Home ownership can be for many their biggest financial asset, and as a result, biggest financial concern. But with current mortgages dropping to their lowest point since the 1950s, many Silicon Valley homeowners are saving thousands a year just by refinancing. Is the time right for you? Let’s go through some considerations that cover the why, how, and hurdles of refinancing.

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Why refinance?
Hurdles in refinancing
Break-even calculation
Comparing interest rates
Shopping for a new mortgage

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Why refinance?

The most common and obvious reason is that homeowners refinance to lower their mortgage rate. A lower rate means lower monthly payments and less money towards interest over the life of the loan.

For example, a 30-year fixed-rate loan of $400,000 at 6% would have a monthly payment of $2,398. But if you were to qualify for 5.5% on the same loan amount, your monthly payment would be $2,271, or a savings of $127 a month and $1,524 saved in a year.

Or you may want to adjust the term of a loan. Decreasing the time period of a loan results in a lower rate and paying off your loan sooner, for a slightly higher monthly cost compared to a 30-year loan. Increasing the length of a loan is a cash-flow option, freeing up cash now, but paying more over time.

You can also switch between an adjustable-rate mortgage (ARM) and a fixed-rate mortgage. The riskier ARMs float with current interest rates, so your payments increase or decrease accordingly. Commonly, homebuyers are moving to a safer fixed-rate mortgage.

Cash-out is the last option, where you refinance a mortgage for more than you owe and receive equity in cash, which can help pay for large debts now.

Options outside of refinancing are home equity loans and lines of credit, and reverse mortgages.

Common hurdles when refinancing

Before you think a refinance is the easiest route to saving your financial back, strict requirements and sometimes extra costs don’t make the trip worth it.

Similar to the first time you applied for a mortgage, lenders are looking at three qualifications: income, credit score, and property value. If any one of these has suffered, lenders will likely charge additional fees or raise your rate.

Another issue can be if your current mortgage has a prepayment penalty, which reduces the benefit of refinancing, again, because of additional costs.

So talking to a loan officer is the first step to see where you fall financially and what you qualify for in terms of refinancing your mortgage.

Break-even calculation

How long it takes to recoup the cost of refinancing realized with a lower rate, the break-even point, is useful for determining if it is worth refinancing when considering how long you plan to stay in your home.

Typical fees that add to the cost of refinancing are loan origination fee, points paid to lower your interest rate, appraisal fee, inspection fee, closing fee, title search and title insurance, and other miscellaneous lender fees. Total fees can easily get into the thousands.

Lenders sometimes offer “no-cost” refinancing. Though you may not have to pay the above fees at closing, you will have to either accept a higher interest rate or the fees will be rolled into the term of the loan.

If you leave your home before recouping the closing costs there is little point in refinancing.

Let’s use our previous example, and say a refinance will save you $127 a month but closing costs were $4,500. To break-even, you would have to keep the loan for about three years; if you were to keep the house for 10 years you would save $10,720, including the cost of closing.

There are numerous refinancing calculators on the Web, like at bankrate.com, where you can plug in your own finances and get a quick estimate.

Comparing interest rates

As we saw with the initial graph, rates have been dropping over the years. But interest rates and fees change daily from lender to lender.

In addition to the most surefire ways — good credit, income, and equity — to an excellent rate you can also pay points. A point is equal to 1% of the total loan amount and the more points you pay the lower the rate.

To give you an idea of the current rates for a 30-year mortgage, here are some from a Bay Area lender as of July 2010:

No point, conforming loan (under $417,00) = 4.5%
No point, “no-cost” conforming loan (under $417,00) = 4.75%
High-balance loan (under $729,250) = .125% – .25% higher than a conforming
Jumbo loan (anything higher than $729,250) = low-to-mid 5s

Shopping for a new mortgage

Shopping around and comparing loan offers by different lenders is the best way to save money. First, talk to your current lender, as they could save you time and wave fees since you are a returning customer.

Feel free to contact us if you are looking for recommendations on Bay Area lenders or mortgage brokers; also, if you would like to find out more about our real estate services.
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Related Posts:
Mortgage Traps: How People Get Ripped-Off
The Three Traps of Exotic Mortgages
Credit Surprises That Damage Mortgage Applications
Loan Rates Based on Mind-Boggling Number of Criteria


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_{(Redwood Gate houses)}

The corner of El Camino Real and West Charleston Road has undergone a lot of real estate development in the past few years. First it was the 181-unit Arbor Real on the corner and now on the old Elks Club property, beside Arbor Real, is the new Redwood Gate by SummerHill Homes development. (map.)

