Earlier today in downtown Palo Alto, I ran into Eric Trailer of Absolute Mortgage Banking. We chatted about the dynamics of the “millionaire watch” cited in today’s Wall Street Journal (Millionaire Watch: In Silicon Valley a Countdown Is Under Way). As many of our local technology firms plan to go public (Facebook, Zynyga) and employees who have their shares unlocked at firms who already have had an IPO (LinkedIn, Pandora Media), it’s anticipated that many will purchase high-end goods (everything from homes to cars to motorcycles). Eric mentioned he has tripled the staff at his mortgage firm, and said he does think we’re going to see a very busy winter in terms of local home sales. This dynamic was seen in the 1990’s, but many people were burned when the dot-com era ended. I think that now there is anticipation about what will happen once tech employees at firms going public can spend, but it feels a bit more restrained to me. Even so, I think that given the current lack of inventory in our Mid-Peninsula housing market, and this anticipated demand, our winter housing market could be an active one.
Interest rates for 30 year fixed mortgages fell to their lowest rates ever—wow. (CNN Money) While prices have not fallen in our local Mid-Peninsula neighborhoods, the cost of home ownership has fallen considerably. Historic low interest rates haven’t been helping the real estate market across the country the way regulators and politicians have hoped for, but here in Palo Alto, Menlo Park and surrounding areas it is certainly another driving force that is keeping our demand high.
If you are thinking of buying a home, my advice is to find a good house and make an offer so you can lock in a low rate now. Prices in this area are not going down, so don’t wait for the “bottom of the market.” At least that’s my opinion. The deals I see being made now are going to pay off long term for those who step up. While prices may not see any solid appreciation for another year, the reward of a relatively low tax base and historically low interest rate on a trade-up property will pay off both sooner and later, making the joys of Mid-Peninsula home ownership all the greater. Expect new listings coming on the market in the coming weeks to be realistically priced, but be prepared to compete with multiple offers.
The current number of listings in our local neighborhoods has fallen from one year ago, while demand has remained high. Right now in Palo Alto, the number of houses for sale is almost 50% less then last year. While the numbers of new listings have decreased, the number of homes sold has stayed mostly the same. Even with two of the wildest months in stock market history, our market continues to defy what is happening in other markets across the state and country.
If you are considering selling your Mid-Peninsula home (Palo Alto, Menlo Park or surrounding areas) the traditional fall selling season would have started in earnest right after Labor Day with lots of new listings hitting the market. So far this hasn’t been the case and sellers that have chosen to list now have benefited from the low inventory and high demand. If you’ve been thinking about selling, the time may be right for you.