It is so easy to let fear in without carefully examining the situation. Yes, housing prices are coming down, yes housing prices came down in 2006-07, yes they came down in 1987. Had you purchased at those times look what happened. Home prices rebounded and went even higher.
I had written in my inaugural letter that the stock market leads the real estate market. Since records have been kept the price of homes have followed the stock market average. Whether the average be the Dow Jones or the Standard and Poor 500 or any other index created. Why? The averages are economic measurements of our economy. With every reaction down there was a rebound up and those rebounds kept going onward and went beyond the lows that created the concept of "crash".
10 years from now all those who went back to their rental or their under sized house will look back and regret not moving forward.
How can one make a mistake? Interest rates are at historic lows. There will be a new normal in real estate.
This past week we have seen prices cut in various sections of Silicon Valley and large drops in sales prices versus list prices. Should you be fearful? Or, should you begin looking for opportunity.
For sellers it is a opportunity to move up, or an opportunity to create a large cash cushion and move into an updated home that fits your family needs.
For the buyers it is the opportunity of a lifetime. Get your dealing hats out and find a realtor who will work hard to get a price less than list or at a discounted price that will increase in time. I have my name out there if you don't realise it.
What will be the new normal. First there will be an end to "Open Houses". Virtual Tours will replace the Open House and visitations will come once the buyer is ready to make an offer, or has made an offer and can substantiate funds to cover purchase and or a commitment from a lender.
The new normal may find buyers and sellers speaking to one another on Skype, Team, Zoom or any service that can create a one on one atmosphere. This I believe will allow buyers to carefully examine the merchandise before making an offer, reviewing the disclosure packets and asking their agents pertinent questions from the disclosures. Remember, nothing is unimportant.
Your real estate agent is here to serve you, not flip you and move onto the next buyer/seller. If you get that feeling get another agent.
Where are buyers active? They are active throughout Silicon Valley. Sales are not as numerous as they were pre-pandemic and pre February 2020 stock market. They are still there.
Getting used to the new normal will take new forms from the California Association of Realtors. New guidelines in viewing homes with face masks and social distancing. Sellers realise that the lender may ask for documentation from employers that the employee will not be laid off due to COVID 19 issues. Buyers, be prepared for larger down payments, be prepared for jumbo loans being harder to find.
Putting your parents in a Senior's Facility will become harder. I already have a realtor associate who has taken in her aunt from a Senior's Facility. Expect parents to begin looking at +55 communities in the eastern hills where COVID 19 was a rarity.
There will be changes, and for every change there will be opportunities. Look for those opportunities whether you are selling or buying. Get onto my Facebook, LinkedIn and Twitter pages to get values in today's real estate market.
The the reader that asked what I think about the economy and market let's say that the economy and the stock market will not move as quickly up as it did down. It will be a gradual affair. I think that the low of March will be challenged or broken. When that occurs homes value opportunities will occur....get ready.
Month One and Counting Shelter in Place
Harley my Old English Sheep Dog looked up at me as I waited for cocktail hour to begin and said, "Now you know why a chew on furniture".
We now are looking forward for the Governor to decide on the resumption of our economy. Good Political play from POTUS. If it is successful he wins and if it is a failure the Democratic Governors who opposed him making the decision are left holding "The Bag". A stinky bag it will be. Redwood City has declared that all walking outdoors must now wear a facemask. Isn't this locking the barn door after the horse is stolen?
Homes for sale declined 15.7% in March and so far this month the results are:
Atherton: 6 new listings, 3 cancels, 2 cuts
Menlo Park: 13 new listings, 6 pending, 7 sold, 1 withdrawn,1 expired, 3 cuts
Palo Alto: 17 new listings, 9 pending, 9 sold, 3 expired, 4 cancelled, 3 cuts
Woodside: 5 new listings, 1 pending, 5 sold, 1 withdrawn, 1 expired, 0 cuts
Portola Valley: 2 active, 3 sold, 1 withdrawn, 0 cuts
La Honda: 1 active, 1 sold, 1 expired, 0 cuts
Redwood City: 24 new listings, 10 pending, 20 sold, 1 withdrawn, 1 expired, 2 cancelled, 7 cuts
Days on the market are increasing. So far, the effects of Shelter in Place and the requirements in listing and viewing documents have not shown an impact.
I am taking a pessimistic attitude toward the ability of realtors to show property and get virtual tours from some of the listing agents. Sellers are reluctant to show homes and buyers are cautious on viewing homes. There must be a process to keep everyone pleased. I will be creating a sanitized home condition for all homes that I list and close. For viewings there will be the California Association of Realtors inspection form, I will require facemasks, gloves and booties. I suggest all you buyers become prepared to view your chosen house with your own equipment. Make offers at below list and make offers contingent upon a sanitizing of the house and living areas. That includes garages and storage areas.
The desire to live in communities that have active city centers will diminish. The joy of a vibrant downtown area like Palo Alto, Los Altos, Mountain View and Menlo Park will come under pressure as the joy of sitting close to one another in conversation will be gone. Face masks make word recognition difficult and down right impossible when one has a hearing disability. Why pay up to live in a city when it is dangerous and unhealthy to walk to downtown area?
I have always believed that the value of Woodside, Atherton and Portola Valley has been the privacy and security a large land parcel offers owners. Children can enjoy the outdoors without incurring the potential health threats of a playground in Menlo Park, Palo Alto or Los Altos. The value of the former with a $5 million home on an acre or more seems far more beneficial than a 12,000 square foot lot in Menlo Park.
