June 2007 Quarterly Newsletter

Volume 2, Issue 2

Nicholas French, Broker Associate, CRS

June 1, 2007

Quarterly Review Palo Alto At a Glance... Inside this issue: Palo Alto At A Glance

1

Email Comic

1

The Real Estate Market Balancing Act

2

Client Testimonial -

2

Yi Zhang and Lisa Wu The Real Estate Market Balancing Act (cont)

3

Real Estate Leadership

3

Current Neighborhood Statistics

4

Nicholas French Broker Associate, CRS 4906 El Camino Real #2 Los Altos, CA 94022 650 773 8000 (cell) 650 961 2338 (office) 650 961 5238 (fax)

Palo Alto is an example of a quintessential community. If you have not experienced the abundant resources in Palo Alto either as a resident or a visitor you are missing out. From the many parks and libraries to services such as shuttle service around town. I decided it would be valuable for you to discuss some of these community resources. 1) Open Space Preserves - A hidden treasure in Palo Alto is the great hiking and natural preserves in town. On a beautiful Saturday instead of taking the drive to Big Basin or Skyline you can easily stay within the area and explore some of the beautiful settings such as rolling hills, bay views and wildlife. There are multiple preserves such as The Baylands, where you can do some bird watching, or Foothills Park for the more rugged terrain. You can also explore the open space through the city’s nature program such as night hiking, birding or stargazing. Palo Alto maintains a large amount of undeveloped land, which is a great benefit to the community and can be enjoyed in infinite ways. 2) Palo Alto Shuttle - What a great value offering free shuttle service around town during the week. The three shuttle routes cover the major parts of the city including the Crosstown Shuttle running from downtown to East Charleston Road, or Embarcadero Shuttle coordinating with the Caltrain schedule running from the Baylands area to the Embarcadero corridor. The third shuttle is a cooperative with Stanford University offering midday service around the university such as Palo Alto Medical Foundation, Town and Country Center and Stanford Medical Center. 3) Children Recreation - Palo Alto is also children-friendly. Children can use their creativity at the Junior Museum and Zoo, utilize the Recreation Center activities or just enjoy the neighborhood parks around the city.

Quarterly Review Page 2

The Real Estate Market Balancing Act Identity Protection Strategies Here are some tips to increase your identity protection: 1) Register for the “Do Not Call List” www.donotcall. gov 2) Take yourself off of preapproved credit card mailings— 888-567-8688 3) Take yourself off of carrier sort mail www.dmaconsu mers.org 4) Purchase a shredder; shred documents with your identity information

The real estate market is slowing! The real estate market is on fire! Two opposing statements and yet they are both heard by consumers when discussing the same market. What is a buyer or seller to think? I would like to share with you my analysis of the current market, the previous few quarters and where I see the market through 2007. We are in a time of uncertainty in the real estate market. Some parts of the country are experiencing significant declines in values, high foreclosure and bankruptcy rates and a real estate market that people are afraid to touch. On the other hand there are parts of the country experiencing strong market conditions with year over year appreciation and strong consumer confidence. It is understandable that this causes some uncertainty for those considering whether to hold their position and watch the market or to take the plunge. There is no single answer to this question. There are several key variables when considering buying or selling property that are specific to a families needs and financial strategy. The goal of this article is to provide you valuable information about the recent market and variables that may affect its direction. The latter part of 2006 showed signs of cooling across the real estate spectrum. Our market experienced greater days on market than year over year quarters and a hesitation in confidence while watching the national real estate slowdown. With the uncertainty as to the length or percentage of slowdown the real estate community played the safe card in January 2007. I noticed aggressive listing prices on new properties some well below recent sale comparables. Properties that had difficulty selling in late 2006 were getting exponentially more interest and offers. It didn’t take long for the perspective of the new buyers for the year to see a new life in the market. The lower the listing price equated to more offers and higher prices. It was hard to keep inventory on the market for more than a week in the first quarter. This competitive market made for a difficult period on buyers who were looking for a value purchase. There are several key variables that are sustaining and driving our market. How would you feel if you walked into the grocery store and found out your dollar was only worth seventy cents? The dollar is devaluating faster against other major world currencies, which is making it more costly to travel, buy imported materials and buy property in some cases. Imagine your stock broker issued a buy order on property because it was at a discount. With fixed mortgage rates at such low rates and foreign currencies receiving a significant discount on the dollar some buyers have an ideal opportunity. We are also fortunate to have a strong local economy and consumer confidence. The stock market is hitting record highs; people are employed with good salaries and the consumer confidence is high. This scenario is creating a strong market at present, though as these variables change so can the market. There is also plenty of uncertainty about real estate. How long can this market last? This is truly the million dollar question. Some people have been waiting for over eight years for the market to decline only to watch median prices double. There are indicators which are concerning as with the devalued dollar and low interest rates. Being aware of the conditions that drive a market are important for future market volatility. Whether or not an individual should buy or sell should be an analysis of several factors one of which being

Client Testimonial - Yi Zhang and Lisa Wu “Nick showed a high level of professionalism the moment we started working with him. His focus on our needs and customer satisfaction is second to none and we never felt pushed or rushed to a decision. His knowledge of the real estate market made our house search much more productive and fun and his attention to detail and enthusiasm to work made the process smoother than we anticipated. He always put our interests as his top priority and went the extra mile to get the job done right. There are a lot of real estate agents in our area and very few of them are able and willing to look out for their clients’ interests, and put their clients’ needs as their

Volume 2, Issue 2 Page 3

The Real Estate Market Balancing Act (cont) the current market conditions. If you are buying a home for an investment you may consider variables that are different from purchasing a home for your family. Just because you can purchase a property for a low value does not necessarily mean it is the property you wish to call home. I have found that individuals have a balance between price, value and fitting the taste, condition and practical use for the family. Examples of typical buyers and sellers in the current market: 1.