The properties are listed as detached and attached single-family homes, which are unlike the the condominiums and townhouses available at the previous housing developments we have reviewed, Altaire and Sterling Park.

Redwood Gate may have better features, a better location and more square feet than its “competitors,” but it also has a higher price tag – $1.15 million to $1.499 million. Continue reading to find out more about this Silicon Valley real estate development and see if it lives up to the old adage: you get what you pay for.

overview | pricing | highlights | concerns | comparables | takeaway

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Overview

_{(Half-acre park at Redwood Gate)}

Redwood Gate is one of the smaller real estate developments in Palo Alto with just 35 detached and 10 attached single-family homes, plus a half-acre park.

Construction of the single-family homes at Redwood Gate started in 2009 and will be completed by the first quarter of 2011. The neighboring Elks Lodge is also under construction and will be completed by October 2011.

As of June 2010, 26 homes have sold and nine homes are currently available; in the future, the five homes in the park location, two of the attached homes and the three remaining model homes will be available.

The development is located in the Charleston Meadows neighborhood and close to the neighborhood’s three schools — Juana Briones Elementary, Terman Middle School and Gunn High School — that are all less than a mile away, and off of Arastradero road.

As a further incentive to visit Redwood Gate, receive a $50 Visa gift card for scheduling a tour of the properties with one of our agents in the month of July.

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Details and Pricing

Redwood Gate properties are listed on MLS Listings Inc. as either attached or detached single-family homes, but sold to homebuyers under condo ownership and approved for loans under the detached condo category. This is the only way that developers could get approval in Palo Alto for building homes that have a large living space on a small lot. Otherwise, the residences resemble the single-family homes they are priced at — the median price for homes in Charleston Meadows in 2009 was $1.25 million; condos were $801,000.

Being in a single-family home, instead of the condos and townhouses found at Altaire and Sterling Park, means that the homes do not share walls (even the duet-style homes, which are connected but have air space between walls), and the homeowner owns the house along with the land underneath and the yard for 10 feet. Homeowners, also, own a percentage of the common area through a $202 monthly HOA fee, which includes landscaping, all water usage, garbage collection, exterior property insurance.

Along with a difference on paper between Sterling and Altaire, is the difference when you see the property. Redwood Gate properties are about $500,000 more than a comparable townhouse at Altaire, but also have a two-car garage, large patio space, high ceilings, an extra loft room and 500 square feet more.

All seven floor plan options are still available at Redwood Gate as of June 2010. Plans range from three bedrooms two-and-a-half-baths and two stories through five bedrooms three-and-a-half-baths and three stories. Residence 1A has 1,7775 square feet all the way through residence 7B with 2,380 square feet, and listed at $1.15 million through $1.42 million, respectively. Upgradeable features are also an option.

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Highlights

_{(Model home interior of a Redwood Gate home)}

New and modern homes. We’ve already mentioned the extra space and privacy that Redwood Gate allows, which means there is more flexibility for growing families. A new build means modern features, including Kohler sinks and faucets, GE stainless steel appliances, maple cabinetry, granite countertops, volume ceilings. Homes are also designed to be GreenPoint Rated, which help in energy efficiency and are environmentally friendly.

Smaller development size means a closer community and less hassle over parking spots, including the 14 guest spots. It is also surrounded by another housing development, the Elks lodge, and a pleasant residential area on Wilkie Way in the rear.

Good location in Palo Alto. If you ignore the busy El Camino Real intersection, Redwood Gate is better and more centrally located in Palo Alto over Altaire and Sterling Park. It is walking distance both to schools and Robles and Briones Park, and one mile from Charleston Shopping Center and San Antonio Shopping Center.

Strong home values. Because Redwood Gate properties sell as single-family homes their value will be more stable over the condo and townhouse market. In addition, Palo Alto, as we have seen, is one of the strongest real estate markets in Silicon Valley.

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Concerns

Traffic on El Camino Real can be difficult, but noise shouldn’t be an issue because the Elks Lodge lies between Redwood Gate and the street.

