Year End Market Report ~ 2014 – 2015


San Mateo & Santa Clara Counties comparison sales from 2014 to 2015 were down in units and up in dollar volume in every city I observed with the exception of Redwood City & Los Altos which marked a 10% & 5% increase in units sold respectively. This reflects a lack of inventory and a high appreciation we have continued to see since we started rebounding after the 2008 crash. Predictions for 2016 seem to be more of the same, with possible appreciation leveling out in the high single digits. Housing market fundamentals are strong, job and income growth are positive, mortgage rates are low and should remain low in 2016, lending standards are more reasonable then they have been a year ago, and household formation is rebounding. Overall 2016 should prove to be a year similar to 2015.  Fingers crossed! It is an election year though and historically the housing market waits to see the outcome.

Here are the Stats:

2014 -2015 Year End Totals

City                         YTD 2014       YTD2015     %Change


# of Sales                      105                    76                     -27%

Median Price            $4.4M               $5.9M               +34%

Menlo Park

#of Sales                       438                   384                  -12%

Median Price            $1.6M               $1.9M               +15%

Los Altos 

# of Sales                      331                   349                  +  5%

Median Price            $2.3M               $2.6M               +14%

Los Altos Hills

# of Sales                      96                      94                    –  2%

Median Price            $3.3M               $3.6M               +10%

Palo Alto

# of Sales                     471                    412                    -13%

Median Price            $2.1M               $2.5M               +15%

Portola Valley

# of Sales                       85                        62                  -27%

Median Price            $2.5M               $2.6M               + 7%

Redwood City

# of Sales                    627                    690                   +10%

Median Price            $975K                $1.2M               +25%

San Carlos

# of Sales                   383                     307                    -10%

Median Price            $1.3M               $1.5M               +16%


# of Sales                   105                     94                      -10%

Median Price            $2.4M               $2.7M               +13%

Bay Area Real Estate Prognosis ~ 2015


Real Estate Prognosis: ‘Smooth Sailing’ for the Next Three Years

The real estate industry is poised for solid growth for the next three years and quite possibly beyond, with home prices rising 4 to 5 percent each year and a solid expansion of new-home construction, according to a recent survey of economists and real estate analysts.

The survey, by the Urban Land Institute, found broad agreement that the nation’s economic recovery will strengthen at least through 2017, laying the foundation for healthy real estate markets nationwide.

The three-year forecast doesn’t drill down into specific markets, but its conclusions bode well for Bay Area real estate. Our region has been at the forefront of the current economic recovery, and another three years of expansion will keep buyers plentiful and sellers motivated to trade up to higher-priced homes.

Earlier this month we reported that the Bay Area leads California in job growth. Last year economist Stephen Levy, director of the Palo Alto-based Center for Continuing Study of the California Economy, told Pacific Union that the region’s tech-focusd economy will keep housing demand high.

Among the results of the Urban Land Institute survey:

  • Housing starts will rise from 647,000 in 2014 to 700,000 in 2015 to 815,000 in 2016 to 900,000 by the end of 2017.
  • The average price for existing homes is expected to rise by 5 percent in 2015, 4 percent in 2016, and 4 percent in 2017.
  • Net job growth is expected to be 2.9 million per year through 2017, compared with a long-term average of 1.2 million. Low unemployment rates should lead to healthy wage gains.
  • Real estate lending will remain competitive and favorable for borrowers.

“In summary, almost all U.S. real estate participants would be very pleased if the future unfolded as predicted by the ULI consensus forecast,” Urban Land Institute executive William Maher said in a statement accompanying the survey results.

Although growth could be slowed by economic downturns, foreign crises, interest-rate spikes, or oversupplies, Maher said, “real estate pros predict three more years of smooth sailing for U.S. real estate.”

Staging ~ Almost a necessity!


Staging ~ Increases a Home’s Appeal

With the coming of spring, potential Bay Area homebuyers will begin pounding the pavement, and homes that make a good first impression are the most likely to make the biggest impressions on eager buyers in what could be a crowd of open houses.

That’s where home staging can help.

A recent survey by National Association of Realtors’ 2015 Profile of Home Staging showed that 81 percent of homebuyers found professionally decorated properties easier to visualize as a future home. Staged homes typically sell within 30 days, according to research by The International Association of Home Staging Professionals and Additionally, staging usually leads to a higher final sales price.

“Staging isn’t about decorating your home,” says Laney Nelson, Accredited Staging Professional stager for Walnut Creek-based East Bay Staging. “It’s about selling.”


