Traffic and weather for your micro-market.
Getting the traffic and weather reporting you need to succeed? Or are you getting reporting that's as relevant to your needs as DEWEY WINS!!!?
Not sure? Let's check in on Joe Homebuyer.
Joe wants to buy a home at the "affordable" end of the price range in Palo Alto (or Menlo Park, or Mountain View, or Los Altos). Other people have done it, why not him? He's heard great things about Palo Alto (or...). Some of his friends live there. Most of his friends want to. And they will. Someday. As soon as the market cools off.
A few years ago Joe tried to buy in Palo Alto. But prices were high, competition hot. Joe kept getting run off the road. "Better wait 'til the market cools off", said Joe. Most of Joe's friends agreed. The ones who didn't live in Palo Alto.
And sure enough, Joe's recently noticed that homes in his neighborhood don't sell as quickly as they used to. Often the homes in Joe's neighborhood don't sell unless they've had a price reduction. Sometimes the homes in Joe's neighborhood don't sell with a price reduction.
And sure enough, Joe's recently noticed headlines like "Market Chill Settles Over San Francisco Bay Area". According to the article's lead-in, "The nine-county San Francisco Bay Area housing market is taking it in the chin". Joe is heartened by news that home prices are down 5.5 per cent year-over-year in Contra Costa County. Not that Joe or anyone he knows wants to buy a home in Contra Costa County. Heck no. Joe already lives in the East Bay. Joe's been there, done that, got the t-shirt. Joe's ready for bigger things. Joe's ready to move up to a mid-Peninsula neighborhood. Now that the market has cooled off. In fact, now that the market has cooled off, Joe's holding out for Palo Alto.
But the article doesn't tell Joe that the frostiest part of Contra Costa County is its eastern part. The part of Contra Costa County that's more like the Central Valley than the Bay Area. The part where over-extended home builders are slashing prices so deeply that they're competing with sellers of older homes. The part that has a surplus of new homes for sale because land is cheap. The part where land is cheap because it's a long way from the things that attract buyers to the Bay Area. That part of Contra Costa County. Now wouldn't that be useful information for Joe to know?
And sure enough, a few days later Joe notices this headline in the Chronicle: "Realtors Predict Prices Will Fall". "The housing bubble has truly burst...California's struggling housing market weakens as lenders tighten underwriting standards...statewide drop of 6 percent...mounting foreclosures...". For Joe the icing on the cake is the photo accompanying the article, a "price reduced" sign, and the caption underneath: "This Palo Alto home is being offered at a reduced price, one indication of stagnating prices".
Good thing I waited, thinks Joe. It's a good time to get a good deal in Palo Alto. Now that the market has cooled off.
But Joe doesn't catch the nuances of the newspaper photo and its caption. The house with the "price reduced" sign has the formal pre-war architecture of one of Palo Alto's top-end neighborhoods. Prices in those neighborhoods have indeed flattened since early 2005. Now if you were a seller or an agent or some other market well-wisher, you'd say that "home prices haven't declined from their peak". And if you were a bubblehead or a wishful thinker or a Chronicle caption writer, you'd say that home prices have "stagnated". But Joe isn't into fine distinctions and semantics. Joe is into getting a good deal in Palo Alto.
Alas Joe hasn't caught the nuances of the local real estate market. When Joe thinks "local real estate", he thinks "Bay Area" when he should think "neighborhood". That's because where Joe lives one neighborhood looks like, acts like and sells like another. Joe doesn't know—yet—that the entry-level Palo Alto neighborhoods, the ones in his price range, are actually more competitive now than they were at the "peak" of the market in early 2005. Joe knows that sales in those entry-level Palo Alto neighborhoods are down, and he thinks that's encouraging. But no one's told him that inventory is down even more. If Joe knew this, he could do the math: homes selling with multiple offers for an average 9% over list, and at an average sales price 13% higher than Q1 2005. If that's "stagnant", then so is the Yosemite River in springtime. If that's "chilly", then so is a summer in Palm Springs.
And Joe doesn't know that "price reduced" signs aren't a common sight in Palo Alto. Of the ninety-five active or pending listings of single-family homes in Palo Alto as of 4/14/07, only eleven had had price reductions. Of those eleven homes, six were over $2M and out of Joe's range.
But Joe is like Will Rogers: all he knows is what he reads in the newspapers. So that next Sunday Joe hits the Palo Alto open houses hard, armed with a sharp pencil and a burgeoning sense of empowerment. He knows the market has cooled off. This is Joe's time to rock'n'roll. Joe strolls into my open house mentally calculating just how much less than list price he'll offer.
Then it hits Joe: it's crowded in here.
It's so crowded it's overwhelming. I'm flattened against a wall, trying to stay out of the way. I tell Joe it looks like we'll have over two hundred people through yesterday and today. I tell him I'm amazed. I tell him this is the fifth listing I've had in this development in the last three years, and that none of their open houses were this busy.
Joe goes away shaken but not convinced. Joe knows something doesn't add up. Someone's messing with Joe's head, and Joe thinks he knows who. Joe calls me a few days later to announce that he's an all-cash buyer willing to make a fair offer a little below list. I tell him the seller got eight offers yesterday, all of them good, a few outstanding. How outstanding? I can't say until escrow closes, but the home sold for well over list. In fact, we set a new record for the development.
I add that while my seller did better than most, the market for "affordable" Palo Alto, Mountain View, Menlo Park and Los Altos is booming. In some ways it reminds me of the late great dot-com boom of 2000.
Joe's just a regular guy trying to get a good deal in Palo Alto. Joe's just a regular guy, working with what he thinks is good data, working the market the way he should. Joe's in the fast lane doing the speed limit and not one mile per hour over, because he knows it's the safe and sane thing to do.
And wondering why the other drivers always cut him off and get there first.
Chilly market? Here in Paradise it's nice and toasty.