OCTOBER 27, 2009
· SEPTEMBER EXISTING HOME SALES ROSE 9.4%
· COMMODITY PRICES CONTINUE TO HIT HISTORIC HIGHS
· CHINA BEGINS A DIVERSIFICATION OF ASSETS
· HOW TO PRICE YOUR HOME PURCHASE
By all appearances, LOCALLY, it looks like a bottom was hit in our real estate market. From our local statistics foreclosures sales have dropped substantially; although, there continues to be an increasing number in the amount of default notices.
Copper has hit a 30-year high and Cocoa has hit a 28-year high, Oil over $80 while gas has not followed suit and natural gas remains bogged down a historically low prices. Other basic commodities continue to move up toward their historic highs seen in the 70’s. Interest rates for convention 30-year bonds have moved up as Chairman Bernanke has stated the economy has improved and interest rates may move up.
With all the indications that the economy is improving, employment has not improved and forecasts are that there will be a 10% unemployment rate in the first quarter of 2010. The consumer is not spending and the main theme of getting the consumer to spend is VALUE.
VALUE is also the word when looking to purchase real estate. Frankly, value should always motivate any investment. When “FEAR” and “GREED” motivate the real estate transaction is either over valued or under valued. So, how do you evaluate the real estate in a transaction?
The evaluation is part of the statistics that are given each month; it is NEW HOMES SOLD, which still is unimpressive. Why is that so, it is cheaper, to buy than to build is the sole answer. Whenever an economy comes out of a recession there is a recovery phase. During that phase you will notice that Companies are active buying other companies. Why is that, it is cheaper to buy than build. The price of the company being acquired is a function of the stock price of that company. Acquisition companies, like Oracle, use their cash reserves and their balance sheet to purchase other related companies who are weaker, smaller; or just under-priced. So is the case in real estate.
As an example let us look at a home from what they are built of. From my last letter I referenced the cost of oil and commodity prices being a part of the construction of a home. There was a time when West Menlo Homes sold at $1000 per square foot; they since have fallen to $750 or less.
Take apart the cost of a home and break down into land and improved costs. It is not that difficult to find a tear down and use the sale price as a cost of land. You can also look at title of a recent sale and find out what the County Tax Records has for land and improvements. With the County records you will know what a 10,000 square foot lot in West Menlo Park, or a lot in wherever you are looking is worth.
With that price in you can now look at the difference between the asking price of the home you are considering and the latest comp in the area land value. Now divide the square foot of the home into the difference of list and land. What is the result? Take that number and determine what will be the costs of improvements to update or cure the ills of the property. Now you have a new price, divide it by the square foot of the property. What is the resultant? Now look at a newly built property, do the same. Now you know the comparative value. The seller’s are both vulnerable. Here is how you proceed.
Which home do you like? If it is the older home make the offer less the cost of improvements and the cure of the ills. If it is the newly built house use the older house as leverage against the seller. The seller of a newly built home is not in a strong position. The seller is usually a contractor or speculative builder. The seller has bank money invested in the property and has pressure to sell the property either due to the cost of carry and or lender pressure. The seller of the older home may be in a strong position or may not. You need to find out more about the seller. Is it an estate sale, does it need court approval. Are the owners long-term owners and why are they selling.
This is what I do for my clients before they even make an offer on a home. If they are listing a property I look at what is needed to make the home competitive and tell them how many days on the market they must look at in today’s new market place. All of what I have written about is what an appraiser looks at and the lender looks at. It is called “comparative market analysis”.
You can go one option further and that is to contact a builder and find out what is the average construction costs are for a typical size home you are considering purchasing. Find out what the contractor mark up is and then the cost of permits and architectural fees. Once you have that you can make a cost comparison on the “Cost Basis”
Sound complicated, that is what you pay a realtor for, not only to know the market; but how to evaluate the market. Just because the realtor spends money to advertise in the local papers and magazines does not mean they are cost or comparison analysts. They may be simply great sales persons!
