Dear readers –
As you may have heard, recently industry icon and good friend Alain Pinel joined our Intero family. To further share with our readers his tremendous knowledge on luxury real estate, you will receive a Luxury Insider – A weekly glimpse of the high-end real estate market blog written by Alain. Hope you enjoy this valuable information. And thank you Alain for your insight on the luxury market.
- Gino Blefari
2011 is gone. Thank you. Don’t know too many home sellers and home buyers who will remember it fondly. I will venture to say that most Realtors share that sentiment. Actually, the best thing that can be said about last year in the real estate business is that… It did not get worse. We’ll take it. After some four years of nasty economic news and agonizing uncertainty, a flat year is a welcome transition. Real estate values have stabilized in the Silicon Valley. The ground is firmer. We now have a more stable foundation to build on. The business climate also is changing: the many “For Lease” signs that we used to see in the hi tech districts have disappeared from the curbs and the job situation has improved considerably. We still have to jump a few hurdles such as a tight credit but, together with low mortgage rates, a decent inventory of homes, attractive prices and a growing pent up demand, today’s picture calls for optimism.
The segment of the market most likely to benefit from the above is the luxury market, the “high end of the high end.” In a way, it was to be expected since it is the segment of the market that suffered the most over the last 12 years or so. Since the dotcom hay-days of 1999 and 2000, prices and number of sales have been cut significantly.
Case in point, let’s take a look at Atherton, the perfect “high end market,” during that stretch of time.
In 2000, 28 sales over $5,000,000 were posted on the MLS for an overall market average price of $3.8M. From that point on, the number of transactions shrunk and ended up at 10 last year, roughly a third of the 2000 high mark. The stats for 2004 came close (21 sales), but no cigar. In terms of price, the overall Atherton market average last year was $3.4M, still 10% below the price achieved in 2000.
At a time when cash is coming back to the valley, fed by new IPO’s, a new wave of buyers in the $ million range anxious to move their equity to higher grounds and foreign investors looking for a safer refuge for their money, things are looking up in the luxury market. I bet the high end is going to be again the market locomotive it used to be. Happy New Year!