Stagers conduct a home assessment, examining items to be removed and refurbished, neutralizing decor to appeal to a majority of buyers, and maximizing both indoor and outdoor space to generate positive impressions of the home’s features. Replacing carpeting and flooring, painting, cleaning, landscaping, changing furniture, and even simple fixture replacements can help a property connect with buyers.

But mixing conflicting styles and accessories can put off homebuyers, according to Kelly Wood, a buyer’s specialist and a former stager. “The extremes don’t really work,” she says.

Additionally, staging and repairs offers the appearance of home upkeep, both in the real world and online, says Danielle Cirelli, owner of Walnut Creek-based staging company Designed to Sell. “Photos are an essential part of marketing because over 90 percent of the buyers will preview a property online,” she says.

Millennials, who currently make up the largest share of homebuyers, are even more likely to peruse online listings before visiting a home. Pacific Union CEO Mark A. McLaughlin stressed the importance of technology on the real estate industry in his recent Inman Select Live presentation, saying that digital strategies are geared toward users likely to “give you eight seconds.”


Sellers who decide that staging is the way to go will likely want to employ the services of a pro. Many expert real estate professionals offer their clients a list of recommended contacts – including architects, general contractors, and interior designers – who can help enhance a home’s appeal. Some real estate professionals provide staging services as a part of their service package. Sellers can also find a staging company through online resources such as Yelp and Angie’s List or referrals from friends and family.

Though some sellers might fret over staging expenses, it actually costs less — an average of $675, according to NAR’s study — than the first price reduction – typically at least 10 percent of asking price. And a lingering home on the market sans staging can incur additional price cuts, according to Nelson.

Every month a home is on the market, there is a price reduction of usually 5 percent.

Bay Area Job Growth

The Bay Area demonstrated impressive job gains over the past year that far outpaced the national growth rate, another sign that intense demand for local real estate is almost certain to continue in 2015.green_up_arrow

According to a new report from the Palo Alto-based Center For Continuing Study of the California Economy, employment increased by 4.0 percent in San Jose and 3.8 percent in San Francisco between December 2013 and December 2014. Nationally, job growth registered 2.1 percent during that same time period.

The report says that the nine-county Bay Area added 11,000 jobs from November to December, accounting for nearly half of the state’s monthly totals. CCSCE notes that the Bay Area remains California’s leader in terms of job growth, driven by hiring surges in the booming high-tech sector.

Our regional economy ended 2014 on a particularly strong note, with jobless claims dropping from the preceding month in all nine Bay Area counties, according to recent data from the California Employment Development Department. Six local counties now boast unemployment rates of 5 percent or less, the level that many economists believes represents full employment.

Marin County unemployment claims dropped to 3.4 percent on a nonseasonally adjusted basis in December – the lowest in California. San Mateo County had the state’s second lowest unemployment rate at 3.5 percent, followed by San Francisco County at 3.8 percent.

Jobless claims declined to 4.5 percent in Santa Clara County, dropping below 5 percent for the first time since April 2008, according to historical data from the EDD. Unemployment fell to 4.7 percent in Sonoma County and 5.0 percent in Alameda County. Contra Costa and Napa counties are also hovering right around full-employment status, both with jobless rates of 5.1 percent.

California’s unemployment rate also dropped from November to December, to close out the year at 7.0 percent on a seasonally adjusted basis, the lowest since June 2008 and down from a peak of 12.4 percent in several months of 2010.

Q32014 Real Estate Report


Home prices reached yearly peaks at some point in the third quarter in five of Pacific Union’s Bay Area regions. As has been the case all this year, buyers continued to pay more than original prices for homes in the East Bay, San Francisco, and Silicon Valley.

Although almost all of our real estate markets still favor sellers, many saw modest increases in inventory from August to September, a hopeful sign for buyers who have been shut out of the action and are giving it another try this fall.

Pacific Union’s third-quarter 2014 report is packed with data and regional summaries that offer a complete look at real estate activity in the Bay Area and the Tahoe/Truckee region.

Our Q3 Report also includes a comprehensive chart tracking 10 years of home sales throughout the Bay Area and Tahoe/Truckee — 76 cities, towns, and neighborhoods in nine regions. A smaller version of that chart, showing regional totals, appears below. Click the link to view the chart which includes a 10 year comparison in volume and dollars.


