March 30, 2011

From the archives: UNSTOPPABLE PRICE APPRECIATION: Palo Alto, Sunnyvale, Mountain View, Cupertino

Let’s take a look at the way back machine. Flashback to this day in 2007:

March 30, 2007

UNSTOPPABLE PRICE APPRECIATION: Palo Alto, Sunnyvale, Mountain View, Cupertino

San Jose Mercury News – In Silicon Valley, real estate market has two faces
In the area comprising Cupertino, Mountain View and Sunnyvale, it would take 27 days to sell out the houses on the market this week – a bit less than the 36 days worth of supply from a year earlier, according to data compiled from the local multiple listing service database by Richard Calhoun, owner of Creekside Realty in San Jose.Calhoun collected the data based on groupings of cities or neighborhoods that tend to be priced similarly and “for the most part are geographically contiguous with one another.” His data measures how long it would take to sell all the listed houses given sales pace during the preceding 35 days. Condos and townhouses were not included in the data.

Martine Schepers and her husband, Wim Verhaert, put their four-bedroom Sunnyvale house on the market March 15, priced at $928,000, which they knew was a bit low compared with recent sales. “We hoped we would get $950,000,” Schepers said.

Five days later, their agent, Dave Clark of Coldwell Banker, showed them a stack of 14 offers. A few were for more than $1 million. “We were looking at each other like `this can’t be happening,’” said Schepers, who is hoping to move back to Belgium, where she and her husband were raised. “We kind of heard it was hot, that the market was pretty good,” she said. “We did expect offers to come quickly, just not so many and not this much overbidding.”

Undeterred by national news of turmoil in the subprime mortgage sector or the stock market, buyers are competing for some homes in these communities, especially those in the most sought-after school districts, such as Cupertino, Los Altos and Los Gatos. Job growth is also bolstering the market, and many house-hunters are seeking short commutes to tech company jobs.

Demand for homes in these areas is such that some sellers are specifying the date upon which they’ll review offers – just like during the boom years from 2003 to mid-2005 – and insisting on “as-is” sales.

“I’m sorry for the buyers, to be frank with you,” said Coldwell Banker agent Stacy Chung as she toured a newly listed Cupertino home Thursday. Other agents agreed that the four-bedroom home – perfectly staged, with granite kitchen counters, stainless steel appliances and immaculate wood floors – would sell for more than its $928,000 list price. Chung told of a recent attempt by one of her clients to buy a Saratoga house priced at about $1.4 million. “We put in $120,000 more and didn’t get it.

 

HAH! TAKE THAT EVERYONE!

The Bay Area continues to go strong with multi-million dollar houses!

Palo Alto, Sunnyvale, Mountain View, Cupertino – 1 word: UNSTOPPABLE!

Oh yeah! We rock. We so rock. Better start bidding 35% over if you want to be a player!

You are so priced out forever.

It appear that some things have changed. But as we all know, real estate comes in cycles. Is this the year we reached this peak again? Or will it be next year?

I won’t rest until every house in the Real Bay Area gets 88 offers!

Comments (36) -- Posted by: burbed @ 5:06 am

36 Responses to “From the archives: UNSTOPPABLE PRICE APPRECIATION: Palo Alto, Sunnyvale, Mountain View, Cupertino”

  1. waiting_for_the_fall Says:

    What is that house worth now?

  2. John Says:

    We need details on these homes

  3. SEA Says:

    Note how this illustrates just what ‘overbidding’ is and how it works.

    First the admission that the asking price was low:

    “Martine Schepers and her husband, Wim Verhaert, put their four-bedroom Sunnyvale house on the market March 15, priced at $928,000, which they knew was a bit low compared with recent sales.”

    The number and value of the offers:

    “Five days later, their agent, Dave Clark of Coldwell Banker, showed them a stack of 14 offers. A few were for more than $1 million.”

    Next their low expectations:

    “We did expect offers to come quickly, just not so many and not this much overbidding.”

    So what they did is take a property that’s worth over $1 million, put a price tag of $928k on it, and then they’re surprised when the offers come in? And when someone pays more than the below market asking price, that’s called overbidding?

    What’s next? People asking above-market prices getting underbid? What is this world coming to?

