Home Seller Alert
Both home sellers and real estate agents are hoping that the recent increase in home sales will continue, if not increase. The improved stock market has fostered the belief that the economy has bottomed and will now improve going forward.
We are very skeptical that the improved real estate market in the Palo Alto/Los Altos market area will last more than a few months. We believe the increase in sales is due primarily to the threat of rising interest rates. It caused potential home buyers sitting on the fence to act rather than risk having their buying power diminished by further rate increases.
In April, Silicon Valley shed about 5,000 jobs! As long as job losses continue the market will weaken. Additionally, there are many home owners who bought between 2003 & 2005 with 5 year adjustable loans that are now resetting at unmanageable payment levels. They will be forced to sell. And, unfortunately, many of those owners purchased with 10% down payments and they actually owe more than their property is now worth. More foreclosures and short-sales are coming.
In spite of the recent bounce in consumer confidence and sales activity, the correction is not over. Therefore, if you plan to sell during the next 12 months now is the time.
Jeff and Steve