Now on to what is causing the increase in commodity prices in a major recession. It’s all about the US$. A strong US$ created growth in the world economies. After WWII the US was the sole economy and country that was not devastated by the war. The strong currency was the US$. The world was building back and their currencies were weak. Weak currency means competitive prices on the world market for goods and services. Since WWII the US has subsidized the growth of all the world’s economies by having a strong dollar. It makes sense, does it not, to look at providing goods and services at a cheaper rate than the same goods and services provided in the US. Therefore, we saw large accumulation of dollars in a country like Japan. Japan has kept its currency weak and they accumulated US$ and provided competitive goods; sometimes at the expense of US companies. Now we have China, but in this case the US$ is weak. The currencies and countries of the world have grown up. It is now time for the US to get back its competitive edge; ergo, a weak dollar. China and many of the world economies have accumulated dollar holding is the form of US Treasury Bonds. These bonds are the countries’ reserves. Too many weak US$ coming in means they must diversify. They cannot sell the bonds they hold dominated in a weak currency of the US$ or the value of those bonds and their reserves would collapse. What decision do they make? How do they offset the loss in value due to a weak US$? The decision was made to accumulate commodities with the excess dollars and offset their reserves with Gold, Copper. These commodities when then be available for their economies. Remember this, China and the Asian Tigers are still controlled economies and subsidized by the State. Mao maybe dead and there is a Western Look to Beijing, but his creation is still there
To me this is a slam-dunk formula for high housing prices and a revival in the Real Estate market and the US economy. Excess reserves, higher construction costs and the off shore buyers come in to acquire homes in the safest government in the world; the foreign buyers did it in the last recession of 1974, they are doing it now.
This Monday I drove to San Francisco to deliver a packet for a listing we have in Portola Valley, 5070 Alpine Road, to an attorney representing a Hong Kong conglomerate of buyers. San Francisco was like a Sunday when I lived there. Parking in the Sutter parking center was readily available on the 4th floor when normally I would be required to go to 7 or 8. As I walked along Kearny and Sutter Streets, I notice parking spots available. What, parking spots available on a weekday in San Francisco? The stores along the way were snack shops and fast food stores. The clothing stores were not open or having big sales. When I returned I asked the girl at the shoeshine spot in the parking lot main floor why it was so slow. She said that it was always that way now. Stores are closing and the restaurants are losing business to the cheaper fast food outlet. That was not the case in Menlo Park and Palo Alto when I returned back from San Francisco. Like they say in Hawaii, “lucky you live Hawaii”, now it is lucky you live in the Peninsula!
From now on you will have charts and graphs to look at. The year-end is usually the best time for buyers to get “value”.
Click the link below for the charts:
Thursday, October 29, 2009
"Use Your Common Sense"
October 13, 2009 - SF Bay Area (Peninsula)
1)Commodity Prices Rise
2)International Economies Rebound
3)Dollar Still Weak
4)Where is the Growth Coming From
Australian is “Commodity Currency Country”. What that means is that Australia relies on commodities; such as grain, metal ore and the like to prosper. In fact; all Natural Resource Countries have had a rebound in their economies and their currency. The demand from China for raw resources has returned and the world economy has bounced back. So why has not the U.S. I think the major reason is we lost our competitiveness because we kept a strong US $. The strong $ allowed the developing nations a favorable spin against our businesses. You all know the fact about the person in Silicon Valley who was laid off and replaced with a worker in India or another developing nation, simply to save money for the parent corporation. A strong $US did that. With a weak dollar the situation will change. Sooner or later the developing country employee becomes more expensive than the domestic employee. Our goods become competitive to foreign competitor’s goods and the tide will swing and the balance of payments will become positive.
The next wave is the present wave, foreign investors and residents will look for a secure environment to raise their families and protect their newly accumulated wealth. Where else but the United States? They will use their strong currency to purchase weak currency US$ assets. Stocks are necessary a stable asset that can be bought on a discounted level, but at present real estate is a discounted US asset.