I think there will be a greater risk of ownership when a Facebook employee must work from home for the next 8 months. Now I know what Solitary Confinement means as a punishment!
There are communities in Silicon Valley that offer solitude and space and are within minutes of local cities and work environments. There will be the areas of growth while the hot downtown cities will see declining home values. IF, the return to normal does not occur as all expect it will happen.
On a weekly basis I send out selections of homes that are presently on the market or have recently come on the market as values, as I perceive them as. Get on my
Linked In: https://www.linkedin.com/in/gmckae
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Tumbler: site https://www.tumblr.com/dashboard.
We now are looking forward for the Governor to decide on the resumption of our economy. Good Political play from POTUS. If it is successful he wins and if it is a failure the Democratic Governors who opposed him making the decision are left holding "The Bag". A stinky bag it will be. Redwood City has declared that all walking outdoors must now wear a facemask. Isn't this locking the barn door after the horse is stolen?
Homes for sale declined 15.7% in March and so far this month the results are:
Atherton: 6 new listings, 3 cancels, 2 cuts
Menlo Park: 13 new listings, 6 pending, 7 sold, 1 withdrawn,1 expired, 3 cuts
Palo Alto: 17 new listings, 9 pending, 9 sold, 3 expired, 4 cancelled, 3 cuts
Woodside: 5 new listings, 1 pending, 5 sold, 1 withdrawn, 1 expired, 0 cuts
Portola Valley: 2 active, 3 sold, 1 withdrawn, 0 cuts
La Honda: 1 active, 1 sold, 1 expired, 0 cuts
Redwood City: 24 new listings, 10 pending, 20 sold, 1 withdrawn, 1 expired, 2 cancelled, 7 cuts
Days on the market are increasing. So far, the effects of Shelter in Place and the requirements in listing and viewing documents have not shown an impact.
I am taking a pessimistic attitude toward the ability of realtors to show property and get virtual tours from some of the listing agents. Sellers are reluctant to show homes and buyers are cautious on viewing homes. There must be a process to keep everyone pleased. I will be creating a sanitized home condition for all homes that I list and close. For viewings there will be the California Association of Realtors inspection form, I will require facemasks, gloves and booties. I suggest all you buyers become prepared to view your chosen house with your own equipment. Make offers at below list and make offers contingent upon a sanitizing of the house and living areas. That includes garages and storage areas.
The desire to live in communities that have active city centers will diminish. The joy of a vibrant downtown area like Palo Alto, Los Altos, Mountain View and Menlo Park will come under pressure as the joy of sitting close to one another in conversation will be gone. Face masks make word recognition difficult and down right impossible when one has a hearing disability. Why pay up to live in a city when it is dangerous and unhealthy to walk to downtown area?
I have always believed that the value of Woodside, Atherton and Portola Valley has been the privacy and security a large land parcel offers owners. Children can enjoy the outdoors without incurring the potential health threats of a playground in Menlo Park, Palo Alto or Los Altos. The value of the former with a $5 million home on an acre or more seems far more beneficial than a 12,000 square foot lot in Menlo Park.
I think there will be a greater risk of ownership when a Facebook employee must work from home for the next 8 months. Now I know what Solitary Confinement means as a punishment!
There are communities in Silicon Valley that offer solitude and space and are within minutes of local cities and work environments. There will be the areas of growth while the hot downtown cities will see declining home values. IF, the return to normal does not occur as all expect it will happen.
On a weekly basis I send out selections of homes that are presently on the market or have recently come on the market as values, as I perceive them as. Get on my
Linked In: https://www.linkedin.com/in/gmckae
Facebook: https://https://www.facebook.com/GaryMckaeProperties/
Twitter: https://twitter.com/gmckae
You Tube: https://www.youtube.com/user/gmckae
Tumbler: site https://www.tumblr.com/dashboard.
Week 4 Of Shelter in Place: The Real Estate Markets Tighten Up
The new thing appears to be emails from all those we know and have known with their various jokes on being too long in Solitary. "Going out this week? What should you wear to take out the garbage?"
In Santa Clara County list prices of Single Family Homes have had a -2.88% fall in a 30-day trend, Luxury Home list prices have had a -10.78% fall in a 30-day trend. Importantly, the average sales prices for single family is +8.10% and Luxury Single Family +0.28%.
In San Mateo County Single Family list prices have a -5.66% 30-day trend and Luxury Single Family have had a -2.10% 30-day trend. Average sales prices for Single Family homes are +11.27% with no statistics available for Luxury Homes in the 30-day trend.
Watching the daily summary of listings of Atherton, Menlo Park, Palo Alto, La Honda, Redwood City, Woodside and Portola Valley the only trend I can see is that there have been a number of cancellations, expired and withdrawn properties in the Luxury Markets of Woodside, Portola Valley and Atherton. Palo Alto, Menlo Park, and Redwood City have remained unchanged. La Honda appears to have some active markets in the land sales and large parcels with buildings.
The recent laws by the California Association of Realtors has had a substantial impact on home viewing and showings. The big issue is Virtual Tours, do the listings have them and will buyers move from the physical visual impact of looking before they buy. That will be the big determinant of home sales in the future. Will real estate go the way of Carmax and Amazon, shopping on line and waiting for delivery? A big question that remains to be seen.