Real estate activity zigzagged during the third quarter in Pacific Union’s Silicon Valley region, slowing to a crawl in July and August, then going gangbusters in early September before decelerating again. High-end markets such as Palo Alto, Menlo Park, and Hillsborough, however, remained busy throughout the quarter.SilValQ314

The region has some of the most expensive homes in the nation, and in Menlo Park, no homes on the market were priced at less than $1 million. Across Silicon Valley, any property priced under $4 million sold briskly.

Home prices continued rising throughout the quarter, although not at the pace seen a year earlier. Multiple offers remained standard, though bidders weren’t as frantic as they were last year. Similarly, off-market sales, while still common, were not as rampant as in 2013. While a balanced market for both buyers and sellers remains a long way off in Silicon Valley, the region is slowly moving in that direction.

Looking Forward: Moderate activity is expected during the fourth quarter before sales slow during the year-end holiday season. Early indications suggest an increased supply of homes will hit the market during October, helping to drive sales in the months ahead.

Buy vs Rent ?

That old question deserves a new look….not that there is much change in the answer though. Here are some thoughts and stats that might help. With the trend in home prices increasing the thought begs asking, ” do I rent and wait out the market or jump in and buy?”. With mortgage rates  still at all time lows, combined with the tax advantages of home ownership – which so far are still protected – this is an excellent time to turn your dream of owning a home into reality. So the next question is, “can I afford to buy?”.

Does it cost me more to rent? No matter what you are currently paying for rent, your total cash outlay over a period of several years will add up to a higher total than you may have realized. The following chart shows what your rent payments would add up to with an appreciated 5% interest rate of investment. On average for the past 10 years our home values experienced an average 10% increase in value per year. This year in many cities of San Mateo and Santa Clara County our property values increased  as high as 25%. Although not always a reality it does beg the question,  “why would I not want to own a home when it provides a permanent roof over my head and returns a rate of appreciation that high?”.

With the money you are currently spending on rent,you could be building equity in your home. Keep in mind, too, that over the years your income most likely
will increase faster than any increase in your mortgage payment. Rent payments, on the other hand, tend to increase – right along with your paycheck. Ask your loan officer or mortgage broker for financial plans that are available to you.

Homeowner Tax Advantages
When you’re figuring out how much you can afford to commit to monthly mortgage payments, don’t forget the tax advantages of homeownership. Both property taxes and interest payments on a mortgage for an owner-occupied home are currently tax-deductible. In the early years of a typical mortgage, all but a small percentage of each monthly payment is used to pay off the interest on the loan. This means that as a homeowner, your annual taxable income could be
substantially reduced by deducting the payments you make on property taxes and yearly mortgage interest. Ask your CPA (certified public accountant), attorney, or tax preparer how buying a home now would affect your tax situation.

Home Value Appreciation
In addition to tax advantages, you can also benefit from any increase in the value of your home through appreciation and improvements you add for your own comfort and enjoyment.

You Can Make Home Ownership a Reality
Take a good look at your personal financial situation in comparison to housing price trends and mortgage plans available in your community. You will probably discover that you are closer to homeownership than you had realized. Buying a home is probably one of the biggest investments you’ll ever make. And when it’s your first home, it is especially important that you seek qualified assistance. Call me I’ll find and help you purchase – the home of your dreams!

Here is a link to a chart that the NY Times recently published that actually plots the financial advantages.  It’s easy and absolutely right on the money!

Silicon Valley Housing Market Snapshot ~ August 2014

Intense demand and limited supply have kept the median sale price for single-family homes in Silicon Valley region hovering around $2.4 million for most of 2014. And although home prices in our Mid-Peninsula sub-region steadily declined throughout the summer, it is still the second most expensive area in which Pacific Union operates, with an August median sales price of $1.33 million.

In such a competitive real estate market, home buyers are finding that one secret to success involves overbidding from the outset, a potential bonus for homeowners planning to put their properties on the market this fall.

To examine which specific Silicon Valley and Mid-Peninsula neighborhoods currently favor sellers the most, we examined MLS data from the following San Mateo and Santa Clara County communities: Atherton, Burlingame, Hillsborough, Los Altos, Los Altos Hills, Menlo Park, Palo Alto, Portola Valley, San Mateo, and Woodside. We included only neighborhoods with at least two single-family homes sales in August.

Palo Alto neighborhoods dominated the list of the 10 markets where homes sold for the most over original price, taking four of the top five spots. Homes in the city’s Midtown neighborhood commanded the highest premiums of any in the aforementioned communities, an average of almost 124 percent.