I recently attended a “Angel Venture Capital” investor forum for Keiretsu Forum in August and September. I was interested in the subject of the August Forum and the venture capital investment Keiretsu would introduce to their members. The August forum was in San Francisco and dealt with depressed real estate. It was STANDING ROOM ONLY! I am not talking about small investors. I am talking about institutional investors and investors with a minimum net worth of $5 million net of home. In fact, a venture capital investor will take 20 or more positions on the basis of not all working. With a minimum of $1 million per investment we are talking about investors with $20 million of speculative money to invest and that speculative money is roughly 5% of their net worth. What I am talking about are big time investors!
The September Forum had 5 investment 3 were real estate oriented and two were funds to purchase real estate.
This group of venture capital investors invests for a 5-year time frame. If they think real estate is the place to look, where should you be?
As the only hard asset that has not participated in the commodity boom; as gold, silver, oil and other natural resources, physiological forces not real forces have kept down real estate.
Let me explain that comment, what is asphalt’s major component? Oil is it not? What about copper prices? They have increased along with other metals. What are pipes and home wiring made of? What about the circuit boards in the electrical panels? The roofing is wood or a composite made from, oil. There is not one part of a home that is not a natural resource commodity. The trucks that bring equipment to the employees and the material; they are all natural resource driven. What country has the greatest source of natural resources? You got it, the United States. Would we purchase high priced foreign resources with low priced US $? Of course not is the logical answer.
Where do we go now? We touched upon natural resource value and the weak dollar; but who will drive our future growth?
Immigration is the answer. I have retired my designation as a certified financial analyst and investment advisor, but I still keep up to date with many of the publications. Martin Barnes wrote one of the publications that I kept in my files in 2004. It is titled “Global Demographics: An Economic and Geopolitical Time Bomb. WOW! I will attach it here or a link to it for those of you who wish to read the article in full.
http://isvr.net/usr/1024408819/CustomPages/Gobal_Time_Bomb.pdf
The basis is this, the baby boom generations of the post WW II years are retiring and moving out of the work force and are no longer the age of Conspicuous Consumption. That goes for the US, Britain, France, Germany, Japan, Russia, Australia and Italy. Only the US will have a positive growth in population. In fact, the US growth projected for 2000-50 will be # 1 at +123.7%. Where elsewhere will there be growth: Yemen +66.4%, Afghanistan +48.1%, Iran +39.1%, Iraq +34.7%, and Saudi Arabia +32.6%.
If the US is losing the greatest generation, the Baby Boomers, where will growth come from? Immigration. The projected fertility rate is 2.05 for 1995-2000 in the US; in Mexico it was 2.75, India 3.45, Egypt 3.51, Saudi Arabia 5.09, Pakistan 5.48, Nigeria 5.92 and Yemen at 7.30.
Based upon those statistics will real estate prices remain at their present levels? I must say that my father told me as a very young boy, 8 or 9, to use your common sense when I made a mistake. When we will all do the same? Sooner or later the inventory of homes will decline, sooner or later the news commentaries will talk about the escalating cost of home construction, repair and remodeling and sooner or later home values will increase. Sooner or later a solid form of lending will occur and a change from the old system will be accepted. When that all occurs home prices will increase. How far away is that? I use the venture capitalist time fame, 5 years or more. 10 years from today people will brag about buying in Woodside, Atherton, Menlo Park, Portola Valley and Palo Alto at the depressed levels of the Great Recession of 2009. Will you be one of them?
I added a new column to the statistical page below, it is “expired, cancelled and withdrawn” homes. I decided to add this page since I sent out letters to this group every 14 days. The average number is usually about 39 or more. We have dropped sharply. What does that mean? My guess is that sellers are staying pat with their listings. The seller has realized that it may talk longer to sell a home, but it will sell at or near their listing price. Sooner or later the buyer realizes that the price will not decline any further and they will make their offer.