    One last comment on the quality of the professional services at the time. “…“We hoped we would get $950,000,” Schepers said.” Where did they get the idea that it was only worth $950,000? I’d really be disappointed with my agent if he missed the final selling price by that much, but they seem happy. Who knows, maybe they home was flipped for an extra $250,000?

  4. nomadic Says:

    SEA, you seem to think finding market price is a precise science that can be determined accurately. It’s not. And it certainly wasn’t during the ridiculous bubble days when a reasonably rational person had no idea what a panicked buyer would do for a house.

  5. madhaus Says:

    We’ll know it’s a sellers market again (which it isn’t) when buyers start in with unusual things to get their offers noticed. I’m thinking hand-written letters, home-baked goodies, and Friending every one of the neighbors. Maybe hiring the blimp from Moffett to overfly the house with a custom message?

  6. PerfectAngel Says:

    2007. That is such a year. And 2008 too.
    Don’t forget to read the excerpts from our favorite real estate expert. The post ends with a memorable sales pitch:

    There’s been an on-going party here. Why are you not joining?

    That’s was 2008, before the phrase “icing on the cake” was ever used in real estate world.

  7. ES Says:

    My parents sold in 2007 in Lynbrook’s district- so San Jose bordering Saratoga and Cupertino. They priced at the magical 888,888 and, I swear I’m not making this up, a dude from China showed up with a briefcase full of cash. Dude put $400,000 down that day for a final bid price of $920K (my parents paid $320K in 1993). There were something like 6 offers during the open house.

  8. PerfectAngel Says:

    a dude from China showed up with a briefcase full of cash.
    —–

    Biological instinct. The dude needed some “chicks”.

    The 28-year-old has been dating for sometime but his relationships have gone nowhere. They often failed because the women wanted a man with a decent apartment, said Jin.

  9. nomadic Says:

    #6, they were ripped off. The realtard should have put a 7-day holding period on the listing so they could collect all offers at once. Then you call the top bidders and ask if they’ll sweeten the pot to “win” the house…
    ;-)

  10. The Gilroy Alex Says:

    #6 wow.

    That called for the ol’ shrimp-inserted-into-curtain-rods trick to make the house more “lucky” since US toilets aren’t set up for the celebratory “upper decker” to bless the new owners with as you hand the house over.

    I mean, at least with a deal like that you can load the place with plenty of radioactive Chinese drywall.

  11. sfbubblebuyer Says:

    Haha! I remember shopping for a house in 2007. Man, it sucked. We were even looking in the Cupertino/Sunnyvale area. We would see the same 100 couples at every single open house. We’d watch the realtors writing offers on the roof of their cars at the open house. I’m so glad I had a meltdown and we wound up not buying then.

    Instead of WAY overpaying in 2007, we just overpaid by a little in 2009, just in time for the second stimulus to make us look brilliant. Until now, that is. This next leg down will absolutely push the price we could sell it for below what we paid for it.

  12. SEA Says:

    #4- Even if we assume that a market price can be nicely determined, such as the current price of a well traded commodity, the bottom line is that the seller sells for market price. The market price is whatever it is at the time.

    Now let’s discuss “overbidding.” There is not a single rational buyer who overbids–not one. And if you suggest that the market is full of irrational buyers, all bets are off. You know, all those irrational lenders who wrote underwrote irrational loans in amounts supported by irrational appraisers to irrational buyers.

    The bottom line is that the so-called ‘overbidding’ was just a reflection of the market values of the time, no matter if it’s a precise science or not.

    With that said, if we give the REALTOR the maximum benefit, he should have at least suggested that the final selling price could exceed $950k.

    Part of the problem is that while the seller seems happy with the agent, we will never know if $250k was left on the table.

    “Five days later, their agent, Dave Clark of Coldwell Banker, showed them a stack of 14 offers.”

    Was the market changing so fast that the agent couldn’t grasp what might happen in the next FIVE days? Why didn’t the agent suggest that the price might be way below the final selling price? Maybe I expect too much when I’m paying $60,000+ in commissions? I pay $60,000+ for five days of market time, and the agent cannot reasonably prepare me?

