McKae Properties Real Estate Market Commentary

The San Jose Mercury News recently wrote that the Bay Area home prices continue to rise, in the face of a pandemic. WOW!  That was hard for me to fathom.  All I experienced are price cuts and selective demand.  The Ultra Luxury Market is soft. Sales occur below list and many tie the sale to a recent cut.  This Monday there were 56 price cuts in Woodside, Atherton, Palo Alto, Redwood City, Menlo Park and Portola Valley.  Palo Alto was the greatest hit with price cuts from 7-11%.  Two cities saw price to list increases.  they were Menlo Park and Los Altos.  The other took hits. The article goes on to say that the "median" sales price for an existing home rose 3.4% from last years "median" of $925000!  WAIT A SECOND!  $925,000?  Okay, where in our Silicon Valley is there a home for sale for $925,000?  When they went into various counties the number became a bit more realistic.  San Mateo median is $1.65 million.  I live ...

This past Monday I opened the MLS website for agents and hit what I call is my "Hot List".  The "Hot List" is a summary of all the new listing, pendings, solds, price cuts or raises, withdrawn and expired properties for that day. or week.  24 price cuts for my universe of real estate.  11 price cuts in Redwood City, for an average 5.62% price cut for an average list price of $1,830,000.  A 6.78% price cut in Palo Alto in 5 listings at an average list price of  $3,756,000.  Menlo Park has 3 cuts to average 5.63% on an average list of $2,498,000.  Atherton has 3 cuts to average 7% on an average list of $7,848,000 and 2 transaction fell through. Summer clean up of inventory?  With inventories low it would seem that prices would remain stable.  Too many cuts to warrant a low inventory market.  The week has been loaded with news articles on renters, both residential and commercial.  The jury is out on this one.  Stories abound o...

Daniel Chinni of NBC News wrote on July 19, 2020 on the way the Pandemic has changed the way Americans live, ..."but the long-term repercussions may be in our world even after the virus eventually is controlled".  The way we shop and spend money began to change before the virus hit.  The virus only accelerated that movement.  More people found acceptance to online shopping, home delivery, working from home, with serious movements out of the congested urban environments.  In June , Visa reported American volume of spending on credit cards declined 21% from May 2020.  Debit card spending increased by 12%!  Good news, as credit card debt will decline, and spending only on money in the pocket.   Bad news for the banks. Spending habits are declining and people are more careful with their money.according to McKinsey and Company .  40% of Americans were becoming more mindful of where they spend their money.  31% were changing to less expens...

From the SF Chronicle Sunday Morning Edition: "Housing Market Gets Real".  Pandemic-related restrictions on showings, the number of Bay Area homes sold fell by more than half in May.  The median price in the Bay Area fell below $1 million.  The decline is Homes sold was -51.1% and the Median Price was $965,000.  In San Mateo County the decline is homes sold was -44.5%, the median price year over year was down 6.6%.  The figures do not include condominiums and newly constructed homes, Source: California Association of Realtors.  Thank you Kathleen Pender San Francisco Chronicle columnist. From the Bay Area News, Louis Hansen, "Rents take a breather as techies go mobile".  Prices for one-bedrooms in "techie hives" near Silicon Valley plummeted from last July.  San Francisco fell 11.8%, Mountain View dropped 15.1%, Menlo Park fell 13.5%, San Jose slid 8% and Cupertino fell 15.75% according to website Zumper.  Twitter told employees they could ...

From my first class in college in investment banking that I thoroughly enjoyed, Statistic and Probability to my Wharton training in Investment Management Analysis, I have found that data shows the condition and direction of a market. We went through a shut down from March to May.  The shut down did have a negative effect on sales and house prices.  That result is difficult to use in statistical analysis because that was a controlled market place.  Once we had the release the effects on the housing market have shown the direction in the market with built up buyers coming into the market in a BIG FASHION! JUNE 2020 Atherton had a 37% decline in sales price and a 22% decline in sales volume.  Woodside had a 8% increase in sales price and a 63% decline in volume.  Portola Valley had a had A 13% INCREASE IN HOME PRICES AND A 436% INCREASE IN SALES VOLUME! Menlo Park followed with a 86% increase in sales price and a 131% increase in sales volume. Palo Alto had ...

I had a number of declines from a seniors group who I included in the Blog mailing list.  Too many came back with a "no interest, I'm going out in a box".  Yes, that is true.  Selling a home that is highly appreciated with a low property tax is quite foolish.  Even if you need the money.  A reverse mortgage will help for tight cash strapped home owners. The greatest fault I can lay on the male spouse is they leave their partner holding a bag of assets without any knowledge or training in how to proceed and know the market for their most valuable asset, their home.  The belief, "my children will take care of (her) him when I am gone",  is a false assumption. It is my hope and prayer for those who do have highly appreciated real estate they have a trust.  Then when a partner and spouse pass away, the property has a step up in basis from cost to market value.  It is essential for the surviving spouse to know the market beyond that of hear sa...

What a week it is has been.  Coming up more often is the progression that Shelter @ Home will extend itself.  When a relaxation appears imminent, then more cases occur.  Go out shopping and everyone is wearing a mask and gloves.  Fill up for gas.  It is not uncommon to see the disposal of gloves after the tank is filled. Local media is on both sides of the street when it comes to whether there is a relaxation of rules or will there be a return to shelter in place. For the real estate buyer or seller one needs to get a grip on the situation and look at it realistically with a focus on their long term objectives.  Yes there will be opportunities.  Having cash in liquid form and a commitment letter from a bank is a necessity.  Having a plan is necessary Do not become too optimistic or too pessimistic that you either put yourself in a regrettable situation or missed a golden opportunity.  I think of a sermon from our local priest about a ...