Many of the sellers have gone off market awaiting the end of our isolation. Buyers now fight over what is on the market, owing to the increase in sales over list. Lists are going down as sellers realise that they need to discount to sell.
The ability to go back to work will change. Will more wish to remain "work at home" employees? Will more businesses adjust to the "Cloud Based" economy? Will clients accept a "Cloud Based" economy? Whether you like it or not, we are already in a Cloud Based Economy! The exception is that it is now broader than it ever was before. Then what will happen to all the commercial spaces?
The stock market this week, 4 days, had a 13% rise in value. To get a better idea of performance it took from October 2019 to February 2020 for the market, call it S&P 500, to gain 12%. Looking at "Bear Market" which is the term for the present condition of the stock market; which means lower prices, there has been a normal 10% rise and fall before the markets resumed an upward trend and it took years before the old highs were ever reached. The greatest loss in the stock market was the Bear Market of 1974. The previous high was not reached until 1983!
We are not in normal circumstances. The Federal Reserve and Congress and the President have taken unprecedented steps in keeping the country from falling into chaos and depression. $1200 coming in the mail for each American is the first of many benefits. Expanded unemployment for those out of work or unable to perform their profession. Businesses get money from 2 different SBA loans. One $10,000 out right forgiven loan and another loan to keep employees on with a Paycheck Protection Program. Getting Federal Funds will take time.
As we await money to help subsidise or Staying At Home and keeping the virus in check from spreading and making the Spanish Epidemic look pale and the Black Death a more reasonable comparison. We wait for a solution to Covid19. Who will have a stop gap, who will create a vaccine? What will be the effect be
on our economy and more importantly employment?
When the all clear is given will it be so? Will we all go back to elbow to elbow or waiting in line within 12 inches of each other? I rather doubt it. Will children be safe on playgrounds, in soccer games or any field sport? Will foursomes in golf return? If so, each walk or have their own cart and of course remain 6 feet apart. Will we all be labeled as positive, negative, immune or a carrier without symptoms?
It appears we will be in place until mid May? Each week the real estate market will have some reflection on our future. At one point I think we will see a large increase in listings and movement EAST. I look at the Mercury News daily and look at the areas in the state that have reported cases. It is very clear that as one moves beyond the Bay Area east cases decline and so do deaths decline or disappear. I am now gretfull my youngest daughter and family moved to the El Dorado Hills. She was the first one I know who realised that working from home did not mean living in the Bay area and took her profits and bought a larger home on a larger lot with better schools and from her comments a far better environment.
On the Baby Boom Generation and the Silver Tsunami of sales and movement, I don't think that senior centers will be a good choice. They appear to be areas of infection and dying alone. Seniors are prone to die in place. Will they move east to be in a safer environment will be the big question; as it will be, the big question on the work from home Bay Area residents.
The major issue I think about is the empty holes along El Camino in Redwood City, Menlo Park to Palo Alto. Will they end up being empty or will apartments fill their space as originally planned? How are rental properties going to fare? Rents are being forgiven in April by some of the large REITS, private owners are waiting to see if they will have past rent made up and or will the renter be there in May, or moving east? Will rental properties carry the premium of the past in low Capital Rates looking for Capital Gains in property value increases. Will rental single family homes be the real Tsunami?
Once the Government subsidies end will the economy and the individual normal return or will there be a new normal. I think the later will be the case. We will need to wait to see what the New Normal will be.
Stay Healthy and safe, Happy Easter and Passover
Gary
In Santa Clara County list prices of Single Family Homes have had a -2.88% fall in a 30-day trend, Luxury Home list prices have had a -10.78% fall in a 30-day trend. Importantly, the average sales prices for single family is +8.10% and Luxury Single Family +0.28%.
In San Mateo County Single Family list prices have a -5.66% 30-day trend and Luxury Single Family have had a -2.10% 30-day trend. Average sales prices for Single Family homes are +11.27% with no statistics available for Luxury Homes in the 30-day trend.
Watching the daily summary of listings of Atherton, Menlo Park, Palo Alto, La Honda, Redwood City, Woodside and Portola Valley the only trend I can see is that there have been a number of cancellations, expired and withdrawn properties in the Luxury Markets of Woodside, Portola Valley and Atherton. Palo Alto, Menlo Park, and Redwood City have remained unchanged. La Honda appears to have some active markets in the land sales and large parcels with buildings.
The recent laws by the California Association of Realtors has had a substantial impact on home viewing and showings. The big issue is Virtual Tours, do the listings have them and will buyers move from the physical visual impact of looking before they buy. That will be the big determinant of home sales in the future. Will real estate go the way of Carmax and Amazon, shopping on line and waiting for delivery? A big question that remains to be seen.
Many of the sellers have gone off market awaiting the end of our isolation. Buyers now fight over what is on the market, owing to the increase in sales over list. Lists are going down as sellers realise that they need to discount to sell.
The ability to go back to work will change. Will more wish to remain "work at home" employees? Will more businesses adjust to the "Cloud Based" economy? Will clients accept a "Cloud Based" economy? Whether you like it or not, we are already in a Cloud Based Economy! The exception is that it is now broader than it ever was before. Then what will happen to all the commercial spaces?