Limited parking could be a pain if you plan on having more than two cars. Besides the 2-car garages, there are only 14 guest spots available here.

It is a high purchase price for condo ownership at Redwood Gate when considering that the median selling price in 2009 for homes in the Charleston Meadows neighborhood was $1.2 million. Having said that, the homes have been selling at a rate of two a month, so demand is clearly there. Another consideration is that standard homes under $1.2 million in Palo Alto are not going to be new and most likely need repairs or upgrades, and lack the premium build and features that a new development like Redwood Gate has.

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Comparables

Altaire and Sterling Park aren’t comparable since price and features differ so much as we covered under the pricing details category. The locations of these properties are less than ideal since both sit near 101 and at the edges of Palo Alto. Another option for homebuyers in this price range would be to consider an entry-level home.

In the past three months (April, May, June 2010), the median price in south Palo Alto for single-family homes has been $1.26 million. Of those homes that have sold, the average age is 56 years old, average interior square footage is 1,779 and average lot size is 7,200 square feet.

So Redwood Gate homes have equivalent interior space and come with all the advantages of a new build and low maintenance, but on the other hand, lack in lot size and ability to customize when compared to a traditional home in Palo Alto.

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Takeaway

These homes are generally targeted for people that are moving up from a condo or townhouse and need the extra space for a growing family. The residences offer the benefits of a new community development but also the future stability in home values that a single-family home has in Palo Alto. Of course, Redwood Gate prices reflect these criteria and it certainly is a quality development, but the high-price tag could be a determining factor for a lot of potential homebuyers.

Feel free to contact us for more specific information and an opportunity to tour Redwood Gate in-person (plus a $50 Visa card if you visit in July), or just to find out more about our unique Silicon Valley real estate services.

_{(Sterling Park exterior)}

Sterling Park is another of the recent housing developments in Palo Alto, which also includes Altaire and Redwood Gate. Located in the Midtown neighborhood, the use of mixed housing and two on-site parks helps Sterling avoid the compact feeling of standard developments in Silicon Valley and lets its residents enjoy some extra space. Click through to find out more about the property.

overview | pricing | highlights | concerns | competition | takeaway

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Overview

Parallel to the 101 freeway and on the corner of West Bayshore Road and Loma Verde Avenue, 96 units compose the new Sterling Park development, which is slated to be completed early 2011.

The development is broken down by 28 detached single-family homes, 39 townhouses and 29 condominiums. Potential buyers should be aware, however, that all its single-family homes are sold out, and only one remaining three-bedroom and two remaining two-bedroom townhouses are available as of June 2010. That leaves the 29 one-and three-bedroom condominiums left, which will be released for sale this October.

The six and a half acre site accomplishes a neighborhood feel with wider streets, mixture of home types, focus on the two central parks, and a nose mitigation wall beside the 101 freeway to reduce the noise and view of passing traffic.

The Midtown neighborhood, which Sterling is located in, is known for its small-town feel and there is a variety of positive things to say about the nearby schools — Palo Verde Elementary, Jane Lathrop Stanford and Henry Gunn High School.

For basic information, available floor plans, features and sales information about Sterling you can visit their web site.

If you are ready to visit the property for your first time, consider representation from a local Silicon Valley real estate agent who can provide information about local comparable properties and help in sales negotiations. The second half of an older post I did goes over these considerations.

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Details and Pricing

_{Sterling Park site map (Click image to enlarge in new window.)}

The two remaining two-bedroom three-bathroom and one-car garage (floor plan 4) townhouses start just under $800,000. The last three-bedroom three-and-a-half bathroom and two-car garage (floor plan 5) townhouse is selling for under $900,000.

The upcoming 29 condominiums will start at approximately $600,000 when released late 2010. They will have either one or three levels, with a respective amount of bedrooms; and range from 1,050 square feet to 1,800 square feet.

In addition, all properties include either a one-or two-car garage. Street parking will be limited to the 39 visitor parking spots and reserved spots that are estimated to sell for $5,000 each.

Homeowner’s association fees will initially be $325 a month, but reduced to under $200 once all the homes sell out, which should occur upon the developments completion by mid 2011.

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Highlights

Lots of space. Because Sterling is composed of single-family homes, townhouses and condominiums, two parks and a community recreation center, the scenery is more pleasant than the dense row housing we usually see in developments. Traffic shouldn’t be a problem on West Bayshore Road and most parking inconveniences have been reduced since every property has their own garage.

