Jun 09

Volume 4, Issue 2 June 1, 2009

Nicholas French, Broker Associate, CRS

Quarterly Review Hot Summer Nights

Nicholas French Broker Associate, CRS

With summer just around the corner it is time to consider the activities, camps and events that will fill the days and weekends. I’m sure these months will include summer camps for the kids, sport activities and possibly some weekend trips to Disneyland, the Zoo, and the beach. Do you take advantage of the fantastic events in the community?

369 S. San Antonio Road Los Altos, CA 94022 650 773 8000 (cell) 650 247 2999 (office) 650 947 3099 (fax) [email protected] www.realtornickfrench.com

There is an event for almost every individual and family: from the Los Altos outdoor movie nights, to the Santana Row Flavors of Jazz and Saratoga Shakespeare in the Park. You can fill practically every summer evening with a free outdoor community event; just bring your lawn chair, some picnic snacks and a light jacket – and of course bring your good conversation and smiles. There are even some weekend concerts and festivals such as the Los Gatos Concert Series on Sunday afternoon. I can usually be found at Music in the Park, Los Altos Movie Night and Shakespeare in the Park and I highly suggest all of them! It’s is a great way to get out and meet your neighbors, enjoy some good entertainment and take advantage of our amazing summer weather.

Inside this issue:

I thought it would be helpful to compile a list of these activities, so I have put links to many of the communities on my website for your convenience. If you click the “Community Information” from www.realtornickfrench.com, you will see the button for “Community Events”. Below are some of the highlighted events:

Hot Summer Nights

1

Property Notes— Dashboard

2

Real Estate Corner

2

Cupertino, Memorial Park

How About Now?

2

Los Altos, Main Street

Location

Event

Campbell, Downtown

Summer Concerts Summer Concert Series Friday Night Movie Nights

Los Gatos, Downtown How About Now? (cont) 3 Client Testimonial— Bansal Family

3

Updated Neighborhood Statistics

4

Share The Newsletter

4

Music in the Park Summer Concert Menlo Park, Fremont Park Series Mountain View, Cuesta Summer Concert Park, Dwntn, Civic Plaza Series Twilight Concert Palo Alto, Various Parks Series San Jose Dwntwn, Cesar Chavez Plaza Music in the Park Santana Row Saratoga, Sanborn Park Sunnyvale, Dwntwn Murphy Ave Willow Glen, Downtown

Day

Time

Dates

Thursday

6:30-8pm

June 18 - Aug 20

Thursday

6:30-8pm

June 4 - July 9

Friday

8:30pm

Aug 7 - Aug 28

Sunday

5-7pm

June 21 - Aug 30

Wednesday 6:30-7:30pm June 24 - Aug 12 Thursday

6:30-8pm

July 9 - Aug 20

Tuesday

6:30-8pm

June 16 - Aug 4

Thursday

5:30-9:15pm

Jun 4 - Aug 27

Flavors of Jazz Tuesday 6:30-7:30pm Jun 23 - Aug 4 Shady Shakespeare Fri-Sun 7pm Aug 7 - Sep 13 Summer Music Series Wednesday 5-8pm June 10 - Aug 26 Dancin on the Avenue Saturday 5-10pm June 14

Quarterly Review Page 2

Property Notes/ Dashboard I’m using a new property dashboard that empowers users to track and make notes on specific properties across the multitude of websites such as: mlslistings, ziprealty, redfin, zillow & trulia It connects users and agents for better communication:

www.myfonz.com

Real Estate Corner Do you have a real estate question and can’t seem to get a straight answer? Try out the new real estate corner of my newsletter :) You can either email me or respond to one of my BLOG articles and ask your question