The stock market this week, 4 days, had a 13% rise in value. To get a better idea of performance it took from October 2019 to February 2020 for the market, call it S&P 500, to gain 12%. Looking at "Bear Market" which is the term for the present condition of the stock market; which means lower prices, there has been a normal 10% rise and fall before the markets resumed an upward trend and it took years before the old highs were ever reached. The greatest loss in the stock market was the Bear Market of 1974. The previous high was not reached until 1983!
We are not in normal circumstances. The Federal Reserve and Congress and the President have taken unprecedented steps in keeping the country from falling into chaos and depression. $1200 coming in the mail for each American is the first of many benefits. Expanded unemployment for those out of work or unable to perform their profession. Businesses get money from 2 different SBA loans. One $10,000 out right forgiven loan and another loan to keep employees on with a Paycheck Protection Program. Getting Federal Funds will take time.
As we await money to help subsidise or Staying At Home and keeping the virus in check from spreading and making the Spanish Epidemic look pale and the Black Death a more reasonable comparison. We wait for a solution to Covid19. Who will have a stop gap, who will create a vaccine? What will be the effect be
on our economy and more importantly employment?
When the all clear is given will it be so? Will we all go back to elbow to elbow or waiting in line within 12 inches of each other? I rather doubt it. Will children be safe on playgrounds, in soccer games or any field sport? Will foursomes in golf return? If so, each walk or have their own cart and of course remain 6 feet apart. Will we all be labeled as positive, negative, immune or a carrier without symptoms?
It appears we will be in place until mid May? Each week the real estate market will have some reflection on our future. At one point I think we will see a large increase in listings and movement EAST. I look at the Mercury News daily and look at the areas in the state that have reported cases. It is very clear that as one moves beyond the Bay Area east cases decline and so do deaths decline or disappear. I am now gretfull my youngest daughter and family moved to the El Dorado Hills. She was the first one I know who realised that working from home did not mean living in the Bay area and took her profits and bought a larger home on a larger lot with better schools and from her comments a far better environment.
On the Baby Boom Generation and the Silver Tsunami of sales and movement, I don't think that senior centers will be a good choice. They appear to be areas of infection and dying alone. Seniors are prone to die in place. Will they move east to be in a safer environment will be the big question; as it will be, the big question on the work from home Bay Area residents.
The major issue I think about is the empty holes along El Camino in Redwood City, Menlo Park to Palo Alto. Will they end up being empty or will apartments fill their space as originally planned? How are rental properties going to fare? Rents are being forgiven in April by some of the large REITS, private owners are waiting to see if they will have past rent made up and or will the renter be there in May, or moving east? Will rental properties carry the premium of the past in low Capital Rates looking for Capital Gains in property value increases. Will rental single family homes be the real Tsunami?
Once the Government subsidies end will the economy and the individual normal return or will there be a new normal. I think the later will be the case. We will need to wait to see what the New Normal will be.
Stay Healthy and safe, Happy Easter and Passover
Gary
The New Normal in Real Estate Sales
LIFE AND HOME SALES DURING THE COVID 19 PANDEMIC, WEEK 3
We are now finishing our 3rd week with the Shelter at Home orders by Governor Newsom. Cities and Counties have followed up with their orders. It does not appear that the order will expire until after May at this point. Next week is the height of deaths and infections per the medical community advising our governmental leaders. STAY AT HOME!
The California Association of Realtors have put together forms that require full disclosure of potential issues to protect both the buyer and the seller of real estate in California. The first is a Quick Guide to Real Estate Transactions in a Safer at Home Environment for Covid 19. Buyers and sellers should review this link as the realtor must comply. Being self-informed is far better than word of mouth. For the seller there is the Listing Agreement Coronavirus Addendum or Amendment. Whether you are presently listed or planning to list this is an essential form for completion. Once the buyer has chosen a property to view there is the Coronavirus Property Entry and Advisory To complete the advisory there is the Notice of Unforeseen Coronavirus Circumstances. Finally there is the Revised Coronavirus Addendum and Amendment to the Purchase Agreement.
There is much more for the real estate agent to manage along with various forms and document review that a brokerage firms may require. Then there will be the normal packet of disclosure documents that the seller must complete, sign or initial and the buyer to complete, sign or initial.
I had originally thought that prices would decline as buyers would back away. That was the historic of the real estate price action when related to the S&P 500. This is not a normal circumstance. The results of March are in and Menlo Park has seen offers 104% over list with a 27 day inventory of homes for sale. Palo Alto is 106% over list with 2.1 months of inventory. Portola Valley is 98% of list and 3.8 months of inventory and sales within 34 days of listing. Woodside is 98.4% off list after being on the market 33 days with 4.5 months of inventory. Atherton was 95% of list after being on the market 128 days and 4.4 month inventory of homes for sale. Redwood City sold 104% over list after 17 days on the market and 30 days of inventory.
Many of the high priced homes have seen cancelled listings. Over all there have been cancelled, expired and withdrawn listings in the areas stated above, but they do not match the new listings that still are coming onto the market; along with pending/contingent and sold properties.
The new normal of being at home has lead to buyers looking at virtual tours and cloud based packages to review properties and the disclosure packets. Once that is done they are ready to view the property, mask on, gloves on, booties too; don't forget to sign all the new forms! Sales then occur with all the disclosures signed and filed with escrow, all electronically.