Long-term oriented looking for the right home and community – In the real estate resale market you cannot necessarily pick the ideal home, street, floor plan. By watching the market over time and doing homework you can find a fulfilling home to enjoy after a long workday; you don’t want to come home to just any home. I have found that even if you buy at a discount, you will not enjoy living in it or making the monthly payments if you do not like the home.

2.

Upgrading – Selling your current property and upgrading into a community that fits your family’s long term goals. By selling and buying in the same general market you will limit the risk of a positive or negative market adjustment. The alternative is to sell, rent, watch the market and buy when you think it is a good time. This is for risk-tolerant individuals. This can work, but it can also backfire. You will need to calculate this for yourself and consider the cost-benefit of the decision.

3.

Tax-shelter – You may fit this type if you are looking for tax-shelter and a long term investment and not as concerned with the maximum cash flow. I say maximum cash flow because if property values on investment property decline over the next several years you had the potential for greater cash flow; it is a risk analysis and investment question.

Examples of buyers who should consider not buying in the current market: 1.

Individuals that can not afford the monthly payment and are counting on the appreciation and a refinance to afford the payments

2.

Individuals who plan to flip a property in a short amount of time. You must have a good amount of appreciation to offset the transaction costs before making a profit, which does not include any improvements or carrying costs you incurred while owning the property.

Santa Clara County Median Price vs. Closed Sales 5000

$850,000.00

4500

$800,000.00 $750,000.00

4000

$700,000.00

3500

$650,000.00

3000

$600,000.00

2500

$550,000.00

2000

$500,000.00 2004- 2004-2004-2004- 2005-2005- 2005-2005-2006- 2006-2006-2006-2007Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

Date Range

Real Estate Leadership: I have been involved with the local Real Estate Association’s leadership for the past few years. In 2006 I was voted by my peers to be the 2008 District Chair for the Los Altos/Mountain View District. My involvement in community outreach programs and positive relationships with Realtors were key factors in the election. In this role I will work to improve the communication amongst the real estate community through the association as well as other districts while being the focal point for my district throughout the Peninsula.

What Would You Like to Read? These quarterly newsletters are for you. If you have any suggestions to improve the content or topics of interest please let me know. I want this to be of value. You can also just let me know if you like the content and presentation.

Current Neighborhood Statistics City

Campbell Campbell Campbell Cupertino Cupertino Cupertino Los Altos Los Altos Los Altos Los Altos Hills Los Altos Hills Los Altos Hills Los Gatos Los Gatos Los Gatos Menlo Park Menlo Park Menlo Park Monte Sereno Monte Sereno Monte Sereno Mountain View Mountain View Mountain View Palo Alto Palo Alto Palo Alto Saratoga Saratoga Saratoga

Year Qtr No. of Closed % of List Sales Price 2007 Q1 2006 Q4 2006 Q3 2007 Q1 2006 Q4 2006 Q3 2007 Q1 2006 Q4 2006 Q3 2007 Q1 2006 Q4 2006 Q3 2007 Q1 2006 Q4 2006 Q3 2007 Q1 2006 Q4 2006 Q3 2007 Q1 2006 Q4 2006 Q3 2007 Q1 2006 Q4 2006 Q3 2007 Q1 2006 Q4 2006 Q3 2007 Q1 2006 Q4 2006 Q3

126 141 128 130 123 167 59 88 93 27 21 25 72 83 64 85 89 80 11 8 9 42 72 80 97 112 121 79 57 75

99.48 98.66 99.38 99.77 99.02 100.4 100.13 98.53 99.11 94.94 95.54 97.17 97.53 97.97 97.2 100.92 98.24 100.44 97.56 95.43 97.7 104.27 100 100.38 102.83 100.49 102.57 97.68 96.96 97.05

Med. Price Avg. Price Avg. DOM 760,000 745,000 760,000 1,027,000 1,000,000 1,000,000 1,643,000 1,650,000 1,652,000 2,249,925 2,250,000 2,300,000 1,469,000 1,355,000 1,323,000 1,250,000 1,245,000 1,277,000 1,850,000 1,687,500 2,050,000 940,000 950,000 920,000 1,500,000 1,315,000 1,285,000 1,660,000 1,550,000 1,514,955

809,327 784,347 813,892 1,150,587 1,065,166 1,078,427 1,732,843 1,851,327 1,792,445 3,191,664 2,541,705 2,677,600 1,572,226 1,538,691 1,510,684 1,522,615 1,418,394 1,436,338 1,856,864 1,840,063 2,223,000 1,019,072 992,551 1,013,884 1,961,067 1,538,639 1,476,630 1,876,741 1,705,290 1,676,349

52 51 43 44 39 28 65 45 37 148 159 54 71 63 55 59 46 34 70 51 94 28 25 33 44 38 30 80 75 54

Please Send This Newsletter to My 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 contact information and I will make contact with them. 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 quality representation.