Q2 Market Report: Real Estate Continues to Improve
Prices are up – and days on the market are down!
In Palo Alto, Los Altos and surrounding communities, the residential real estate market continued to recover in the 2nd quarter of ’10. Supply and demand continued to move back in favor of sellers with multiple offers common and prices rising.
See charts, commentary and analysis on the next page.
The percentage of list price received by sellers in the second quarter showed the greatest gain overall compared to a year ago. Buyers are clearly more confident this year than last, but they’re still nervous about the economy. This is reflected in the market by two current buyer behaviors:
Buyers are shying away from properties with any perceived negative issues, unless they believe they are getting a significant discount.
Buyers are chasing the “best buys” in each price segment, reinforced by other buyers’ desire for the property and getting into bidding wars, as a result.
This phenomenon is encouraging sellers and their agents to purposely under-price properties to create bidding wars which is causing properties to sell for more than they might have if priced at “current market value”. This, of course, is very risky as one cannot count on a bidding war in every case.
Extraordinarily Low Interest Rates Continue to Pump the Market
In spite of the high level of unemployment locally, demand for homes has remained high in most areas. Salaries are high in the Bay Area and interest rates are at record low levels. Affordability, as a result, is the best it has been in several years. Purchase money loans are easy to get for those with good credit scores and “Jumbo” loans up to $2 million are becoming much more plentiful with great low rates.
ADVICE FOR SELLERS
Buyers are willing, but very picky. Never has staging the home or completing any needed repairs been more necessary or more profitable. The “Fall Market” – the 2nd best time of the year to sell – begins in mid-August and runs through October. Now’s the time to get ready.
ADVICE FOR BUYERS
Don’t miss these outstanding interest rates! However, be careful of fixer-uppers. It’s easy to underestimate repair and remodeling costs. Choose your micro-location carefully, avoiding busy streets or blocks with poorly kept homes.