Escrow companies are ready too, with online signatures. Notaries in parking lots ready to witness the signature of forms. We are in a new normal with buyers and sellers that are ready to accept. Thanks to Zoom, Amazon, Docusign and the bevy of online sources sellers and buyers are fully knowledgeable on the process of kicking real estate into the 21st Century. I expect the notary to end soon and also become electronic.
Real Estate is one of the last areas of our economy that has hung onto the old generation of administration and operation. The biggest change and New Normal will be in how your realtor and title/escrow company operate. The days of Open houses will end. Realtors will ask buyer to review the virtual tours thoroughly before a home visit is made. How many times will a buyer complete forms to view a property and a seller accept without a semi-firm commitment of an interested buyer will be an area of interest. Only time will tell that case.
The next issue I would like to see is how the work at home situation carries itself out. I have been working at home for over 6 years. Each year it becomes easier and easier. The only issue is up-to-date computers and software. The days of Realtor offices on every corner will soon go. Real Estate agents are now in the situation of Netflix in the Blockbuster era. Amazon and the corner store era.
What will happen to the Campuses of Apple, Google and Facebook? Will their employees work from home and be on conference meetings via a firm network? It sounds highly probable to me. With that the case, will the employees want to live in a high priced Silicon Valley community? Will the need to be in Menlo Park, Los Altos and Palo Alto because of their downtown areas diminish? Six foot distancing will impact health clubs, restaurants, football games, baseball games. WILL THE GRAY TSUNAMI of Baby Boomers occur? Baby boomers may just feel far more comfortable in their home than a +55 Community or a Senior Center. When I look at the Real Estate investment Trusts that specialize in Senior Communities drop 70-80% it tells me that there are some major issues are at hand for those communities.
Looking forward to Week 4 and PRAY that Angel of Death passes us all by.
Pandemic and Shelter at Home in 2nd week
My wife, Cindy, has become a great source of news and information for me to use in my Blog. She is coming to realise Social Media as the way to communicate and promote myself and my business. This is quite a change as she was once my secretary as a stock broker, who went up the management ladder. Her final place was with the Western Regional Director of Merrill Lynch (pre 2006 fallout) which had her in compliance as one of her duties. Mailing, newspaper advertising and the "written word" were all part of the old school marketing programs. She has realised that Facebook, Instagram, Linked In and the other social media sites are much more than communication sites of friends. I think of it as a current resume' that lets viewers get to know who I am and how I think. She realises that and is planning a Instagram video once the quarantine os over. Look for it!
Clients really want someone who thinks like them and can relate to their needs. Hopefully this Blog will help me help you.
From Cindy an article from Kathleen Pender of the SF Chronicle from mid January 2020 that the Bay Area home cost dropped 2.3% in 2019. She felt it was a pre-cursor of the future. Like stock prices she believed that home prices could not keep up their fevered move up. Sooner or later prices get to a point that buyers just "give up". Kathleen's article certainly gave warning of a slow down in home prices.
The Dow Jones or the S&P 500 ,as most people watch, has been jumping around with new % moves up and down that are creating records for the financial markets. Follow this with the Virus and we will see home prices sooner or later follow the 2019 decline further downward in prices. Financial anlysts all declare this to be a ber market, which means stock price will decline in the future.
On a daily basis homes are being either withdrawn, cancelled or allowed to expire. From Condo's to Single Family homes in the Redwood City, Menlo Park, Atherton, Woodside, Portola Valley, Palo Alto and La Honda area sellers have come to the conclusion that inviting others into their home is inviting an unknown virus into their home.
To homes have sold, gone pending and are contingent. They represent what has happened 30-45 days ago. As we move into the 3rd and 4th week of the virus we should be able to see the impact on the real estate market. Woodside and La honda seem to be immune as they are not experiencing the same as their sister communities.
The California Association of Realtors has declared that "No Open Houses should be held" and "Showings should be done virtually". This will have a big impact on how realtors change into the 21ast century and beyond.
I am surprised to see listings coming back on the market. Prices are being cut and new listings are still coming forth.
The new listings, price cuts, return to the market should signal "Opportunity" to the buyers.
From Cindy:
Stretching Out in the Virus Age: a healthy life style of getting outdoors to exercise, get fresh air and encourage of healthy life style. I can't believe how many families are walking pass our house these days. Dogs seem to being walked so much they must be thoroughly pooped out at the end of a day.
Bay Area Group and San Jose Mercury News contribution is Bay Area Hikes. A "Breath of Fresh Air Among the Redwoods. I first realised what beauty and grandeur there was in Redwoods when I took our first horse,Simon, on a trail ride in the hills above our house on Tripp Road in Woodside. The silence and fresh air was invigorating. Riding there with Simon became a weekend regular. It came to the point of making a lunch and stopping along the way to sit and watch a waterfall while admiring the beauty we have behind us in the Western Hills.
20 years later as a realtor, I was given an in depth appreciation of the Redwoods. My MBZ repairman saw a home in the Middleton Tract in the La Honda area that dropped in price from over $1 million to about $345,000. It turned out to be a pre-foreclosure in 2006. We drove up there. It took about 45 minutes. The ride along Skyline Boulevard was spectacular! The view of the ocean to the right and San Francisco Bay to the left was awe inspiring. When we arrived at 150 Back Road we found it within an area called the Middleton Tract. We almost missed it as it was a small entry road to the left of the Portola State Park Road entry sign. We drove over a redwood bridge, limited to 40,000 pounds, and looked over the edge. Below were fish! Steelhead trout I later found out and Peters Creek was a spawning area. As we drove in we were overpowered by the Giant Redwoods. Some so large in girth I assumed they must be the Old Growth Redwoods that I only read about and never saw. When we found the property all he said was "buy it".
