Local Real Estate Market Report and Outlook for 2019

The local housing market reached new record highs in 2018 although it cooled off in the second half, likely due to the political climate, the jittery stock market and the cancellation of the free trade agreement. The number of offers on listings declined in the second half of the year but houses generally were selling at or above the list price excluding the upper-end listings. The strong economy coupled with still historically low interest rates motivated buyers to buy before interest rates climb higher. However Chinese buyers were less active in the local market in 2018 due to their government's tightening of money outflow and the drop of the Chinese stock market.

The current hot real estate market cycle could be due for a pullback. It has been 10 years since the last market cycle ended in 2008. Average and median prices have more than doubled, and affordability is nearing lows that typically appear at the end of a cycle. Some economists predict that the next housing recession will begin in 2020. They note that, if the Fed raises rates too quickly, it could slow down the economy and thus lead to a recession. As discussed further below I believe the local market will remain strong in 2019.

Median home prices increased 8.5% in Palo Alto to $3,200,000, 14% in Menlo Park to $2,600,000, 40% in Atherton to $6,650,000, 12.6% in Los Altos to $3,400,000, +25% in Los Altos Hills to 4,850,000, 17% in Mountain View to,3,320,000, 11% in Portola Valley to $3,330,000, and 39% in Woodside to $3,262,500. The charts below show 2018 sales data for local area communities, including median sales prices, sale to list price ratios and prices per square foot.    Year Palo Alto Menlo Park Atherton Los Altos Los Altos Hills Mountain View Portola Valley Woodside 2018 $3,200,000 $2,600,000 $6,650,000 $3,400,000 $4,850,000 $2,320,000 $3,330,000 $3,262,500 2017 $2,950,000 $2,280,000 $4,750,000 $3,019,000 $3,881,000 $1,980,000 $3,000,000 $2,350,000 % Of Change +8.5% +14% +40% +12.6% +25% +17% +11% +39%      Challenges to Home Sales in 2019 Supply will remain a thorn for buyers and brokers. Long-time homeowners are expected to remain in their homes to avoid paying significant capital gains taxes due upon sale and to maintain low existing property taxes and low rates on current mortgages. More single family units are expected to become rentals. Affordability has  reached a new low of 17% in California. Mortgage interest rates are expected to continue to move higher. According to mortgage professionals 30 year interest rates will rise to 5 percent but will still remain low by historical standards.   The Positives in 2019 The local economy is strong and job growth will continue. The Silicon Valley economy grew 4.7% in 2018, much higher than the nation’s 2.8% growth. The stock market has experienced some correction without going into a freefall. Unemployment rate is 2.4% in Silicon Valley. Wages are expected to increase. More millennials will be leaving the nest and looking to buy homes. The net cash gain to sellers is the highest since 2006 2019 Real Estate  Industry Outlook I am optimistic about the economy and the housing market as the new year begins. High demand and robust economic conditions are reasons to be hopeful and rising interest rates alone may not slow down the market. Unless there are major changes in the fundamentals of the economy or significant political upheaval, prices will continue to rise. I expect our local market to increase 7-8% in value Here's the bottom line: For buyers, interest rates will rise in 2019 but will remain at near historic lows and 2019 will be a better year to   buy a home. Home sellers need to be cognizant that buyers are more price sensitive now.  You can still sell your home for a strong price if you price it competitively. Please share my semi-annual  report with your friends who might be looking to buy or sell their home. I will be happy to answer any questions or discuss in further detail the state of the real estate market

Nprtgage Musts

Interest Rate Impact

Millennial Money Habits

Rare custom-built estate in Palo Alto

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1535 Edgewood Drive, Palo Alto

Virtual Tour: 1535 Edgewood Drive

 Rare custom-built estate located on one of the most prestigious streets in Palo Alto. This magnificent property was inspired by the Robert A. M. Stern architectural vernacular and evokes elegance and modern comfort. Its sophisticated design and open floor plan embrace indoor/outdoor living.

