many single-family houses available between $400K and $800K as there are between $1.5M and $2.5M. 

Second, the ones at the low end of the range are closer to Redwood City and East Palo Alto, and use Redwood City and Ravenswood Elementary School Districts, respectively.  The more expensive ones are closer to Atherton and Palo Alto and are part of the Menlo Park Elementary School District — and its 907 district API score — or the Las Lomitas Elementary School District — and its two schools with a 948 district API score.

So, with that in mind, the median value of homes in Menlo Park can be somewhat of a tug-of-war.  For September 2007, there were two transactions for low-income housing which closed at about $330,000 each.  If you threw those two out, the median single-family home in Menlo Park was $1,220,000.  That’s a realistic 6% decrease year-over-year.

It’s important to look beyond what the numbers are and understand the story behind them.  In this case, there’s been some softness in Menlo Park given increasing CDOM numbers, from 19 to 38 year-over-year.  (The average CDOM over 10 years is 34.)  But, from on the ground experience, there wasn’t anything to indicate a decrease as dramatic as the median value chart would indicate.

[ Median Home 2007, 2006 | Market Snapshot | How Much Home Can I Get? ]

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Categories: Market Updates, Menlo Park

The Islands of Foster City is a 174-unit condominium and townhome complex located along on the central lagoon in Foster City, in a low-traffic area off Beach Park Blvd. (Balboa Lane and Portofino Lane).  Because the complex is on an island, most of the homes here have a view of the water.

[ Strengths | Weaknesses | Opportunities | Threats ]
[ Recent Transactions | Neighborhood Transactions | Schools | Map ]
[ What's Available in the Area | Other Notes ]

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Categories: Foster City

Statistical analysis isn’t only important in calculating the value of real estate in Silicon Valley, it’s integral to choosing a starting point, whether buying or selling. 

One of the metrics at our disposal which comes up frequently is the cost per square foot of a particular property.  The "per square foot" number divides the total value of the transaction by how many square feet of space within buildings was purchased or rented.  That phrase "within buildings" is important. 

This quick-and-dirty metric lets my clients compare the relative costs of properties of different sizes and shapes located in different cities around the Bay Area (or the rest of the world for that matter).  And it’s useful — to a point. 

But misinterpreting this number often causes buyers to overpay, whether it’s because they offer more than a property is worth, they don’t account for hidden factors, or they take for granted the seller’s valuation based loosely on a per square foot calculations for the most recent, relevant comparable.  Here is what to look out for in your analysis.

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Categories: Home Buyers

Available supply in the Los Altos market hasn’t been as low since 2000, when the median number for single-family homes jumped an astronomical 48.9% year-over-year.  That year, the number of closed transactions to new listings was almost 2-to-1 (48 closed to 25 new).  The headline number this year is that closed sales are the lowest in a decade, but so was the available inventory.  Relative demand for what’s available has been strong enough to draw notable increases in two key statistics.

Only one condo in Los Altos was sold this August and only a handful more in each of the previous years, so their trends and statistics may have a high variance.  In single-family homes, though, it wasn’t just the fact that the percent of list received jumped from just under full value to 104.31%.  The median listing value also increased 4% year-over-year, meaning homes weren’t just selling for more, they were starting higher too.  The median transaction increased year-over-year as well, from $1,650,000 to $1,782,000 (8%).

For July and August numbers in particular, schools play a large role in housing demand and Los Altos schools are some of the best in Silicon Valley.  I’ve worked with people who’ve made the argument that, assuming that schools are the critical factor in their home-buying decision, paying a premium on a home is preferable to sending their kids to lesser schools, or private schools.  To them, private schools may not be as good socially: the kids who they go to school with may not always live nearby or have as varied backgrounds.  Premiums aren’t necessarily the most financially-conservative route, but choices involving children don’t always need to be.

[ Median Home 2007, 2006 | Market Snapshot | How Much Home Can I Get? ]

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Categories: Los Altos, Market Updates

It can happen to anyone, no matter what number you offer or what terms you’re willing to agree to.  It even happens to folks here in Silicon Valley who make above-asking offers — actually, it happens more than you’d expect for the most in-demand homes.  So, there’s nothing more risky than falling in love with a home before escrow closes. 

It’s okay to show how much you want that home in your reservation price, and even in your offer if you choose to, but once that offer is made there are so many factors beyond your control.  

While you’re mentally moving your furniture into the home, the owners are evaluating what’s best for them, and even after a good informational interview, you still might not be aware of all the factors that go into their decision to accept, counter, or reject.

"I’d rather look at the letters than the offer sheets right now," he said.  I do my fair share of number-crunching, but as a person who tries to pay attention to people’s emotions, I understood why he’d feel that way.  Their family didn’t really need the money — there’d been so much appreciation in their Silicon Valley home that they were well past the number they’d hoped for.  And since this was "back in the day", all of their incoming offers were non-contingent. 

It wasn’t a matter of real estate anymore.  Remember the college admissions process?  For this family, it wasn’t only about SAT scores or GPAs: who their home should go to was about the story behind the paper.  So if you’ve given it your best effort, in terms of both your number and non-monetary factors owners consider, and your offer wasn’t accepted, what are your options? 

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Categories: Home Buyers, Real Estate Stories