Since then Middleton has been a special area for me. To my wife's dissatisfaction, since it takes longer to sell, I have had a number of listings and purchases in the Middleton. James Middleton bought the property in the 20's and subdivided it into numerous lots all of which have a deed restriction of being residential only. Recently an attorney, Laura Bryant (recently deceased) fought and won a case stopping harvesting of the redwoods in the Middleton. The tract has its own mutual water company, road maintenance association and a water table that will give any owner easy access to back up emergency water. A fire hydrant systems covers the area and up to a few years ago they had their own volunteer fire department. PGE provides electricity, Propane is the gas supplied by services and AT&T supplies a land line and hopefully soon to be added internet service if i believe what the Portola State Park people tell me.
Today I have 4 listings in the Tract from just under 3 acres to over 18 acres. I love taking agents and buyers on a tour and into the trails of the tract among those giants. The air is fresh. The silence is most comforting and the seclusion keeps your mind on enjoying the beauty rather than social distancing and clorox wipes, face masks. Never a harsh word will be heard from the property owners as they ask if you need help as you drive into the tract.
Take a trip to Middleton and Portola State Park. Walk the trails and get fresh air made by nature's giant, the Giant Redwood of Portola State Park and the Middleton Tract. Call me for a tour and watch for Cindy's video.
IN THE MARGIN: Monday March 30th, The National Association of Realtors announce pending home sales. The forecast is -1.3%.
Clients really want someone who thinks like them and can relate to their needs. Hopefully this Blog will help me help you.
From Cindy an article from Kathleen Pender of the SF Chronicle from mid January 2020 that the Bay Area home cost dropped 2.3% in 2019. She felt it was a pre-cursor of the future. Like stock prices she believed that home prices could not keep up their fevered move up. Sooner or later prices get to a point that buyers just "give up". Kathleen's article certainly gave warning of a slow down in home prices.
The Dow Jones or the S&P 500 ,as most people watch, has been jumping around with new % moves up and down that are creating records for the financial markets. Follow this with the Virus and we will see home prices sooner or later follow the 2019 decline further downward in prices. Financial anlysts all declare this to be a ber market, which means stock price will decline in the future.
On a daily basis homes are being either withdrawn, cancelled or allowed to expire. From Condo's to Single Family homes in the Redwood City, Menlo Park, Atherton, Woodside, Portola Valley, Palo Alto and La Honda area sellers have come to the conclusion that inviting others into their home is inviting an unknown virus into their home.
To homes have sold, gone pending and are contingent. They represent what has happened 30-45 days ago. As we move into the 3rd and 4th week of the virus we should be able to see the impact on the real estate market. Woodside and La honda seem to be immune as they are not experiencing the same as their sister communities.
The California Association of Realtors has declared that "No Open Houses should be held" and "Showings should be done virtually". This will have a big impact on how realtors change into the 21ast century and beyond.
I am surprised to see listings coming back on the market. Prices are being cut and new listings are still coming forth.
The new listings, price cuts, return to the market should signal "Opportunity" to the buyers.
From Cindy:
Stretching Out in the Virus Age: a healthy life style of getting outdoors to exercise, get fresh air and encourage of healthy life style. I can't believe how many families are walking pass our house these days. Dogs seem to being walked so much they must be thoroughly pooped out at the end of a day.
Bay Area Group and San Jose Mercury News contribution is Bay Area Hikes. A "Breath of Fresh Air Among the Redwoods. I first realised what beauty and grandeur there was in Redwoods when I took our first horse,Simon, on a trail ride in the hills above our house on Tripp Road in Woodside. The silence and fresh air was invigorating. Riding there with Simon became a weekend regular. It came to the point of making a lunch and stopping along the way to sit and watch a waterfall while admiring the beauty we have behind us in the Western Hills.
20 years later as a realtor, I was given an in depth appreciation of the Redwoods. My MBZ repairman saw a home in the Middleton Tract in the La Honda area that dropped in price from over $1 million to about $345,000. It turned out to be a pre-foreclosure in 2006. We drove up there. It took about 45 minutes. The ride along Skyline Boulevard was spectacular! The view of the ocean to the right and San Francisco Bay to the left was awe inspiring. When we arrived at 150 Back Road we found it within an area called the Middleton Tract. We almost missed it as it was a small entry road to the left of the Portola State Park Road entry sign. We drove over a redwood bridge, limited to 40,000 pounds, and looked over the edge. Below were fish! Steelhead trout I later found out and Peters Creek was a spawning area. As we drove in we were overpowered by the Giant Redwoods. Some so large in girth I assumed they must be the Old Growth Redwoods that I only read about and never saw. When we found the property all he said was "buy it".
Since then Middleton has been a special area for me. To my wife's dissatisfaction, since it takes longer to sell, I have had a number of listings and purchases in the Middleton. James Middleton bought the property in the 20's and subdivided it into numerous lots all of which have a deed restriction of being residential only. Recently an attorney, Laura Bryant (recently deceased) fought and won a case stopping harvesting of the redwoods in the Middleton. The tract has its own mutual water company, road maintenance association and a water table that will give any owner easy access to back up emergency water. A fire hydrant systems covers the area and up to a few years ago they had their own volunteer fire department. PGE provides electricity, Propane is the gas supplied by services and AT&T supplies a land line and hopefully soon to be added internet service if i believe what the Portola State Park people tell me.