Affordable, luxurious, green. Prices starting at $600,000 for a condominium in Palo Alto are a strong draw for many first-time buyers. But Sterling also has luxury features such as gourmet kitchens with General Electric appliances and granite countertops, and large master suites. Standard green and energy-efficient features reduce utility bills and result in quieter homes.

A location in the Midtown neighborhood means Sterling is only one mile away from fulfilling basic shopping and restaurants needs at the Midtown shopping center, which includes Longs Drugs, Safeway, Starbucks and Mike’s Cafe. And only half a mile from Greer Park, Seale Park and the Palo Verde Elementary School.

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Concerns

Beside two office buildings and the noisy 101 freeway. The developers did their best to mitigate both these issues by, first, focusing the real estate development inward and towards the parks. Second, noise levels have been reduced by a wall built along the freeway. Lastly, for condos located on Bayshore Road, the developers have taken extra measures to reduce the noise through sound insulation like double-pane windows.

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Competition:

Two other currently competing real estate developments in Palo Alto are Altaire and Redwood Gate. Comparable properties at Altaire are about $100,000 higher and Redwood Gate is mostly detached homes starting above a million. So expect nicer overall building quality and features at those two developments, but both are located at crowded intersections. Redwood Gate has the advantage of being centrally located in Palo Alto, while nearby Altaire is at the boarder of Palo Alto and Mountain View.

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Takeaway

Most buyers looking into Palo Alto already know about its strong real estate market and fantastic school district and API scores. But most are taken aback by the steep Silicon Valley real estate prices, and is why many developments in Palo Alto make it possible for new homebuyers to break into Palo Alto’s prestigious market.

Sterling Park reflects this demand and doesn’t skip on features that should enable the properties to hold their value in the coming years.

Feel free to contact us for more specific information and an opportunity to tour Sterling Park in-person, or just to find out more about our unique Silicon Valley real estate services.
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_{(Altair exterior/flickr)}

Altaire, the newest townhouse development in Palo Alto, should be on anybody’s shortlist when looking for an entry-level opportunity to move into the area without forgoing quality accommodations. We’ll cover some important details you should know about the property in this post.

overview | pricing | highlights | concerns | competition | takeaway

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Overview

The 103 urban-looking townhouses are set along open walkways and adjoined to the recently constructed Taube-Koret Campus for Jewish Life, which, together, create a feeling that is unique from traditional high-density developments. The whole complex site is right off the 101 freeway at 3901 Fabian Way.

Construction on Altaire is expected to be completed by late 2010. As of June, 59 of the 61 townhouses already completed have sold, and developers are currently in the last phase of construction for the remaining 42 homes, which are expected to be sold out by the end of the year.

For a quick description of Altaire, floor plans and features visit their website. You can also take a YouTube tour of the residences and view example show homes on their flickr page.

Also of note, when considering a property, especially a new build, representation from a real estate agent can help provide the buyer with a larger knowledge base in areas like negotiating a final sales price or showing comparable properties in the area. The second half of an older post I did goes over these considerations.

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Details and Pricing

Image shows the entire layout of Altaire residences in yellow on the left, and the rest of the campus and fitness center on the right. (Click image to enlarge.)

Available properties include one, two, three and four bedrooms; and prices start at $479,000, high-$600,000s, $739,000 and high-$800,000s, respectively. The typical three bedroom unit is around 1,300 square feet, while a four bedroom is around 1,900 square feet.

Homeowner’s association fees are from $375 to $475 a month and include: water, disposal, landscaping, insurance, two underground parking spaces and storage, and maintenance.

Also included in the purchase price is a free year membership to the JCC fitness center — a 33,560-square- foot space that includes an indoor and outdoor pool, basketball court and gym, and an expected membership of 10,000. The campus also has a preschool, senior living residences, and cultural arts center.

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Highlights

Altaire is an upscale townhouse community. New owners can expect spacious and contemporary designs, stainless steel Bosch appliances, in-home laundry, high-efficiency air and cooling, secure underground parking, and high-speed Internet connections. The townhouses were designed to meet both ENERGY STAR and GreenPoint Rated programs for energy efficiency and eco-friendliness.

