The number of single family homes sold in Los Altos is at an 11 year low. Since 1998, the average number of number of homes sold (closed escrow) in November is 26. In November 2008, only 8 Los Altos homes closed escrow. Note: most of these purchase contracts were ratified in mid/late September.
That is a 69% drop over an 11 year average (of 26) and a whopping 78% drop from the just 2 years ago (2007 had 36 closed sales in November). 2007 was the next lowest year in sales volume with 21 closed sales. See graph below for November sales history since 1998.
The volatility in the stock market has had a huge (negative) impact on our market by reducing the amount of funds available for the down payment and financing (especially jumbo loans) continues to be difficult at best.
Over the past several weeks, I have had the opportunity to speak with many buyers who have come through my open houses. The one constant – buyers tell me they are “hunkering down.” They are in a “wait and see” mode and aren’t likely to make a home purchase until they believe the real estate market is getting stronger. In short, buyers feel our local real estate market will continue to soften.
What’s interesting is a well qualified buyer can negotiate a pretty fantastic deal, even in Los Altos. We’re talking home purchases at 2004 prices (or better). The problem is it’s tough to know “a good deal” if one doesn’t know where the market is going or when it will change. Time will tell.
I thought I would end this post with a little prediction – Investors will take the lead in December home sales. I predict 5 closed single family home sales in Los Altos for the month of December 2008.
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2 responses so far ↓
1 Jimmy Noh // Jan 1, 2009 at 3:48 pm
The property cycle is remarkably constant. 5 years peak to trough, 10 years peak to peak, plus overlaid by the backed up recession staved off by Greenspans overly low interest rates in 2001. So this recession has to incorporate the 2002 one aswell. I predict prices in Los Altos Hills and Silicon Vallye will fall another 40% in the next two years.
Venture Capital has dried up, start ups will not be able to have IPOs, layoffs from Tech companies will bite. Previously high living people will lose their income. Stanford is hiring less, Real Estate agents will look for something else to do HOORAY, as the real estate agents, to a man, had a big part to play in selling unaffordable real estate to poor fools trapped in a Las Vegas dream of consumptoin.
2 Dave Blockhus, Los Altos CA Real Estate Specialist, Coldwell Banker // Jan 2, 2009 at 1:23 pm
Jimmy,
I appreciate your passion and agree with a good part of your comments. The one thing that I have to take exception to is your prediction of a 40% drop in prices in Silicon Valley (ie. east side). While prices in some parts of the valley have already exceeded a 40% drop, some areas have not.
I anticipate a more moderate decline in 2009 (maybe another 10-12% drop in cities like Los Altos, Mountian View, Cupertino and Sunnyvale).
One thing is for sure, the shoe has finally dropped and buyers now have the upper hand in negotiations.
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