Today I have 4 listings in the Tract from just under 3 acres to over 18 acres. I love taking agents and buyers on a tour and into the trails of the tract among those giants. The air is fresh. The silence is most comforting and the seclusion keeps your mind on enjoying the beauty rather than social distancing and clorox wipes, face masks. Never a harsh word will be heard from the property owners as they ask if you need help as you drive into the tract.
Take a trip to Middleton and Portola State Park. Walk the trails and get fresh air made by nature's giant, the Giant Redwood of Portola State Park and the Middleton Tract. Call me for a tour and watch for Cindy's video.
IN THE MARGIN: Monday March 30th, The National Association of Realtors announce pending home sales. The forecast is -1.3%.
Is The Spring Selling Season Dead?
Listings are being cancelled or withdrawn. Open Houses are gone or going. The outlook for the virus and the challenges of being protected look beyond the stay home order expiring April 4th. Work at home, no school, outside activities are all having a dramatic impact on our lives
Will this change the way we knew our lives and the way we lived? Is this the "New Normal"?
Does the "work at home" start a new normal? Will employees be able to be productive with working at home? Will working at home change the value of home prices? Will those working from home find that they can do so in a less expensive area.
All that is yet to be determined. It is my belief that home prices were influenced by incomes and the stock market. The growth stocks of Silicon Valley are down 25-50%. Are you willing to pay the discounted rates as much as you were willing to pay the higher prices of January 2020? Do you feel that home prices should stay high and go higher if your income is impacted and your portfolio has declined?
Will our economy move higher and when? Will the $1-2 trillion in stimulus turn our economy. If these are questions that you need to answer will you pay list on a house and if you want to sell are you confident you will be able to sell at a price that was common last month?
To many buyers and sellers there are questions they need to answer for themselves. For the person or family who have long term employment here in Silicon Valley the answer is clear they will buy. Do they do so now? Home prices will come down, but how far?
When the 2006 crisis occured Palo Alto was strong, Atherton prices were strong Menlo Park were strong. Yes there were situations in which a deal could be gotten; but over all, the prices of those communities remained in demand.
Remember you are buying your home, not a stock option or in index fund.
Will buyers look elsewhere? Will buyers continue to rent? I think renting will soon become challenged as home prices decline. The massive apartment construction project could find them without renters and may end up like the Excite Campus on 101 that remained empty for years.
I expect that moving out of California will continue. We have already lost one Congressperson due to out flow. Will movement occur?
In the present situation I cannot see why I would stay other than I have a business that pertains to local buyers and sellers. What is your situation? I have worked out of my home office for years. Real Estate Brokerage Firms & Offices have closed or down sized. Agents can work outside the Brokerage office at a discount to paying desk fees. Sellers and buyers look more to the internet to find a home or realtor. Sellers do not want a door knocker, post card, door hanger. Who knows that realtor may be passing on COVID 19.
I still believe home prices will decline before they ever go up again. Do you think so? If you do, let's discuss on the phone, email or text. Become part of the Cloud, that is where homes will be bought or sold.
I am here to help you and help answer your questions and concerns, Call, Text of Email me.
Gary
|
Will this change the way we knew our lives and the way we lived? Is this the "New Normal"?
Does the "work at home" start a new normal? Will employees be able to be productive with working at home? Will working at home change the value of home prices? Will those working from home find that they can do so in a less expensive area.
All that is yet to be determined. It is my belief that home prices were influenced by incomes and the stock market. The growth stocks of Silicon Valley are down 25-50%. Are you willing to pay the discounted rates as much as you were willing to pay the higher prices of January 2020? Do you feel that home prices should stay high and go higher if your income is impacted and your portfolio has declined?
Will our economy move higher and when? Will the $1-2 trillion in stimulus turn our economy. If these are questions that you need to answer will you pay list on a house and if you want to sell are you confident you will be able to sell at a price that was common last month?
To many buyers and sellers there are questions they need to answer for themselves. For the person or family who have long term employment here in Silicon Valley the answer is clear they will buy. Do they do so now? Home prices will come down, but how far?
When the 2006 crisis occured Palo Alto was strong, Atherton prices were strong Menlo Park were strong. Yes there were situations in which a deal could be gotten; but over all, the prices of those communities remained in demand.
Remember you are buying your home, not a stock option or in index fund.
Will buyers look elsewhere? Will buyers continue to rent? I think renting will soon become challenged as home prices decline. The massive apartment construction project could find them without renters and may end up like the Excite Campus on 101 that remained empty for years.
I expect that moving out of California will continue. We have already lost one Congressperson due to out flow. Will movement occur?
In the present situation I cannot see why I would stay other than I have a business that pertains to local buyers and sellers. What is your situation? I have worked out of my home office for years. Real Estate Brokerage Firms & Offices have closed or down sized. Agents can work outside the Brokerage office at a discount to paying desk fees. Sellers and buyers look more to the internet to find a home or realtor. Sellers do not want a door knocker, post card, door hanger. Who knows that realtor may be passing on COVID 19.