Built in 2002 and recently decorated by Martha Angus, this 8,212 square foot home consists of three floors featuring fine architectural details and carefully chosen luxury materials. A central grand foyer with soaring ceilings leads to multiple living areas. There are 5 bedrooms and 5.5 baths, 3 offices, a fitness center and a tremendous recreation room with kitchen area, parquet dance floor and game area.

The grand style of the house, together with the beautiful grounds, numerous terraces, and inviting resort-style pool, create a serene, architecturally stunning property. This very special offering is convenient to downtown Palo Alto and Stanford University with easy access to all of Silicon Valley.

Details of This Residence:

Main Level

·        Connecticut blue stone walkway and elevated covered porch with extensive millwork supported by Doric columns.

 ·        Oversized front door with leaded glass panes and central grand foyer with hardwood floors, high ceilings, wainscoting and crown moldings.

 ·        Large formal living room with wood burning fireplace, exquisite stone mantel, wainscot paneling, crown moldings and large windows that overlook the front yard.

·        Sun-filled formal dining room with built-ins and oversized windows.

·        Main level designer’s powder room.

·        A tremendous great room of grand proportions with soaring ceilings opening to the kitchen, natural gas fireplace surrounded by built-ins, entertainment center, large dining area, a private executive office space, intricate beams and a double-paned Nana wall of French doors that completely opens to a light-filled terrace and the back lawn.

·        Chef’s kitchen with an oversized central island with separate prep sink and rare Lumerian blue granite counters, breakfast bar, top of the line appliances, desk area, and hardwood floors.

·        Main level wet bar center with icemaker and glass display cabinet.

·        Full bath with large stall shower, limestone floor and counter that services the pool.

·        Mud room with bench, built-in cabinetry, stacked washer and dryer.

Upper Level

·        Grand stairs with intricate millwork, wainscots and huge window take you to the private upper level with a central galleria. On either side of the main corridor are the luxurious master bedroom compound and 3 additional generous bedrooms.

·        Luxurious master suite overlooking the backyard with two offices, his and hers large walk-in closets, and spa-like master bath with steam shower, oversized tub with jets, dual sink vanity, marble top and heated limestone floors and two executive offices finished in the finest materials.

·        Three family bedrooms with vaulted ceilings and large closets: one bedroom en suite bathroom and the other two bedrooms sharing a large Jack and Jill bathroom with double sinks, marble counter, tub and stall shower.

·        Upper floor laundry room with built-in cabinets and sink.

Lower Level

·        Luxurious guest suite with full bath, limestone stall shower and counter, sink and walk-in closet.

·        Expansive media room with three Murphy beds.

·        Recreation room with parquet dance floor and game room.

·        Kitchen sink with limestone counters and refrigerator.

·        CrossFit-style professional fitness center equipped with media including a television and a Sonos sound system.

·        Two storage rooms and IT closet.

·        Mechanical room.

Backyard

 Park-like backyard with a variety of venues that offer a magical setting for entertaining and family gathering: numerous blue-stone terraces, arbor, heated dining and entertaining area, built-in barbecue with granite counters, lush sweeping lawn, mature trees, rose garden, fruit trees, Barbara Butler play structure, heated pool and spa - all adding to the feel of an exclusive resort.

 At A Glance:

·        5 bedrooms, 5.5 baths plus 3 offices.

·        Approximately 8,212 square feet:  Home 7,743 square feet, garage 469 square feet. One of the largest properties in Palo Alto. (per architectural plans).

·        Lot size approximately 19,593 square feet.

·        Open concept floor plan with fine architectural details and millwork throughout the house.

·        Guest quarters, recreation room, fitness center, game room, dance floor.

·        Private yard with swimming pool, hot tub, numerous blue stone terraces and heated patio, built-in barbecue.

·        Iconic designer lighting with unique selection in every room.

·        Hardwood floors throughout the first floor.

·        Uniquely appointed bathrooms.

