Feb 2007: Market at 73°
Anyone following these posts knows that I have been saying for three years that the hysteria about a real estate bubble was overstated, at least as it applies to the San Francisco Peninsula. About three months ago the tone of media reporting started to change. We began to hear of a “soft landing.” We began to read discussions of how different parts of the country are responding differentially to the real estate slowdown.
Now the picture is very clear: the bubble concept does not correctly describe the situation in high demand, high priced areas with ample job supply and affluent buyers such as our area. The bubble is affecting lower priced areas with lots of speculators who bought up properties in the hopes of turning them around. In our area, the vast majority of buyers are buying houses to live in them, not to turn them over.
Since there was very little speculation over the last 5 years of rapid price appreciation in the SF Peninsula, this appreciation was the result of supply and demand. As such, the appreciation has stabilized. While prices have softened in marginally in some places, they have actually increased a little in others. What is true is that there are fewer sales. This is the result of several factors, including the need for sellers to adjust to not totally being in the driver seat and being willing to accept their list prices without choosing to take their homes off the market, hoping for renewed frenzy in a few months, buyers’ hesitation because they are still focusing on bubble fears, and simple lack of inventory to sell.
Navigating this market as a buyer or seller is not easy. I have been helping buyers and sellers here for 20 years. If you would like to talk with me about the market, please give me a call at (650) 387-6120. I would be happy to share with you my thoughts and suggestions.
Take care,
Stewart Kiritz
paloaltoarea.com