Being located in Palo Alto means residents can expect some of the best schools (Fairmeadow Elementary, Jane Lathrop Stanford Middle School and Gunn High School) in California, a bustling downtown, Stanford University and Shopping Center, and a strong local government. Altaire is ideally located near the Baylands Preserve, Shoreline Amphitheatre, Century 16 Theatres, and retail developments Charleston Plaza and Rengstorff Center, which includes Costco, Best Buy, and REI.

Strong home values will continue in Palo Alto as we have seen in the 2010 quarterly post on the real estate market.

The adjoined Community Center creates a convenient neighborhood environment. Just outside the door is the previously mentioned fitness center that also has a soccer field, tennis courts, and Pilates and yoga studios. There is also a cultural arts center, cafe, preschool and day care, meeting rooms with planned adult programs and lectures, and senior living residences.

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Concerns

Area originally zoned for commercial buildings. Altaire and the community center was built atop the old Hewlett Packard site, which means that the surrounding scenery is mostly corporations like Space Systems/Loral on Fabian Way and the 101 freeway nearby.

Being at the edge of Palo Alto means a longer drive to downtown, schools or other popular spots in the city. Conversely, though, it is located near two big shopping centers, the movie theater and concert venue, and Baylands Preserve.

Expect more traffic and noise from the busy intersection at San Antonio Road and East Charleston Road, and also when the Community Center holds events — an expected trade-off of living in a more urban environment. Buyers also get two underground parking spaces with storage, but not the convenience of an attached garage.

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Competition:

Sterling Park is another new housing development on 1080 Loma Verde Ave., which is a mile north of Altaire and separated from the 101 Freeway by West Bayshore Road.

The development has sold out of single-family homes, but the remaining townhouses are priced and have a contemporary style similar to Altaire, though different floor plans and amenities available. Sterling Park has attached garages and is adjacent to a residential neighborhood and near Greer Park, but on the other hand, there are commercial buildings on two of its sides. Lastly, most of the remaining townhouses available sit on West Bayshore Road.

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Takeaway

As with any home purchase, there are positives and negatives that the buyer must personally weigh in their final decision.

Palo Alto’s strong real estate market and outstanding school district and API scores is a draw for many buyers, and combined with today’s depreciated market increases the attraction. Additionally, Altaire makes the most of its location, offers premium townhouses and a Community Center that other developments cannot match. For these reasons, first-time buyers and anybody interested in a new build should take the time to consider if Altaire is the right place to settle down.

Feel free to contact us for more specific information and an opportunity to tour Altaire in-person, or just to find out more about our unique Silicon Valley real estate services.

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The graphs cover quarterly results from 2008 to 2010 for single-family homes using data from MLS listings Inc. (link)

Number of homes sold –

It is hard to see how the cities responded to the crisis within this time frame since most home sales drop off during the winter months and spike in summer. But it is clear that home sales sagged in the first quarter of 2009, were slow to return initially, and then eventually returned to similar or stronger numbers by the end of 2009, which have continued through 2010.

Median selling price –

All four cities home prices started to slip at the end of 2008, with the exception of Mountain View, which dropped a couple quarters later. Prices rebounded mid-2009, after cities like Sunnyvale had bottomed out in the beginning of 2009, and have begun to stabilize at a depreciated value. Los Altos, which has the most expensive houses of the four cities*, realized a 20 percent drop from the beginning of 2008 to 2010; Mountain View dropped 17 percent, Palo Alto dropped 11 percent, and Sunnyvale dropped 15 percent.

*Los Altos may have a higher median selling price than Palo Alto, but part of that is the wider range of home prices available in each of the 14 Palo Alto neighborhoods, where the lower-end is selling quickly, and a population that is double the size of Los Altos. (Expect a post covering Palo Alto neighborhoods in the future.)

Average days on market –

Building up to the crisis, average days on market increased for all four cities until the beginning of 2009. Interestingly, Los Altos and Palo Alto numbers are still increasing today, while Sunnyvale and Mountain numbers are dropping. This may be a result of higher priced homes in Los Altos and Palo Alto that tend to stay on the market longer, especially in a recession, in contrast to the strong demand for the greater supply of low priced entry-level homes in Mountain View and Sunnyvale.

_{(Shoreline Lake in Mountain View)}

As in the neighboring cities of Palo Alto and Los Altos, the Mountain View housing market in the first quarter of 2010 has rebounded from the previous year.

