Gamble Garden Community Day

Gamble Garden Center will be holding its Community Day this Sunday, October 4th, 10-2. There will be activities for the whole family, plus information on Palo Alto's Emergency Preparedness Program and other neighborhood opportunities. Scheduled to be on site – Palo Alto Fire Truck and Police Vehicles. Earthquake supplies will be on sale - they make great holiday gifts for friends and family!

The real estate market has really picked up since Labor Day (it usually does, but buyers came back into the market in force this year)! I think the best house for the money in Palo Alto is 157 Primrose, in the Duveneck School district. It's priced at $1.625mn, 3 bedrooms, 2,060 square feet on an 8, 800 square foot lot, mostly updated, a beautiful new kitchen and family room, and all the rooms are large. The downside is it doesn't have a master bath, but that could be easily fixed by converting the large laundry room - it's nice to have a laundry room close to the bedrooms, but it's a trade-off I would definitely settle for. My guess is it will get multiple offers this week.

New Listings!

Wowzer! 31 new listings in Palo Alto this week - haven't seen volume like this in a very long time. Market activity has been heating up over the last few weeks, so it'll be interesting to see if demand keeps up.

Here's some more good news for the housing market: thanks to the European debt crisis, mortgage rates are at historic lows. The current average rate for a 30 year fixed is 4.87%, per Bankrate.com. That's the lowest rate for the last 30 years.

Even jumbo rates (loans in excess of Have fallen. The 30 year jumbo is an average of 4.5, down from nearly 6% this time last year. If you believe Moody's (and after the CDO ratings mess, I would take their pronouncements with a grain of salt), "It's the best time in our generation to buy...mortgage rates are so low and home prices down, and lots of inventory, you couldn't pick a better time to buy or re-fi".

The question is how long will these rates last. "I think they won't last much longer than a month or two at the best. I can see them going up to 5.5% by the end of June, if not sooner" says Lawrence Yun, chief economist at NAR. Yun says the worries over Europe will be fading soon and investors will be looking at other assets besides Treasuries. And, of course, the U.S. deficit will push up Treasury yields at some point. A quarter point rise in interest rates can raise the monthy payment by $1,100.

Real Estate Market Picks Up!

Realtors always say that the market can turn on a dime, and we have really seen that on the Mid-Peninsula in the last few weeks! We are going into the 10th month in a row of increased sales activity vs. the year before, and prices are steadily inching up:

Average Closed % of List Price

2009 Price DOM Sales Inventory Received

January $1.552 52 12 85 95%

February $1.465 64 14 124 96%

March $1.391 53 24 140 98%

April $1.536 65 29 161 95%

Average Closed % of List Price

2010 Price DOM Sales Inventory Received

January $1.396 65 22 76 98%

February $1.634 64 22 80 97%

March $1.645 62 27 89 99%

April $1,707 37 32 96 99%

Days on Market (DOM) is a key indicator of market strength. % of List Price Received is also key, and I believe will be over 100% when the May data is in.

The Cost of Over Pricing (by even a little)

We have seen it over and over. Houses that are priced just a little over the market"s sweet spot just languish. 558 Greer is priced at $1.299m, 3 bedrooms, 2 baths, 1,350 square feet on a 6,000 square foot lot, nicely updated with a new kitchen, and in Duveneck School district. It's been on the market for 10 days, which might not seem like much until you consider 2137 Bowdoin in College terrace, a 2 bedroom, 2 bath fixer on a 4,500 square foot lot that was priced at $728 and sold for $1,000,000 in 9 days. Or 3499 Greer in South Palo Alto - a 4 bedroom 2 bath Eichler, very little updating, and on a busy part of Greer, listed for $969k, under contract after 7 days and 23 offers.

Mortgage Rates Going Up or Down?

Mortgage rates have recently gone down again after a brief rise in December. There was an article in the Wall Street Journal about the fragile underpinnings of recent positive trends in the real estate market nation-wide. They mentioned that the Fed brought down mortgage rates by committing to purchase up to $1.25 trillion in mortgage-backed securities. That program, already extended once, is set to expire in March. A Lazard Asset Management portfolio manager say rates could rise by a full percentage point after the purchases end, sapping the recovery. He predicts that house prices could fall by 15%-20% if the program ends as planned in March.

What we have seen in the past on the peninsula, is that when rates go up and buyers are more cautious, sellers get stubborn and either take their houses off the market or let them languish on the market at a high price. When sellers do that, inventory looks high on paper, but selection of properties priced at the real market rate is very limited. So, I am hoping that Ben Bernanke has the support in congress to extend the program.

Best deal in Menlo Park

350 Nova Lane in the Willows neighborhood of Menlo Park is one of those houses that should have sold immediately, but is languishing in this quirky market: $1,249,000, 4 bedrooms, 2 baths, 1,490 square feet on an almost 5,000 square foot lot - completely updated with open floor plan, big master bedroom, on a quiet cul-de-sac. The lot is on the small side, but the back yard is nicely landscaped and completely usable. It isn't my listing, but somebody should grab this!