Happy Labor Day

I needed a break to review our present situation and look at the various forecasts for real estate values.  The markets I follow indicate to me acceptance of buyers at levels below what has been posted.  The cuts represent the buyers reluctance to accept the idea that prices are going higher.  The buyers do want homes in areas that require move in condition and conditions that they are looking for based upon today's buyer's attitudes.

The comments below are those from 2 weeks ago when I decided to stoop and re-evaluate.

After the remarks I will post my closing comments based upon my research.

TWO WEEKS AGO:

 With the movement out of San Francisco and New York City and if we are to believe the media, out of big cities.  Where are they going?

Redfin has a great site for those of you who like to do some research in price and market analysis redfin.com/blog/data-center.

In the San Jose Silicon Valley market center 77.8% of the searches are within the Bay Area.  22.2% elsewhere with the leader Seattle with 6.75 of searches and Portland with 4.3%, Texas a close 3rd of the searches the remainder are in lower % numbers.

That tells a most important point.  With all the complaints on home prices, the Bay Area is still the place to be.

That takes it to price, we have the weather, we have the quality of life, we have home styles that suit the new buyer and all those looking to move out of rentals to a new home.  Let's ignore the fires, smoke and pandemic as a passing event.  To business we have a highly educated population and investment funds willing to back startup and transitions to new markets into a new Silicon Valley economy.  The ability to transform is the key asset of Silicon Valley.

Cuts in home prices I regularly put on Linkedin, Twitter and Facebook.  They tell a story of 10% price cuts in communities that were once immune.  Los Altos, Palo Alto, Menlo Park. (Get yourself on my Facebook Page, McKae Properties, or Linkedin & Twitter as gmckae to get my selections)

Now it will become a period of buyer and seller battles.  

The Covid 19 restrictions keep buyers off the market, on the virtual tours.  When it comes to muli-million properties and first time buyers, they really want to know the property.  

With all that, inventory must decline, and prices decline to a level that inventory is eliminated and prices move back up.  But it is not!

As I review the cities within our area there are some notable instances.  For example Palo Alto a formerly insensitive city to price declines did a head dive in January from just over $3.2 million to under $2.6 million.  

UPDATED REMARKS:

Zillow's calculations are beginning to show an estimated increase in home values for 2021.  Redwood City in the 94061 zip code is estimated to see home prices increase 1.3%, in Woodside and parts of Redwood City in the Farm Hill and Emerald Hills area with a 94062 zip code there is an expected 2.3% increase in 2021.  On the Coast in Aptos area there is an expected 3.1% increase for 2021.  Palo Alto in the 94301  zip code a 2.7% increase is expected for 2021.

The latest issue of Realtor.com magazine notes that home prices are increasing on a national level but notes the increases are in the nation's hottest zip codes.  Sorry to tell you the Bay Area is not in the list.  This further confirms to me that the movement out of the area in Redfin of 22.2% is most likely being seen in Realtor.com searches and Zillow searches.  

I have had several buyers who were formerly or are now renters looking outside the area.  It was interesting to see where they wanted to move.  (They all have the ability to work from home)  The Big Island in Hawaii was one choice and another was Reno and surrounding area.  I put those areas in my watch list and discovered some interesting patterns.  The Big Island has seen a number of price cuts.  Most notably in property over $1 million. ( By the way, you can get some unbelievable homes on the water for over $1 million in Kona.)  The price cuts were from the County of Hawaii, the Big Island, decision to raise property taxes on all homes over $1 million.  This reason, my colleagues in the Kona area tell me, is aimed at the High End owners who come to the Big Island as vacation homes.  The other is aimed at the BNB homes that represent visitors not residents.  In Reno and surrounding area home prices are strong in the starter home area and will vary when viewing the gated communities with golf courses and or tennis and exercise clubs.  Lake Tahoe is strong and again my colleagues tell me there are a number of Bay Area buyers looking for homes in a rather limited market.  Let me say that does not included the multi-million homes on the lake and vicinity.

That puts buyers in a very good position in our area.  Prices are not going to run away.  20% of the former completion is looking elsewhere.  Sellers who believe their homes are worth more than the market will require a price cut to get them sold.  When that happens they sell. 

To me this is an even market place for buyers and sellers.  That also bodes well for the builders who can work on their calculations of cost and profitability without concerning on future price movement against them.

On virtual tours hers is what I recently read

Buyers are 49% more likely to write a contract on a listing with a 3D Virtual Tour

1 out of 2 properties with a virtual tour sell in less than 30 days REALTOR.com says listings with a virtual tour get 40% more clicks  75% off buyer prospects prefer listings with 3D tours Buyers spend 130% more time on an agent's website if they have recorded voiceover virtual tours

A good market makes me recommend buyers to act now and look for the 10% cut.  To sellers, don't let what you think what you believe your home is worth.   Or what higher price the realtors you interview with can get you.  Sellers don't let the realtor "buy" your listing with a high price.  Go with the realtor who is rational in their price for your house and can show you statistics of where the market is and where it will be in the future.   Of course, I hope that realtor is me!