The characteristics of Mountain View – situated in Silicon Valley and home to tech companies such as Google, Symantec and Intuit; one of the stronger school districts in California; a friendly downtown area next to Caltrain; and a more affordable single-family home and condominium and townhouse market compared to its northern neighbors – means that homebuyers are returning to the area to take advantage of reduced home prices that have occurred since the real estate crisis a few years back.

In the first quarter of 2010, the median sales price for single-family homes in Mountain View was $875,000, a slight decline from $900,000 in 2009. Though the median sales price dipped, the turnaround for this past quarter was that 50 homes sold with an average days on market of 24 days, compared to 41 sold and 62 days in 2009 during the same time period.

Mountain View home sales and the number of days on market have returned to 2008 levels, before the crisis really showed its teeth, but the median sales price this past quarter is still 20 percent lower than in 2008, which was $1.095 million.

The price range of single-family homes sold in Mountain View this past quarter, from $560,000 to $1.575 million, reflects a more affordable market than Los Altos and Palo Alto.

A strong local condominium and townhouse market

There is a larger market for condos and townhomes in Mountain View compared to Palo Alto and Los Altos, which makes it great for first-time buyers right now, especially when considering the depreciated market and government incentives.

A total of 52 condos and townhomes sold in Mountain View this past quarter at a median sales price of $589,000. Most of them had two or three bedrooms and took up an average of 1,327 square feet. To compare, Palo Alto sold 26 for a median price of $725,000 and Los Altos only sold seven for a median price of $780,000. If we were to take out properties that are less than five years old (in order to compare resale values) there was still 50 properties that sold in Mountain View, 15 in Palo Alto that sold for a median price of $672,000, and just two sold in Los Altos.

What sold for $875,000

A 1,859 square foot, four-bedroom and three-bath house was listed for $875,000 and sold for the same price this past quarter. It is a 10-year-old house and sits on a 3,920-square-foot lot in a cul-de-sac on Plum Court.

^{(Jazz festival in downtown Sunnyvale)}

The Sunnyvale housing market was one of the Bay Area cities that were hit harder by the recent real estate crisis.

Before the crisis hit in the first quarter of 2008, the median sales price for the 121 single-family homes that sold was $976,000 (including three short sales). The following year, the number of single-family homes sold during the first quarter dropped to 100 (including 23 foreclosures and 18 short sales) and the median sales price fell 46 percent, to $530,000.

The north region of Sunnyvale was most affected by the housing crisis, including the 94085 and 94089 area codes. Homes in the 94086 area code were slightly affected; and the homes that weathered the best, with sales in the million plus range, were in the 94087 area code.

This past quarter, 97 homes (including 12 foreclosures) sold for a median price of $820,000. Average days on market was 42 days, down from 85 days in 2009. The price range of home sales starts at $371,000, for a foreclosure home, all the way up to $1.45 million.

Sunnyvale is recovering quickly even though the crisis has had a more dramatic effect on the area compared to some of its neighbors, such as Los Altos and Mountain View. Because Sunnyvale is home to tech companies like Yahoo!, Palm, Inc., and AMD, and has some strong schools, including Cumberland Elementary and Cherry Chase, home prices are expected to return as the market stabilizes.

Homebuyers right now are taking advantage of this time to find good-valued homes before sales above list price become common again, as in the first quarter of 2008, when the average listing price was $964,996 but the average sales price was $979,941. It wasn’t uncommon at that time to find a home selling $100,000 over list price, which was unheard of in 2009 when most homes over a million did not sell at all. In 2010, as in the following example, we are seeing homes selling at those competitive levels again.

What sold for $820,000

A 1,210 square foot, three-bedroom and two-bath house was listed at $750,000 but sold for $820,000 this past quarter. The house was built in 1955 and sits on a 6,600-square-foot lot in Arlington Court. The home featured remodeled kitchen and bathrooms.

^{(Downtown Palo Alto on University Avenue)}

Palo Alto is one of the premier real estate markets in California, but that doesn’t mean it was able to pass through the mortgage and housing crisis, just two years ago, without a scratch.

Like most of the Bay Area, Palo Alto home prices and inventory dipped following the crisis but are now showing signs of recovering.

Comparing first quarter results between 2008 and 2010, the number of single-family homes on the market went from 81 to 68, and the median sales price from $1.681 million to $1.518 million. First quarter results in 2009 were even lower, with 66 homes sold and a median sales price of $1.275 million.