How About Now? This is probably the most common question I hear regarding real estate: Should I buy or sell now? I’m glad you ask, is my common response. I begin to give an overview of the past several quarters from the low end market to high end and everything in between; addressing the financial market concerns, consumer sentiment, and the like, not to mention discussing the historical market cycles. From an analytical perspective it is easy: the lower end areas (East, North, Central, South San Jose, Gilroy, East Bay, Daly City, etc) are down approximately 40-60% from the ridiculous peak numbers – I addressed these markets a few quarters ago and mentioned that they were about to see a run on sales. The high end markets, for that matter, just started realizing their market change, or should I say the sellers realized the change. By mid 2008 the higher end locations were experiencing the market change, but many did not accept it either by holding onto their list prices, pulling off of the market and wait until the following spring where “the market is always better” or just became frustrated that their house was not selling. I was advising clients at the time to be patient with the market because signs were showing the market slowing, albeit no one knew how much, but the feeling of invincibility was soon to have a rude awakening. I recall one example very clearly in May of 2008 – a client was interested in a property that worked well for the family. After thorough review of the property and the current climate I advised the client to go in at a certain price feeling that was the market value based on a number of variables. There ended up being only two offers and the delta between them was about $275,000 on a two million dollar home. Another buyer paid over 10% more for the home than my client. We discussed how this is a good example to support our discussions of the market slowing and my client trusted that I would watch the market carefully and find a great property and price. Fast forward one year and my clients have now purchased a superior property for the same price as their previous offer. It is also only fair to mention the slowdown had a shot of adrenaline with the financial meltdown in October 08 – buyers who had their down payment in stocks watched it vanish, the financial market froze for jumbo loans and fear was paramount. I was listening to doomsday theories and basic anarchy fear throughout. The last issue in many minds was whether to buy a house. The market was slowing prior to the financial collapse, but this changed the market overnight and no longer could a seller really hold onto their wishful price. Many fears still remain from the meltdown especially whether or not we are through the eye of the storm given the ridiculous amounts of money given to corporations on the taxpayer’s backs. The print presses are working double-time to print all of the money pumped into the economy. Apparently this is when all of the lobbying money pays off and those individuals are first in line for the political favors. Now we are going through our days trying to make the best decisions with the information available; making educated assumptions, taking calculated risks, and hoping for the best. Most people that have lived in the area through multiple real estate cycles agree this is the worst given the scope and depth – basically every area and every price is dramatically affected, but don’t forget that during the dot com bust some homes in Saratoga, Woodside and Portola Valley, for example, experienced 50% drops (given this wasn’t on every property nor did we reach those extremes even in this last run-up of prices), or during the early 90’s and 80’s we had other market corrections. The lesson learned and to pass to our children is that markets are cyclical and there is no immunity. Once we get through this correction there will be another run up and at some point another correction. Thus far in 2009 you are seeing investors and first time buyers out picking up bargain properties (lower end markets) in mass numbers. They see value either as rental properties that are cheaper to purchase than to rent, or are taking advantage of first time buyer credit and amazingly low interest rates (and believe it or not after all the issues with subprime loans and no money down the government still has a low down payment program available – I guess they don’t learn). Homes that were selling for $600,000 are now listed at $300,000, selling with twenty or more offers and closing around $350-375,000. Now don’t think the market is on fire and prices are jumping up – that’s not the case. There is a huge increase in the number of transactions with many offers, but if you do the research and look at the values they are still

Volume 4, Issue 2 Page 3

How About Now? (cont) selling 40% under the last sale (of course this varies on home and neighborhood). A quick rule of thumb – the neighborhoods that have dropped the most are generally areas where not only would you not live but you probably wouldn’t want to leave your car overnight. With regards to the recent run-up in transactions I think this may be a first wave hype to people realizing this opportunity to buy good properties. I am hearing from colleagues that solely work with banks that there is a large volume of properties that should be coming to market not to mention newer legislation which restricted banks from foreclosing for a given period. During the end of 2008 and beginning of 2009 there was a window where people still didn’t like property, even though the prices made sense, so it gave my clients an opportunity to get some good properties and prices. Since about March the market activity at the lower end picked up dramatically and since then has been difficult to get those deals. In late February I was working on a property in a neighborhood with three good properties that hadn’t been selling in the $400,000 range. We were very close to ratifying then in early March the market jumped – multiple offers came in within days and we were outbid by 10%. The home had previously sold for almost $600,000 and was a great location, so it was still approximately a 30% drop from the last sale. The higher end markets are currently at a 15-20% drop from the peak prices. I pulled this data from looking at homes that resold from 2007-2009. Whether in Menlo, Palo Alto, Los Altos, Saratoga, etc I am seeing a fairly consistent drop across these desirable areas. Unlike the lower end markets where I think there are clearly values whether for investors as rentals or a first time buyer and what appears to be a market in the bottom period of the cycle (may not be the exact bottom, but the range), the higher end has only recently seen the drop and the uncertainty is much greater, similar to the lower-priced areas in 2008. We can only hypothesize where these markets will go, and of course want to consider all variables: financing, house values, employment, etc. The question is at what point (whether a buyer or seller) does it make sense to buy or sell. As a buyer I suggest considering how many homes are on the market and evaluate what are your goals – if you are looking for the best property to live and enjoy I can tell you those houses don’t generally make it to the bottom of the market – there are a limited supply of good properties and though you can get a deal, you will unlikely get the bottom basement price. To support this statement take a look at all of the property currently on the market (there is plenty). You will see that most of these properties do not fit your needs for one reason or another: floor plan is odd, dark house, noisy, bad lot, poor location, etc. Even with the huge inventory you will not find too many properties to call home – this is why I am suggesting clients evaluate their family position and goals before making a decision. If you are looking for a prime property is a 20% discount from the peak enough for you to make the move? Don’t forget the financial market and loan rates – in the last three weeks I have seen the interest rate on a 30 year loan increase almost one percent. I’m not suggesting it will stay at that point right now, but it is important to evaluate the cost of borrowing money as an intricate piece of purchasing. Concerned with inflation? That’s another fear of mine personally and may be another motivating factor to get a good interest rate and loan. The current spread on loans is quite high—banks are making three times as much on lending (not the mortgage broker but the actual bank). As the economy improves and/or inflationary concerns start developing banks will likely see this spread go back to more reasonable levels then we may see rates increase; just another variable to watch and be mindful of. The sentiment varies depending on location: are you looking for a family home, rental property, or something to flip (I don’t suggest flipping property right now). In our areas the market is down to a level where now the big question is when will perception change—there are enough buyers ready to buy where if a good property is priced well and fits the needs it will sell. It will take several months to get through the inventory (remember most homes have some kind of issue) and to a normal level – I think we are still quite far from that point, I only suggest if you are looking for a particular property that fits your needs you should consider looking for homes now at the current discount because even in the current market there are few good properties to chose. The next few quarters should show fairly poor numbers compared to the previous year, but remember that those numbers were not considering what was on the market last year and not selling, just the actual sales. I will be more interested to see the numbers of March 09 vs. March 10.