  13. Maryland Says:

    A little data to thank you for your blog.

    Underwater?

    The Sunnyvale house sold for $1,070,000. But has a Zestimate today of $856,500.

    Seller Information
    Original Name: VERHAERT WIM

    Property Information
    Original Property Address: 1482 THUNDERBIRD AVE
    SUNNYVALE, CA 94087-3734

    Lender Information
    Name: ABN AMRO MTG GRP INC

    Legal Information
    Assessor’s Parcel Number: 313-16-002
    Recording Date: 04/20/2007
    Contract Date: 04/12/2007
    Document Number: 19393466
    Document Type: GRANT DEED

    Sales Information
    Sales Price: $1,070,000
    Sales Price Description: SALE PRICE (FULL)

    Mortgage Information
    Loan Amount: $856,000
    Loan Type: CONVENTIONAL
    Mortgage Date: 04/13/2007
    Due Date: 05/01/2037
    Title Company: FIRST AMERICAN TITLE
    Transaction Type: RESALE
    Description: DEED OF TRUST

  14. SEA Says:

    I wish I were paid like a REALTOR.

    True market value $1M, given a normal sale. Asking price $900k. Fire sale selling price $950k.

    I quickly get paid $14,250. Do I care that I left $750 [=1.5% of $50k] behind? How much skill does it take to sell a $1M house with an asking price of $900k for $950k?

    So I present a dozen or more offers in a couple of days, get paid the quick $14,250, and the sellers thank me. So what that I could have actually done some work and sold it for $50k more.

    The American way! What could be better?

  15. nomadic Says:

    YAY – by Zillow’s estimate, they still have $500 in equity! :-P

    (Plus the principal paid since 2007… spoil sport.)

  16. nomadic Says:

    SEA, you’re off on a tangent again. Your scenario in #11 is nonsensical. If the “market value” was $250k more, then why didn’t the market offer that much more? Is there a minimum time on the market somewhere in your definition?

    And yes, the market price (first paragraph of your dissertation) is what a seller gets at the time. (Or conversely, what a buyer is willing to pay at that moment.) What if the seller thinks it’s X and prices accordingly, not realizing there are buyers out there who believe it’s X+50k?

    First rule of selling real estate is to try to price it right AT the market price for a quick sale. During the bubble, that was distorted to price just below market price to drive more interest because the volume of buyers will float it up to “where it needs to be” as our resident troll likes to say.

  17. SEA Says:

    “Is there a minimum time on the market somewhere in your definition?”

    Yes. My first questions to any agent is about time on the market. Once we have some sort of normal time to sell, I start asking questions based on that time.

    Generally:

    Fire sale price (an very good offer within 14 days–high earnest deposit money, minimum restrictions, etc.).
    1/2 the current average time (normal offers)
    the average time
    double the average time
    the maximum given a few times the average time

    If the agent suggests that the highest selling price is in the near future, he’s suggesting a down market: don’t wait to sell at the best price.

    So basically I’m suggesting that the home was sold at a fire sale price, but it was an up market at the time.

    “What if the seller thinks it’s X and prices accordingly, not realizing there are buyers out there who believe it’s X+50k?”

    So I’m paying $60,000 in commissions, and my agent cannot get the price reasonably close in a heavily traded market?

    I agree that today a house might be more difficult to price, but when homes are selling in less than five days?

    “First rule of selling real estate is to try to price it right AT the market price for a quick sale. During the bubble, that was distorted to price just below market price to drive more interest because the volume of buyers will float it up to “where it needs to be” as our resident troll likes to say. ”

    Ok, if you price below market, why would you be surprised when the home sells above the asking price?

    Here’s what I’d like to see:

    A ‘near’ expected price offer near the average time on the market for the other homes.

    Near being statistically defined, and expected selling price being established before the home is listed. If the agent misses the mark by $120k [=over 12.5%], as is suggested by #12, I wouldn’t be happy.

    I’m not happy when an agent fills my head with fantasy pricing in either direction:

    Above: List at $1.5M for this $1M home–I have lots of buyers who will suddenly vanish once I get the listing.

    Below: List at $900k for this $1M home–you want to get all kinds of interest, and you’ll sell for more than the asking price, even if the final sales price is less than the $1M potential given a sale that would take an average length of time to complete.