Again, because of a location in the Silicon Valley, neighboring Stanford University and a top performing school district (news link), Palo Alto homes are some of the last to be hit by a recession and a bellwether out.

When considering a home in Palo Alto, homebuyers have over 14 distinct neighborhoods to consider and home values that range from $800,000 to tens of millions.

Entry-level market

I am seeing a lot of homebuyers trying to take advantage of the dip in local home prices and trying to secure a low mortgage rate right now. As a result, buying an entry-level home in Palo Alto can be a very competitive market.

Most entry-level homes in Palo Alto can be found south of Oregon Expressway, in the Midtown and south Palo Alto neighborhoods.

The median sales price this quarter for the area was $1.27 million; and the average days on market, excluding Midtown and two outlier homes, was 24 days.

Good family homes exist under one million, and I recently sold a three-bedroom, one-bath in south Palo Alto for $950,000 this quarter. But buyers should be aware that strong competition for entry-level Palo Alto homes results in many going above list price after multiple offers are made – sometimes as close to 20 offers.

High-end market

The mortgage crisis has slowed the sales of high-end homes because sellers can afford to wait until home values return. Buyers are also more cautious with their money and may find it difficult to get approved for a jumbo loan under today’s stiff mortgage regulations.

The number of high-end home sales, like in Palo Alto’s Crescent Park neighborhood, are returning back to normal levels this year. In the first quarter of 2008, seven homes sold in Crescent Park at a median price of $4.25 million. In the first quarter of 2009, only two homes sold, the higher one selling for $1.7 million. And in 2010, five homes sold for a median price $2.75 million.

What sold for $1.25 million in 2009 and 2010

A 2,091 square foot, four-bedroom and two-bath, two-story house was originally listed for $1.495 million but sold for $1.25 million in the first quarter of 2009.

The house was built in 1963, sits on a 7,688-square-foot lot and is located at Barclay Court, a cul-de-sac in the Charleston Meadows neighborhood. Inside are oak floors, a combination living and dining room with a fireplace. The house is located next to Robles park and part of the Palo Alto school district.

During this past quarter, a 1,324 square foot, three-bedroom and two-bath house was listed for $1.198 million and sold for $1.27 million.

The house was built in 1954, sits on a 9,009-square-foot lot and is located at Fairfield Court, a cul-de-sac in the Green Meadow neighborhood. Inside is hardwood floors, stainless appliances, new fixtures and a combination living and dining room with a fireplace. The large rear yard features a patio.

Market Snapshot – May 3, 2010

There are currently 69 single-family homes and 44 townhomes and condos available. Out of the69 single-family homes, the prices have a wide range from $760,000 to $8,000,000.

^{(Main Street in downtown Los Altos)}

Home buyers and sellers are quickly returning to Los Altos after a hesitant 2009 period. Los Altos is primarily a single-family home market as we can see in the first quarter of 2010 results, with 63 single-family homes and six condos sold. The average days on market was just about 60 days.

The median price of single-family homes sold in Los Altos this quarter was $1.47 million, which is slightly higher than the previous year’s first quarter results of $1.435 million.

The effects of the mortgage crisis in 2008 and late 2007 is more apparent when we see that only 32 single-family homes were sold in the first-quarter of 2009.

Los Altos has consistently held its home values, and even in a weak national market, home prices are beginning to rise as buyer confidence returns. Home sales were also strong through the traditionally slow winter months, and we are already seeing multiple offers on well priced homes again.

At the same time, the market has cooled compared to the excitement just a few years ago. For example, when I last did a housing market update for Los Altos in September 2007, and the market was around its peak, the median sales price was $1.78 million – 17 percent greater than today. Homebuyers are probably a bit relieved that today’s scale is more balanced between the Los Altos home buyers and sellers.

Recent government tax credits, historically low mortgage rates and the slight dip in local home prices are  some of the reasons why homebuyers are trying to take advantage of this time and move into desirable neighborhoods like Los Altos. Besides the city being located in Silicon valley, there is an excellent school district and the homes are known for their larger lot sizes – ideal for families.

School performance, in particular, plays a large role in the stability and value of home prices in an area, and the Los Altos School District has some of the strongest scores on the Academic Performance Index (API) in California. In 2009, Covington Elementary scored 947 out of 1000, and Egan Junior High scored 954.