Two of Palo Alto’s most coveted neighborhoods took second and third places on the list. Homes in Old Palo Alto sold for 122.6 percent of original price, while those in Crescent Park pulled in 115.7 percent of asking price.

In one extreme example, a two-bedroom, 1,080-square-foot home in Old Palo Alto sold for $2.8 million in early August, almost 50 percent more than its original price of $1.9 million.

See the chart below for the full results.


Peninsula Housing Prices August 2014

Good news for home buyers…..where the median home sales price was up in almost every one of Pacific Union’s Bay Area regions this year, August had a bit of a down tick.


Homes in Pacific Union’s Silicon Valley region continue to command the highest prices of any our regions, with the median clocking in at $2.4 million for the past five months. Still, buyers are getting a small break on another front: In August they paid an average of 1 percent more than original price, compared with 5 percent earlier in the spring.MonthlyMarketUpdate_Aug14_SiliconValley

The average days on market in Silicon Valley has increased each month since May, and homes took an average of 37 days to sell in August. At 1.3, the MSI dipped just a bit from the preceding month.

Defining Silicon Valley: Our real estate markets in the Silicon Valley region include the cities and towns of Atherton, Los Altos (excluding county area), Los Altos Hills, Menlo Park (excluding east of U.S. 101), Palo Alto, Portola Valley, and Woodside. Sales data in the adjoining chart includes all single-family homes in these communities.

To view the graph in a larger format just click on the link:

Next Era on the Horizon ~

  I thought this was an interesting and insightful article written by Michael Malone in the Wall Street Journal today. Dealing with the aspect of real estate in particular,  investors have been backing away from paying high dollar costs per square foot in the immediate valley and searching for the next immediate boom area. First time buyers have already experienced the frustration of not being able to afford decent homes on their budgets, deciding to push out further into surrounding communities.  The San Jose Mercury News article of recent note wrote that sales of homes over $1M in Santa Cruz County were up over 21% just from June.

Here is the article as it was published in the WSJ:

Silicon Valley, especially its San Francisco wing, is richer and more powerful than ever. Yet there are growing murmurs—underscored by plateauing new-jobs numbers and housing prices, street protests in San Francisco over the new ‘plutocrats,’ the lack of exciting new products and a decline of early-stage new investments—that Silicon Valley has finally peaked and begun the downhill slide to irrelevance.

Slide? Perhaps. The Valley has always been characterized by a four-year boom-bust cycle, and the electronics industry is overdue for such a downturn. Yet there is very good reason to believe that not only will the Valley return bigger and stronger than ever, but that it will further consolidate its position against all comers as the World’s High Tech Capital. Here’s why:

Success breeds success. A major new report being prepared by the Silicon Valley Competitiveness and Innovation Project has found that the region’s dominance is still decisive and growing. While a decade ago the nation’s various tech centers showed a relative balance in creating high-value companies, Silicon Valley (including San Francisco) has now jumped far ahead. The average worker in Silicon Valley generated 50% more output per year than the average U.S. worker in 2012, according to Collaborative Economics Inc.

The Long Wave: Most observers appreciate the Valley’s four-year cycle, but few have ever noticed a much longer, 20-year cycle in electronics. For nearly two decades since the beginning of the dot-com boom, the Valley has been dominated by software. We have lived in the Era of Code—and with it the gestalt of the programmer. This person is young, single, urban, visionary and utopian: the frat boy turned tycoon. But that era is ending, as a cycle of hardware begins to assert itself in the form of watches, wearables, mobile health, autonomous cars, drones, 3-D printing and a revolution in sensors—all tied together by the cloudlike Internet of Things.

We are entering the Era of Devices. This will be led by builders: older, with a family, suburban and pragmatic. This will undoubtedly result in a Valley more like that of the calculator and PC eras in its style, people and attitudes, and a break from the increasingly protested-against titans of social networking.

This shift is already under way. The epicenter of Silicon Valley has always migrated. With the return to hardware, it is now preparing to leap back to where it began 75 years ago—to Mountain View ( Google GOOGL -0.87% glass, autonomous vehicles), Palo Alto (Tesla, Theranos) and Cupertino (the new Apple headquarters). Even the San Francisco 49ers have moved to a high-tech stadium in Santa Clara. Back to Traditional Valley—and traditional attitudes.

