A look at local real estate in 2012.
The best way I can describe the amazingly off-the-wall 2012 real estate market is to tell you that this year it took me as many as five offers to get a buyer in contract...and that that particular buyer was smart, well qualified, very motivated and had a large down payment...and that my previous high was four offers...which happened just once...back during the amazingly off-the-wall dot-com boom...and that aside from then, it's never taken me/us more than three offers to get a home...in more than fourteen years of representing mostly buyers...through three helacious booms...a record I seem inordinately proud of.
Buyers and their agents had their work cut out for them this year. In fact, Coldwell Banker was thinking of charging me for wear and tear on its conference rooms ;-)
What happened? Everyone decided that now is a good time to buy real estate. But not everyone knows that now is a good time to sell. And it's not, not for everyone. Own a home in one of this area's favorite neighborhoods and I can't think of a better time to sell, except perhaps those amazingly off-the-wall few months of late 1999 and early 2000 when a spike in dot-com wealth reacted with low inventory like vinegar with baking soda. Own a home in a less sought-after area, on the other hand, and if you bought in the mid-2000s, five years of distressed sales and plummeting prices in your neighborhood and price range means you probably don't have equity, which means you owe more on your property than it's worth, which for most homeowners stops the selling conversation in its tracks.
So how much did prices go up this year? First let's look at the cities and neighborhoods I track in Santa Clara County.
Obviously, prices went up across the board, but some markets fared even better than others. Here's the appreciation percentage for each.
These markets averaged over 11 percent price appreciation (see bar at far right) and that's just the average: the turn-key stuff in prime locations did even better. But like all numbers, these should be taken with a grain of salt. There's no doubt that the affordable end of the market saw plenty of action, but its gains year over year look especially impressive because entry-level prices continued to decline through 2011, while the midrange flattened soon after the bust and the upper midrange, cities like Cupertino and Palo Alto, saw prices begin to bounce back as early as 2010. Which is another way of saying that the low end bottomed late and only last year, but instead of the gradual recovery I'm sure most buyers were expecting—"I'll have plenty of warning"—prices snapped back with a vengeance. I've seen it before and I've been tiresomely predicting it for years. Now we have a new crop of believers—when a Silicon Valley real estate recovery leaves tire tracks across your back as it zooms away from the start line it gets your undivided if stunned attention—but don't let it bum you: generations of home buyers yet unborn will no doubt also learn the hard way that a real estate recovery in an area of big money and little buildable land is more like a flash flood than a gentle tide.
Now let's see what the San Mateo County markets I track were up to in 2012. First, prices year over year.
Then, 2012 price appreciation by market.
Again, some of the biggest year-over-year gainers were some of 2011's biggest losers. Atherton needs an asterisk: like other top-end towns, overall price appreciation was modest this year, and this was the only range locally where deals could still be had on anything less than exceptional properties exceptionally well-priced—unless you were looking for an Atherton teardown on a nice lot in a good location. The top-end market is so thin that it's challenging to track statistically, but my super-secret see-them-over-my-dead-body property-by-property spreadsheets suggest that Atherton teardowns appreciated at at least the county average. The end-users aren't necessarily driving up the price of finished product, but the builders and do-it-yourselfers are definitely chasing the knockdowns. Which is as good an indication of local consumer confidence as any.
Next week: a preview of 2013.