October 13, 2009
City
Active
Pending
Pending 2
Sold
Exp/Cxl/WD
Atherton
43
5
8
0
1
Menlo Park
75
19
10
10
10
Portola Valley
28
4
4
3
3
Woodside
53
9
3
0
1
Palo Alto
103
22
33
12
9
September 24, 2009
Inventory
Pending
Pending contingencies removed
Sold
Menlo Park
85
14
12
16
Portola Valley
28
2
8
4
Woodside
54
5
1
4
Atherton
39
5
6
11
Palo Alto
114
22
28
36
September 2, 2009
City
Inventory
Pending
Pending contingencies removed
Sold
Menlo Park
72
12
11
17
Portola Valley
27
2
6
5
Woodside
52
2
1
5
Atherton
40
5
6
6
Palo Alto
93
21
28
28
July 28th report as a comparison
Cities
Active
Pending
Pending Do Not Show
Sold
Menlo Park
90
10
13
58
Portola Valley
33
5
1
6
Woodside
57
2
5
3
Atherton
37
3
10
7
Palo Alto
117
13
25
27
1)Commodity Prices Rise
2)International Economies Rebound
3)Dollar Still Weak
4)Where is the Growth Coming From
Australian is “Commodity Currency Country”. What that means is that Australia relies on commodities; such as grain, metal ore and the like to prosper. In fact; all Natural Resource Countries have had a rebound in their economies and their currency. The demand from China for raw resources has returned and the world economy has bounced back. So why has not the U.S. I think the major reason is we lost our competitiveness because we kept a strong US $. The strong $ allowed the developing nations a favorable spin against our businesses. You all know the fact about the person in Silicon Valley who was laid off and replaced with a worker in India or another developing nation, simply to save money for the parent corporation. A strong $US did that. With a weak dollar the situation will change. Sooner or later the developing country employee becomes more expensive than the domestic employee. Our goods become competitive to foreign competitor’s goods and the tide will swing and the balance of payments will become positive.
The next wave is the present wave, foreign investors and residents will look for a secure environment to raise their families and protect their newly accumulated wealth. Where else but the United States? They will use their strong currency to purchase weak currency US$ assets. Stocks are necessary a stable asset that can be bought on a discounted level, but at present real estate is a discounted US asset.
I recently attended a “Angel Venture Capital” investor forum for Keiretsu Forum in August and September. I was interested in the subject of the August Forum and the venture capital investment Keiretsu would introduce to their members. The August forum was in San Francisco and dealt with depressed real estate. It was STANDING ROOM ONLY! I am not talking about small investors. I am talking about institutional investors and investors with a minimum net worth of $5 million net of home. In fact, a venture capital investor will take 20 or more positions on the basis of not all working. With a minimum of $1 million per investment we are talking about investors with $20 million of speculative money to invest and that speculative money is roughly 5% of their net worth. What I am talking about are big time investors!
The September Forum had 5 investment 3 were real estate oriented and two were funds to purchase real estate.
This group of venture capital investors invests for a 5-year time frame. If they think real estate is the place to look, where should you be?
As the only hard asset that has not participated in the commodity boom; as gold, silver, oil and other natural resources, physiological forces not real forces have kept down real estate.
Let me explain that comment, what is asphalt’s major component? Oil is it not? What about copper prices? They have increased along with other metals. What are pipes and home wiring made of? What about the circuit boards in the electrical panels? The roofing is wood or a composite made from, oil. There is not one part of a home that is not a natural resource commodity. The trucks that bring equipment to the employees and the material; they are all natural resource driven. What country has the greatest source of natural resources? You got it, the United States. Would we purchase high priced foreign resources with low priced US $? Of course not is the logical answer.
Where do we go now? We touched upon natural resource value and the weak dollar; but who will drive our future growth?