Population: While Silicon Valley is among the most multicultural communities in the U.S., even more important is the composition of those communities. The Valley immigrant is twice as likely as the average U.S. immigrant to hold a bachelor’s degree. Unlike in the other technology centers, the net influx of these immigrants continues to climb rapidly. If the past is precedent, this will accelerate the creation of new startup companies and patent filings (6% of all patents filed in the U.S. include the name of at least one Valley worker.) There’s a good chance that a decade from now the “face” of Silicon Valley will be an Indian woman CEO.

Infrastructure: In experienced engineers, incubators, recruiters, contractors and service companies to support entrepreneurs, Silicon Valley remains unequaled. The great universities—Stanford, Berkeley, Santa Clara, UCSF Medical—have only become greater, and they are supported by scores of other universities, community colleges and trade schools. Carnegie-Mellon, Wharton and other famous schools have set up satellite programs or relationships in the Valley.

Perhaps most compelling for the future, the past few years have seen the arrival of research and design laboratories from the likes of BMW BMW.XE -0.94% and Mercedes, Samsung 005930.SE +0.65% and Nissan 7201.TO +0.05% and even General Electric. GE +0.46% Most important, this remains the world’s center of venture capital: Total Valley (including San Francisco) venture investments this year exceed the rest of the country combined, according to the investment-analysis firm CB Insights.

The Valley does still face some serious challenges. While it may not succumb to its traffic and cost-of-living problems, it may soon be compelled to expand. San Francisco’s tech industry is already crossing the Bay to Oakland, while the rest of the Valley is pouring into the East Bay and beyond toward the San Joaquin Valley cities of Tracy (where Amazon has set up a plant) and even Stockton. That is a glimpse of things to come.

It is possible to imagine a “Greater Silicon Valley” of 2050 that stretches from Santa Cruz on the coast, up through Sacramento, 250 miles to the Gold Country and on to Reno/Lake Tahoe. But that will take a profound rethinking of the state’s transportation system. A good start would be for Gov. Jerry Brown to abandon his San Francisco to Los Angeles high-speed-train boondoggle and replace it with an equally high-speed hub-and-spoke system centered in San Jose (and perhaps a separate hub and spoke in Orange County).

The Competitiveness and Innovation Project has found one gaping hole in Silicon Valley: research-grant money, where the Valley trails almost every other tech region. The Valley has always eschewed government money—usually for good reason. But even that may have to change as the Valley can no longer wait for the government-backed Big Science projects, now taking place elsewhere, to power its future. It needs those initiatives, and the talent they attract, closer to home. The peripheral counties of Greater Silicon Valley may be the perfect sites for those big laboratories and research facilities.

Finally, Silicon Valley needs a de facto “mayor,” the person who represents its broad interests, and not those of a particular company, industry or advocacy groups. The Valley began with such individuals—Stanford’s Fred Terman, Dave Packard and then Intel founder Robert Noyce. But that ended with Noyce’s premature death in 1990. Now, poised to reinvent itself one more time and lead the global economy again, Silicon Valley needs another leader to address the great changes to come.

Mr. Malone writes often for the Journal about technology. His latest book is “The Intel Trinity: How Robert Noyce, Gordon Moore and Andrew Grove Built the World’s Most Important Company” (HarperBusiness, 2014).

Q2 Real Estate Report 2014-Silicon Valley


Spring is typically a brisk season for real estate, but second-quarter activity in our Silicon Valley region was even busier than usual. Tech-industry workers and foreign buyers catapulted our market activity resulting in high sales prices. Just a few years ago, homes in our immediate counties sold for $1.1 million to $1.7 million; today, those same homes command between $1.5 million and $2.5 million, and they go into escrow as soon as they hit the market. 

High-end homes continued to sell well, with many buyers paying all cash for properties priced at $10 million and higher. An estimated 25 percent of sales in the region were “off-market” – private transactions that never appeared on an MLS.

Off-MLS sales are controversial. While buyers and sellers can avoid the tumult of open houses and bidding wars, a prearranged price can mask a home’s real value. Buyers, for example, may pay well over a homes value just to avoid competition. On the other hand, sellers may settle for a price far below what a home is worth in an off-MLS transaction to avoid the multiple offer situation.

Looking Forward: The third quarter in Silicon Valley looks to be busy, although not as hectic as the second. Homes generally attracted fewer multiple offers in the second quarter than in the first, and we expect that trend to continue.

Defining Silicon Valley: Our real estate markets in the Silicon Valley region include the cities and towns of Atherton, Los Altos (excluding county area), Los Altos Hills, Menlo Park (excluding east of U.S. 101), Palo Alto, Portola Valley, and Woodside. Sales data in the charts below includes all single-family homes in these communities.