♦ The real estate markets struggled in 2009 to recover from the effects of the 2008 global economic downturn.
♦ The local housing market saw the biggest price declines in recent history, with the medium home price declining 14% in Palo Alto ($1,335,000 in 2009 compared to $1,550,000 in 2008), 18% in Atherton ($2,790,000 in 2009 compared to $3,380,000 in 2008) and 21% in Menlo Park ($1,095,000 in 2009 compared to $1,386,000 in 2008).
♦ However, the number of home sales did increase in 2009. There were 387 sales in Palo Alto (compared to 356 in 2008), 69 sales in Atherton (compared to 63 in 2008) and 315 sales in Menlo Park (compared to 300 in 2008). Only 15% of the sales in Palo Alto and Menlo Park were above $2,000,000.
♦ The effect of the downturn was tempered in our local market by the general affluence in the area. As prices dropped, some buyers stepped back into the market looking for buying opportunities. In addition, loss of confidence in our financial institutions and concerns over future inflation increased the attractiveness of real estate as an investment option.
♦ Looking ahead to 2010:
♦ On the bright side, the economy is improving although recovery will likely be slow, particularly in the labor market. A U-shaped recovery seems likely with the labor market expected to bottom out in the second half of 2010 and sustained job growth not expected to return until 2011.
♦ Some mortgage lenders are beginning to relax their down-payment requirements. In a sign of increased confidence in the housing market, buyers with good credit can now often borrow 80% of a property value.
♦ However, the Mortgage Bankers Association expects interest rates to rise by about one-quarter of a percentage point, and others are predicting that rates could jump by as much as a full percentage point.
♦ It is important to keep in mind long-term fundamentals and not ignore the positives in the marketplace - in particular, historically low interest rates and lower home prices. If you have a stable income, it could be an opportune time to buy a house.
♦ If you are thinking about buying or selling your home, I invite you to contact me for a free market presentation about the current real estate market, and how to sell your home in today’s market quickly, at the best price and stress free.
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