·        Multi-zone heating and air conditioning.

·        Fully finished 2 car attached garage.

·        Outstanding Palo Alto schools: Duveneck Elementary, Jordan Middle and Palo Alto High (buyer to confirm)

·        In close proximity to Palo Alto and Stanford University with easy access to Silicon Valley

1535 Edgewood Drive

Local Real Estate Market Report and Outlook for 2018

The local real estate market recovered from the modest dip in 2016 to unexpectedly climb and  set new records in many area s in our communities in 2017.  Median home prices increased 15.7% in Palo Alto, 14.9% in Mountain View, 11.4% in Los Altos, 11% in Portola Valley and 7% in Menlo Park. In contrast median home prices decreased 21% in Atherton and 16.5% in Woodside. The Silicon Valley economy grew 7.8 percent last year, much higher than the nation's 2.6 percent growth. The steady job market, low mortgage rates and foreign investment helped to propel demand for real estate and push up property prices. International buyers share increased in 2017 including the share of Chinese buyers that had stepped back in 2016 because of their government's tightening of money outflow. Property price increases were also driven by area housing shortages and limited available inventory.  Supply outpaced  demand by far and buyers who are determined to purchase a home in the area need to be ready, willing and able to move quickly. Some prospective buyers, especially younger buyers and those entering the market for the first time, are struggling to buy a home as affordability reaches a new low of 17% in California. The charts below show 2017 sales data for local area communities, including median sales prices, sale to list price ratios and prices per square foot.  Year Palo Alto Menlo Park Atherton Los Altos Los Altos Hills Mountain View Portola Valley Woodside 2017 $2,950,000 $2,280,000 $4,750,000 $3,019,000 $3,881,000 $1,980,000 $3,000,000 $2,350,000 2016 $2,550,000 $2,127,000 $6,002,500 $2,710,000 $3,865,000 $1,723,000 $2,700,000 $2,815,000 % Of Change +15.7% +7% -21% +11.4% +0.46 +14.9% +11% -16.5%

 

 

2017 Median Sale price

 

2017 Sale to List Price Ratio       Price Per Square Foot by City     Challenges to Home Sales in 2018 Supply will remain a thorn for brokers, developers and homeowners Long-time homeowners are expected to remain in their homes to avoid paying significant capital gains taxes due upon sale and to maintain low   existing mortgages               property taxes and low rates on current mortgages. More single family units are expected to become rentals Mortgage interest rates are expected to move higher. According to mortgage professionals 30 year interest rates will rise to 4.5 percent      in 2018 The tax reform law changes affect real estate beginning with the 2018 t     tax year. You will no longer be able to deduct: The State income tax and property taxes above $10,000 per year in total; Moving expenses (with an exception for certain military); Mortgage interest beyond interest on $750,000 of acquisition debt, if you purchase a new home; and Mortgage interest paid on equity debt (this is no longer deductible for any taxpayers).       I do not expect any significant changes to our local market as of the result of the new tax law because of the high demand and the wealth of our clients. The Positives in 2018 The local economy is strong and job growth will be expanding Wages are expected to increase More millennials will be leaving the nest and looking to buy homes The net cash gain to sellers is the highest since 2006 2018 Real Estate  Industry Outlook I am optimistic about the economy and the housing market as the new  year begins. High demand and robust economic conditions are reasons  to be hopeful. Unless there’s a major correction in the tech sector, prices  will continue to rise. I expect our local market to increase 8-10% in value. The question on everybody’s mind is: are we going to hit another bubble soon? The market conditions today are fundamentally different from the bubble of a few years ago. Home sales are recovering and we don't have the subprime lending we had before. Mortgage lending has stringent r equirements today - almost too stringent. There is job growth and business and consumer sentiments are high and business is booming in what experts are saying could become the longest economic expansion since WWII. Please share my semi-annual  report with your friends who might be looking to buy or sell their home. I will be happy to answer any questions or discuss in further detail the state of the real estate market