    There are cases when sellers want to sell at fire sale price–that’s fine, but let’s be honest about it.

  18. madhaus Says:

    #12, where did you get that yummy data? Is that a proprietary database that must be paid for or is it open to all? PropertyShark used to have useful info, but it’s really not anymore. This property doesn’t have the mortgage you found, but it does have the old $493,500 one that Wim and Martine obtained back in 2000, when they bought the house for $705,000.

    WAIT! This house isn’t in the RBA! It didn’t double in ten years!

    Also an interesting tidbit for our delightfully pixilated South Sunnyvale maven: According to Redfin, Birdland prices are below the median for all of the 94087 zip. I’m fairly sure he said this was a sought-after neighborhood. Guess it isn’t.

  19. madhaus Says:

    Sorry, Birdland prices available on the Redfin listing for the house under discussion.

  20. SanMatean Says:

    17- Why are you picking a fight with a guy that hasn’t even commented on this posting? I’m pretty stoked that the petty bickering that dominated this site for a while has disappeared…there’s no need to bring it back!

    That said, #12, where did you get that delicious data? Inquiring minds want to know!

  21. madhaus Says:

    #19, thanks for keeping me honest. :D Or at least less contentious than I could be.

  22. nomadic Says:

    Not to diminish Maryland’s most excellent contribution, but if you go to propertyshark and put in the seller’s last name, the address pops up. Then you can look up the property to get the buyer and purchase price info. The rest of the loan data isn’t there though.

    Amazing how the internet can invade one’s privacy.

  23. bob Says:

    I read stories like these and sort of shrug. I don’t really care for the Peninsula or any of the neighborhoods in it. Nothing utterly remarkable or scenic about it. Even if the prices were cheap it doesn’t matter. A million bucks for what I’m going to assume looks like your ole’ typical 70-riffic’ rancher house is nutty.I don’t care where the house is located.

  24. madhaus Says:

    OMFG. I went over to the link to when this article ran in on Burbed in 2007. There’s one comment. ONE. Here it is:

    Sick of it, sick of it—grew up in S’Vale–NOTHING exciting going on here folks–it’s devolved into a suburb of Beijing and Banglor–I hope the idiots that buy this year watch the prices slowly and painfully drop for the next 5.

    Wow, some bitter racist got their wish.

  25. Real Estater Says:

    Unbeatable value in 94301:

    http://www.mlslistings.com/434-FULTON-ST-Palo-Alto-CA~i19$1021166$RES

  26. madhaus Says:

    Wow, what a piece of crap! Perfect for burbed, thanks #25!

  27. Real Estater Says:

    Value is in the land.

  28. nomadic Says:

    That is an excellent specimen for burbed! The honesty of the listing is breathtaking: “substandard lot,” “as-is where-is” (I’d like to see land that isn’t!), “no value.”

    Wow. Truer words have never been written. Hilarious.

  29. PerfectAngel Says:

    Value is in the land.
    —-

    Value is in the humor of this listing. At least on Burbed.

  30. madhaus Says:

    I got it written up already. Thanks again, #25!

  31. Real Estater Says:

    I still don’t get what’s the big deal. It seems like a reasonable listing considering where it’s located and the East Bay price they’re asking.

  32. madhaus Says:

    You just keep on being you!

  33. Maryland Says:

    #18 sorry was on my way home when you posted. Problem of being in another time zone. The data is from Lexis property records. The article from the paper got me interested enough to look it up.

  34. Real Estater Says:

    Here’s another one listed by the same realtor, with similar description. Be forewarned, offers by 4/6, or you may lose out.

  35. nomadic Says:

    Hooray, another substandard lot. I’d rather have a tree house. heh.

  36. madhaus Says:

    #33, thanks for the update. Lexis, definitely money involved. Just like a Lexus.

    #34, I think I like the first one better. This one looks too at home in the woods. But I just took a quick glance.


Leave a Reply

Please be nice. No name calling, no personal attacks, no racist stuff, no baiting, etc. Let's be nice to each other in the true Bay Area spirit! (Comments may be edited/removed without notice.)