Immigration is the answer. I have retired my designation as a certified financial analyst and investment advisor, but I still keep up to date with many of the publications. Martin Barnes wrote one of the publications that I kept in my files in 2004. It is titled “Global Demographics: An Economic and Geopolitical Time Bomb. WOW! I will attach it here or a link to it for those of you who wish to read the article in full.
http://isvr.net/usr/1024408819/CustomPages/Gobal_Time_Bomb.pdf
The basis is this, the baby boom generations of the post WW II years are retiring and moving out of the work force and are no longer the age of Conspicuous Consumption. That goes for the US, Britain, France, Germany, Japan, Russia, Australia and Italy. Only the US will have a positive growth in population. In fact, the US growth projected for 2000-50 will be # 1 at +123.7%. Where elsewhere will there be growth: Yemen +66.4%, Afghanistan +48.1%, Iran +39.1%, Iraq +34.7%, and Saudi Arabia +32.6%.
If the US is losing the greatest generation, the Baby Boomers, where will growth come from? Immigration. The projected fertility rate is 2.05 for 1995-2000 in the US; in Mexico it was 2.75, India 3.45, Egypt 3.51, Saudi Arabia 5.09, Pakistan 5.48, Nigeria 5.92 and Yemen at 7.30.
Based upon those statistics will real estate prices remain at their present levels? I must say that my father told me as a very young boy, 8 or 9, to use your common sense when I made a mistake. When we will all do the same? Sooner or later the inventory of homes will decline, sooner or later the news commentaries will talk about the escalating cost of home construction, repair and remodeling and sooner or later home values will increase. Sooner or later a solid form of lending will occur and a change from the old system will be accepted. When that all occurs home prices will increase. How far away is that? I use the venture capitalist time fame, 5 years or more. 10 years from today people will brag about buying in Woodside, Atherton, Menlo Park, Portola Valley and Palo Alto at the depressed levels of the Great Recession of 2009. Will you be one of them?
I added a new column to the statistical page below, it is “expired, cancelled and withdrawn” homes. I decided to add this page since I sent out letters to this group every 14 days. The average number is usually about 39 or more. We have dropped sharply. What does that mean? My guess is that sellers are staying pat with their listings. The seller has realized that it may talk longer to sell a home, but it will sell at or near their listing price. Sooner or later the buyer realizes that the price will not decline any further and they will make their offer.
October 13, 2009
City
Active
Pending
Pending 2
Sold
Exp/Cxl/WD
Atherton
43
5
8
0
1
Menlo Park
75
19
10
10
10
Portola Valley
28
4
4
3
3
Woodside
53
9
3
0
1
Palo Alto
103
22
33
12
9
September 24, 2009
Inventory
Pending
Pending contingencies removed
Sold
Menlo Park
85
14
12
16
Portola Valley
28
2
8
4
Woodside
54
5
1
4
Atherton
39
5
6
11
Palo Alto
114
22
28
36
September 2, 2009
City
Inventory
Pending
Pending contingencies removed
Sold
Menlo Park
72
12
11
17
Portola Valley
27
2
6
5
Woodside
52
2
1
5
Atherton
40
5
6
6
Palo Alto
93
21
28
28
July 28th report as a comparison
Cities
Active
Pending
Pending Do Not Show
Sold
Menlo Park
90
10
13
58
Portola Valley
33
5
1
6
Woodside
57
2
5
3
Atherton
37
3
10
7
Palo Alto
117
13
25
27
Has The Real Estate Market Bottomed?? Part 2
SEPTEMBER 24, 2009
· Real Average hourly earnings up 4.5% over the year
· CPI, Consumer Price Index up .4% in August, unchanged July, less food and energy up .1%.
· CPI for SF, Oakland and San Jose +. 2% 12 months ended August 2009 and 0.0% for past 2 months.
· Housing prices were forth art do thee go?
· Interest rates in the crystal ball
· Local market performance
By the look of the economic reports we are still looking for the end of the tunnel. I still go by my forecast that it will take us 10 years plus before we surpass the highs of 2007-8. Inflation is lacking; irrespective of what the investment gurus tell you about Gold, precious metal, commodities and the inflationary impact of the bond-selling binge of the
US Government. The key item here is to remember that the US wants inflation. The US want risk to come back into the investor mentality. We have inflation and we have risk again and we will have low unemployment and a growing economy with increased tax receipts and healthy banks and consumers. We do not have that now, that is why the US is feeding the economy with $$$$$.
