What about an easy multiple choice quiz to start the day? Here is the question: How is the real estate market at the high end today?
a) very good
OK, so maybe the quiz was a little bit unfair since it was one answer short: the right answer is “all of the above”. How can this be? Well, the answer really depends on the famous “location”- “location”- “location”: the specific state, the specific region, the specific town, the specific district, perhaps the specific street or even which side of the street. It is that complicated.
Today, with all the uncertainty still reigning over the national economy, the job situation and the dark clouds blanketing much of Europe, people are looking for security for the money they can invest, because buying a home today is more than putting the family under a roof, it is indeed an investment. It can be good but it can also go bad.
With the sudden revival of the high end market, the pricey towns, the “money towns”, are very much wanted under the circumstances. Typically, real estate values there are more stable over time, because of a multitude of factors: school ratings, zoning homogeneity, setting desirability, not too far from the work hubs, etc…Not to forget the encompassing reason: that’s where people who have lots of money want to live. Period.
Palo Alto, in the heart of the San Francisco Peninsula, is a great example of the phenomenon. The median price there is about $2M. That market is hot, which corroborates our predictions. Listings don’t stay on the books more than a few days. Multiple offers are the norm.
Does it mean that the entire Peninsula is feeling the same heat? Not necessarily. Not yet in any case. It will happen though. The fever from the high end is progressively spreading into the surrounding areas like ink on blotting paper. How far and how long it will spread is still an open question. Looking at the map of the Bay Area, we see a significant difference between the hot Peninsula & South Bay, the warming up East Bay, and the North Bay which, aside from the buzzing traditional pockets of wealth, is mostly lukewarm. Some regions, where distressed properties represent the lion’s share of the market, are still a bit cold and may not catch the fever before next year.
The tempo at which it will spread is also an interesting point. For example, we see that in the select high end towns, a large percentage of the winning offers are over the asking price, while outside of the best zip codes, winning offers are still below asking even though multiple offers are becoming more common.
Last observation about this evolving market on the Peninsula: so far this year, the most active price bracket has been the bottom segment of the high end, between $1M and $1.5M. It is gradually moving to the next level, over $2M and up to $3.5M. We can realistically expect that the top end, from $3.5M to the moon will be sizzling by springtime.
If you are in the mood to buy, it would not be a bad idea to act on your desires now. If you are in the mood to sell, the time is ripe too: you may have buyers waiting to make you an offer you cannot refuse.