I still believe home prices will decline before they ever go up again. Do you think so? If you do, let's discuss on the phone, email or text. Become part of the Cloud, that is where homes will be bought or sold.
| Bubble Watch: Coronavirus may clobber ‘overvalued’ housing markets - "The broad spread of coronavirus in the U.S. will slow down home buying activity, leading to a temporary drop in demand and lower home price growth, " Fitch wrote. "A widespread and protracted period of containment could result in larger disruptions... Read More |
I am here to help you and help answer your questions and concerns, Call, Text of Email me.
Gary
Real Estate Values, the Cronavirus and the Stock Market
This is the second edition of the Blog since I re-started it in late February 2020.
Much to talk about and focus on the real estate markets for Atherton, Menlo Park, Palo Alto, Portola Valley and Woodside.
The comments I made last edition was the similarity of the price movement of the Standard & Poor's 500 and Real Estate values. The recent lost in values of over 20%+ in the S&P and other US indexes have been joined with declines in the World's indexes. From Canada to Japan to Australia, Hong Kong and Africa the World's markets have seen devastating loses that have taken away 50 years of growth in some countries and financial loses that are difficult to comprehend.
To review I have attached below the Historical Chart of the S&P 500 and the S&P Case/Shiller SF Home Price Index. You will note in 2005 that the the decline from a high of about 220 on the S&P Case/Shiller index to 120 in 2010 to represented a 45% decline in home prices. The decline in the similar period of the S&P 500 from about 1550 to 650 represented a 58% decline. Subsequently values improved.
So what does not mean for home prices for Silicon Valley or SF area? If history is a judge of the future the prices will decline.
Tops Round and bottoms Spike is a Wall Street saying. Fear and Greed is the normal physiological reaction of humans. Fear causes the spikes and greed the buying. Buying to a point when prices are wholly over priced to a point they round as rationale thinkers are selling.
When I look at the home prices in Atherton, Menlo Park, Palo Alto, Portola Valley, I see the same price movement or chart formation that the S&P exhibited.
Home prices have progressively declined. As posted in the charts below you will note all except Woodside have had successively declining home price highs.
This is the 5 County area of Silicon Valley. Not very encouraging. We have more listings than sales
Atherton has had a steady decline in the price of home prices. While the "pops" over have occurred the "pops" are lower than the previous "pop" high.
Menlo Park has shown a very good ability to hold value. The trend still is obvious in lower highs.
Palo Alto, like Menlo Park, has shown the ability to hold value. It still has the obvious trend of lower highs
Portola Valley has a sharper decline in value than the previous cities.
Woodside has always been an outlier. What ever the market condition Woodside has never deviated. A steady place for home ownership.
Redwood City has become the new mecca for affordable living and safe living. No street beggars. Children are safe to walk to school and parks abound with a safe and family atmosphere
The lowest mortgage rates on record are colliding with the prospect of an economic down turn complicated by COVID-19. This is meeting an unpredictable Spring Selling Season. Further complicating matter is the "Stay and Work at Home" phenomenon. We in real estate have always done so. As a former Wall Street Trader and Advisor, I always felt it better to work from home and only use the phone to communicate with others. Will this new way of working have a long term effect?
Will workers find it easier to buy in a less expensive area with the same or better working and living conditions? Will it be easier to telecommunicate? Amazon has already made a dramatic change in marketing. Brick and mortar retail businesses have crumbled away and or dramatically changed to adapt to the new normal. Stanford students are being sent home to work and study and telecommute. I had my Wharton Certification telecommuting. I only went to Wharton for the finals and final lectures. after 2 years on line.
Home Sales will face uncertainty.
Remember History forecasts the future. As the prices declined in 2005 in both the S&P 500 and the S&P Case/Shiller Price Index...they also increased. Buying opportunities occur when fear is high. Has that time come? We will need to see how home prices have changed. The home prices are not the exact reflection of the S&P. Stocks are liquid. Homes are not. 30-45 day escrow closes in real estate reflect what has happened in the past. We will not see the present prices until 30-45 days from now.
Real estate is an asset class and its movement is reflected in the stock market movement; along with other asset classes. The large declines in stocks and other asset classes have historically been matched by declines in real estate values. Does that mean stock prices cause similar movement in real estate prices? NO! It means that emotions of that affect asset prices are common in their movements. Fear and Greed, Supply and Demand will not change. Prices of all assets will once again increase. When and from what level will asset prices increase or stop declining is still in the future.
Now is the time for buyers to begin to pick out their style of home and city to live in. Asking price is just that. "ASKING" Look at affordability and pick a price at least 5% under the list. Remember you are buying a home not a trading vehicle. The same must be thought of in a seller. They can live in their home and wait out the return in value. Of course, from what value is also in the future.
Sellers must reflect on the statistics. Prices do not jump up to past highs. Prices slowly decline as buyers retreat. Insecurity and fear take over. Sellers must think about looking at the last high as a point to discount their list price. Pricing at the high will only cause further price cuts and cuts below what could have been gotten if the price was realistically below the past high. The high oil 2005 was not seen until 2016, so consider and tame your greed instinct.
Where are the values? Land Sales will and are the best value. While home prices have increased land prices have remained stagnant. Next issue will discuss why buyers should look to vacant land sales as the best opportunity to build the home of their dreams; irrespective of what city in the Peninsula you prefer.
Gary
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