Everyone knows the economy is on the rebound. The Silicon Valley real estate market has, once again, reaped the benefits in 2013 as it did in 2000 and 2007. Those three years mark the most red-hot real estate markets over the last 20 years. Q4 2013 for Los Altos real estate, and especially North Los Altos, was no different! During 2013, I often likened our real estate market in Los Altos to the “Wild West” as not a great deal made sense in terms of buyer and seller behaviors, recent comparable sales (were all over the board) and sometimes even agents were acting as though they wore gun holsters.
Los Altos as a whole saw some interesting real estate market trends in 2013. Available housing inventory has been low for the last few years, but especially during 2013. You are probably most familiar with 2013’s low inventory as it was blasted across nearly every real estate headline. Despite what the media reported, the lack of inventory in our valley in desirable cities, like Los Altos and popular neighborhoods such as North Los Altos, has been trending higher and higher for the last few years. At the end of Q4 2013, available homes in Los Altos were at:
49.1% of Q4 2012 (inventory down by 50.9% from previous year)
55.8% of Q4 2011 (inventory down by 44.2% from previous year)
56.2% of Q4 2010 (inventory down by 43.8% from previous year)
Inventory continued spiraling downward while the average Days on Market for the city was slashed from 54 days to 24 days over the same time periods. That means that homes are selling far more quickly than they have in the past, and in North Los Altos, Sellers received an average of 110% of their list price. Another factoid is that the median sales price in North Los Altos for 2012 was $2,027,804 and jump by 11.4% to $2,289,767 in 2013. Due to job growth and another year of historically low interest rates, our market’s Buyers did not go away and were willing and able to pay the high price for a home. Our Sellers, however, thinned out…
STRATEGIES IN 2013
A few of our Buyers in Los Altos actually went through a dual loan process throughout the entire transaction—all the way up to loan documents being delivered to escrow. Why, you may ask? In a highly competitive market when it’s not uncommon for a buyer to go up against other buyers paying with all-cash who have little or no contingencies, some of our buyers wanted to make sure their lender could perform. Since they ran dual loan processes, they felt they had a better safety net to close their transactions on time and not lose the house they worked really hard to find. Since many buyers need financing, they also found that “sweetening the pot” a bit more in a multiple offer situation helped them to win their home in North Los Altos this past year.
CONSIDERATIONS FOR 2014
I don’t want to discourage our Buyers out there as there is hope: Interest rates are still low for the time being, and we in the real estate industry have been marketing to Sellers for two years regarding the shortage of inventory. Hopefully they’ll begin to hear the message.
For future Sellers who are thinking of making a move in the next five years, I DO want to nudge you to seriously consider accelerating your plans. In 2013, there were a few instances where we wrote offers on the same home more than once because the Sellers were not in tune with what their home offered and what the market would really be willing to bear. The second time around was a winner a few times in 2013!
It definitely was in 2013 and still is a Sellers’s Market in North Los Altos—for now. The question is how long will it last? Even the Wild West era didn’t last forever as stabilization had to eventually occur. Our real estate market will stabilize. It cannot keep this pace.
I get it—we all want the most money for our homes. When we, however, are winning the second time around in writing an offer on the SAME house in today’s Silicon Valley real estate market, it is a sure indication that even Sellers are not certain this market will continue much longer. What does this mean for Sellers in 2014? GET YOUR HOME SOLD NOW!
The first one out of this market wins!