I know we hear about gold and commodities, but did anyone notice the Real Estate indexes all had dramatic move upward in the stock market? For investors real estate was just as popular as precious metals and gold.
The stock market is up over 50% for the year. Is that not confidence in the future. At least in my experience and training the stock market is the forecaster of the future. Things will be better in the future says the stock market.
It is too soon for our economy to be moving in its old fashion. The old economy was built upon poor foundations of synthetic securities and over seen by blind watch dogs. We need the consumer protection agency in force, a new-invigorated SEC and FTC. Too big to fail means just simply TOO BIG, and they should be dismantled for the betterment of our society. Risk need to return and that can be seen by a yield curve that returns back to normal with a normal range between government, corporate debt. Investors need to be buying mortgage-backed securities, not the Federal Reserve System. This will all take time. Housing prices will stabilize, move up in some areas and stop declining in others. Foreclosures will end, and a new mortgage environment will emerge from the ashes of the old.
Where will interest rates go in the future? I say they remain flat for the near term into the first quarter of 2010. The FED has agreed to expand and continue its mortgage purchase program. This will keep rates down, increase affordability of homes and diminish the inventory of homes. Mortgages will be changed and banks will no longer be sellers of real estate. It will take time. Don’t expect the turn around to be noticeable. It will slowly occur in areas that will slip by you.
Sort of like grass growing, you don’t see the blade rising, but one day you look at the grass and say to yourself, “it needs to be cut”. That is how the real estate market will treat you.
To me the indications are in the high-end market. Buyers of Atherton and Woodside do not need mortgages because they are all cash buyers. When I created the report below, I looked at the homes that sold and the homes that are pending in Atherton and Woodside. The prices were from $3 up to $12 million and a few were not quoted in the sales price but listed ion the $6 million range. The homes had been on the market beyond 6 months and some over a year. Was there price sensitivity, yes some; but not a knock down and drag out kicking and screaming to the Title and Escrow Company.
On the other hand, the areas or towns that grew in the past boom like Menlo Park and Palo Alto are not the darlings of the past, they are seeing the inventories increase, but no matching increase in pending and sold properties. None of the high end home dominates the sold and pending list.
It is a time for value hunting, a time to buy rather than build new, a time for re-modeling, a time for paying down debt and saving and a time for buying real estate as an investment NOT A SPECULATION!
Gold, precious metals and commodities do not shelter you from the cold, rain and wind. They cost money to carry. They do not give you the satisfaction of hosting friends and family for the holiday. They do not store you precious belongings and remembrances that give you comfort during times of loss, sickness and death.
It is time we all get back to basics and realize that real estate is a home not a savings account to draw upon for fun and excitement.
For the buyers out there, get in touch before the end of the year. I see many places of opportunistic buying. For the sellers, don’t rely upon the past for your sales price. Remember you can’t work and play as you did ten years ago and you can’t expect the prices of a year or two ago to be good this year.
Rental properties should be considered for those of you who do not want to take on the risk of the stock market. Values are returning and the rents to debt coverage ratios are now coming back to a point there is positive carry in California Real Estate.
To the sellers, remember if you are down sizing or moving to another area, you are getting the same deal you are giving. We called it “Same Day Substitution” in my stock market days.
Don’t let your ego; greed and fear dictate your actions. Evaluate and ask questions, like busses and elevators; there is always another one coming along.
· Real Average hourly earnings up 4.5% over the year
· CPI, Consumer Price Index up .4% in August, unchanged July, less food and energy up .1%.
· CPI for SF, Oakland and San Jose +. 2% 12 months ended August 2009 and 0.0% for past 2 months.
· Housing prices were forth art do thee go?