Client Testimonial: Bansal Family It was a great pleasure to have Nick as part of our journey to find our perfect home. He guided us through the searches providing both pros and cons of each particular area and house. He quelled our doubts to the fullest and understood our needs and demands. He worked well with all our whims and fancies and took us to our destination smoothly without any hurry, just the way we wanted it.

Page 4

Please Send This Newsletter to Your Family and Friends If you know someone who would like to receive this newsletter I would like to send it to them. Please either have them contact me or provide me their information and I will make contact. My goal is to have this newsletter add value and be an information source for my clients, family and friends. Please do not hesitate to contact me if I can help you with any real estate questions, strategies or if you are seeking higher quality representation.

Updated Neighborhood Statistics % of List Price

Median Price

Average Price

DOM

32

96.94

610,000

641,598

75

43

96.55

725,000

770,930

87

Q3

56

97.45

775,000

785,344

58

2008

Q1

45

97.73

795,000

844,240

81

2009

Q1

30

96.24

1,039,000

1,109,909

63

Cupertino

2008

Q4

33

96.42

1,035,000

1,125,732

68

Cupertino

2008

Q3

95

98.47

1,180,000

1,221,998

41

Cupertino

2008

Q1

52

100.34

1,185,000

1,271,490

45

Los Altos

2009

Q1

27

93.56

1,410,000

1,606,805

67

Los Altos

2008

Q4

38

97.85

1,605,000

1,758,841

42

Los Altos

2008

Q3

68

99.04

1,950,000

2,017,432

48

Los Altos

2008

Q1

46

100.11

1,892,500

2,020,065

31

Los Altos Hills

2009

Q1

5

94.39

3,400,000

4,325,000

111

Los Altos Hills

2008

Q4

6

93.81

1,762,500

1,769,166

53

Los Altos Hills

2008

Q3

18

94.23

2,425,000

2,743,647

78

City

Year

Qtr No. of Closed Sales

Campbell

2009

Q1

Campbell

2008

Q4

Campbell

2008

Campbell Cupertino

Los Altos Hills

2008

Q1

11

95.90

2,900,000

2,924,909

112

Los Gatos

2009

Q1

35

94.39

1,210,000

1,394,234

102

Los Gatos

2008

Q4

39

93.55

1,200,000

1,617,761

69

Los Gatos

2008

Q3

76

95.71

1,265,000

1,577,520

74

Los Gatos

2008

Q1

51

97.83

1,595,000

1,651,725

82

Menlo Park

2009

Q1

50

96.77

915,000

932,095

72

Menlo Park

2008

Q4

59

97.46

1,010,000

1,155,194

49

Menlo Park

2008

Q3

77

98.88

1,340,000

1,385,125

53

Menlo Park

2008

Q1

55

99.67

1,535,000

1,787,681

48

Monte Sereno

2009

Q1

3

95.83

1,322,500

1,322,500

188

Monte Sereno

2008

Q4

5

86.58

1,850,000

2,479,000

75

Monte Sereno

2008

Q3

8

96.75

2,505,000

2,768,000

74

Monte Sereno

2008

Q1

7

97.06

1,820,000

2,039,285

141

Palo Alto

2009

Q1

50

97.17

1,287,500

1,451,818

56

Palo Alto

2008

Q4

67

98.89

1,350,000

1,473,550

37

Palo Alto

2008

Q3

99

101.10

1,700,000

1,793,510

32

Palo Alto

2008

Q1

65

100.13

1,617,500

1,977,301

20

Saratoga

2009

Q1

21

89.58

1,200,000

1,412,446

103

Saratoga

2008

Q4

30

94.77

1,600,000

1,714,317

75

Saratoga

2008

Q3

72

96.41

1,676,500

1,938,044

57

Saratoga

2008

Q1

61

98.43

1,565,000

1,674,203

67

Sunnyvale

2009

Q1

85

97.08

533,000

625,307

77

Sunnyvale

2008

Q4

90

98.31

656,500

712,863

47

Sunnyvale

2008

Q3

175

99.43

875,000

835,940

47

Sunnyvale

2008

Q1

94

100.36

893,133

893,744

52