· Interest rates in the crystal ball
· Local market performance
By the look of the economic reports we are still looking for the end of the tunnel. I still go by my forecast that it will take us 10 years plus before we surpass the highs of 2007-8. Inflation is lacking; irrespective of what the investment gurus tell you about Gold, precious metal, commodities and the inflationary impact of the bond-selling binge of the
US Government. The key item here is to remember that the US wants inflation. The US want risk to come back into the investor mentality. We have inflation and we have risk again and we will have low unemployment and a growing economy with increased tax receipts and healthy banks and consumers. We do not have that now, that is why the US is feeding the economy with $$$$$.
I know we hear about gold and commodities, but did anyone notice the Real Estate indexes all had dramatic move upward in the stock market? For investors real estate was just as popular as precious metals and gold.
The stock market is up over 50% for the year. Is that not confidence in the future. At least in my experience and training the stock market is the forecaster of the future. Things will be better in the future says the stock market.
It is too soon for our economy to be moving in its old fashion. The old economy was built upon poor foundations of synthetic securities and over seen by blind watch dogs. We need the consumer protection agency in force, a new-invigorated SEC and FTC. Too big to fail means just simply TOO BIG, and they should be dismantled for the betterment of our society. Risk need to return and that can be seen by a yield curve that returns back to normal with a normal range between government, corporate debt. Investors need to be buying mortgage-backed securities, not the Federal Reserve System. This will all take time. Housing prices will stabilize, move up in some areas and stop declining in others. Foreclosures will end, and a new mortgage environment will emerge from the ashes of the old.
Where will interest rates go in the future? I say they remain flat for the near term into the first quarter of 2010. The FED has agreed to expand and continue its mortgage purchase program. This will keep rates down, increase affordability of homes and diminish the inventory of homes. Mortgages will be changed and banks will no longer be sellers of real estate. It will take time. Don’t expect the turn around to be noticeable. It will slowly occur in areas that will slip by you.
Sort of like grass growing, you don’t see the blade rising, but one day you look at the grass and say to yourself, “it needs to be cut”. That is how the real estate market will treat you.
To me the indications are in the high-end market. Buyers of Atherton and Woodside do not need mortgages because they are all cash buyers. When I created the report below, I looked at the homes that sold and the homes that are pending in Atherton and Woodside. The prices were from $3 up to $12 million and a few were not quoted in the sales price but listed ion the $6 million range. The homes had been on the market beyond 6 months and some over a year. Was there price sensitivity, yes some; but not a knock down and drag out kicking and screaming to the Title and Escrow Company.
On the other hand, the areas or towns that grew in the past boom like Menlo Park and Palo Alto are not the darlings of the past, they are seeing the inventories increase, but no matching increase in pending and sold properties. None of the high end home dominates the sold and pending list.
It is a time for value hunting, a time to buy rather than build new, a time for re-modeling, a time for paying down debt and saving and a time for buying real estate as an investment NOT A SPECULATION!
Gold, precious metals and commodities do not shelter you from the cold, rain and wind. They cost money to carry. They do not give you the satisfaction of hosting friends and family for the holiday. They do not store you precious belongings and remembrances that give you comfort during times of loss, sickness and death.
It is time we all get back to basics and realize that real estate is a home not a savings account to draw upon for fun and excitement.
For the buyers out there, get in touch before the end of the year. I see many places of opportunistic buying. For the sellers, don’t rely upon the past for your sales price. Remember you can’t work and play as you did ten years ago and you can’t expect the prices of a year or two ago to be good this year.
Rental properties should be considered for those of you who do not want to take on the risk of the stock market. Values are returning and the rents to debt coverage ratios are now coming back to a point there is positive carry in California Real Estate.
To the sellers, remember if you are down sizing or moving to another area, you are getting the same deal you are giving. We called it “Same Day Substitution” in my stock market days.
Don’t let your ego; greed and fear dictate your actions. Evaluate and ask questions, like busses and elevators; there is always another one coming along.
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