What sold for $1.47 million –

A 2,279 square foot, three-bedroom, two-and-a-half bath house sold for $1.47 million this past quarter. Built in 1962, the house sits on 10,450-square-foot lot.

The house is located on Kent Drive in the desirable Highlands area close to Cupertino schools. Inside there is a chef’s kitchen with a large granite island, and a formal dining room, family room and living room with a fireplace. Standard amenities and appliances were included.

Market Snapshot – April 28, 2010

There are currently 79 single-family homes and 9 townhomes and condos available.  Out of the 79 single-family homes, tw0 dozen are new listings that have recently hit the market, indicating increasing inventory in Los Altos.

One home is short sale. 8 of these homes are new construction with a few ’stubborn’ builders reluctant to negotiate early on and with the longest days on market for a listing being 393 days.

The Active continuous days-on-market (CDOM) for single-family homes in Los Altos is 58 days.  If you throw out the two properties that have been on the market for more than 300 days, the Active CDOM number drops to 50 days.  The average CDOM for properties that sold this year (once again throwing out listings that had a 200+ CDOM) is 35 days, which is a pretty good indicator for when owners should be seriously considering more latitude in their pricing.

How Much Home Can I Get for $1.35 Million?

Here’s a video of one of our current active listings on Lyell Street in North Los Altos.

Copyright (c) Alex Wang for the Silicon Valley Real Estate Blog, 1SiliconValley.com

Kudos to Zillow for providing a detailed video explanation on "Understanding the Zestimate". Zillow doesn’t have the last say, but is definitely a great tool that you can use when starting to evaluate a home’s value.

Next time you are evaluating the price of a home, don’t forget to check out our article on the hidden factors in calculating your home’s value. 

September is the time of the year when the California Department of Education releases its yearly Academic Performance Index (API) scores. Here are the 2009 Growth API Scores for Santa Clara County and San Mateo County. 

We see an overall steady increase in scores compared to last year’s growth API scores.

A few notables in the following Silicon Valley Santa Clara County school districts:

Berryessa Union Elementary School District: Ruskin Elementary School continues to lead the pack and breaks the 900 barrier with a general improvement in most of the schools in the district

Cupertino Union School District: Continues to have a plethora of high achieving schools (Murdock-Portal and William Faria Elementary School and Joaquin Miller Middle School)

Fremont Union High School District: Monta Vista High increase it’s lead over Lynbrook High School from four to nine points.

Los Gatos Union Elementary: Significant increase across the board for most elementary schools

Moreland Elementary School: Leroy Anderson Elementary takes one of the largest increases in scores by an increase of 136 points to 810

Palo Alto Unified: Herbert Hoover and Duveneck Elementary Schools continue to lead the way

Santa Clara Unified: Overall Santa Clara schools had good improvement with notable Rivermark’s Don Callejon as well as Westwood and Briarwood Elementary jumping nearly 40 points.

Sunnyvale School District: Cherry Chase increases 28 points to an impressive while Cumberland drops 26 points to 905

Check out our previous post to find out what’s the difference between Growth and Base API scores and how they are calculated.

Rivermark offers among other things, a central, self-contained community in Santa Clara of newer single family homes and townhomes intermixed with urban amenities like shopping centers, major restaurants, retailers, service providers, schools, parks, walkways, paths and bike trails.  All within a stone’s throw of major Santa Clara commute routes on highways 101 and 880.  

You can see many of these amenities in a video we put together for a listing we sold recently on Billings Circle.  Despite a much cooler Rivermark real estate market we sold 4467 Billings Circle in 23 days using a conservative pricing strategy and aggressive marketing campaign.  

Rivermark of Santa Clara was a master planned community of the City of Santa Clara built on 152 acres of state land that was once the home of the Agnew’s hospital complex.  Rivermark is located in Santa Clara between Montague Expressway, Lafayette Street, Hope Drive and the Guadalupe River.

One of the most appealing features to Rivermark is its newness.  Rivermark represents a fresh and timely approach to community development with new homes, shopping centers, public buildings and business parks.  Unlike most homes in Santa Clara country, many of which were built post WWII, construction began along the Guadalupe River in Rivermark in 2002.  Since then major builders like Centex, Shea Homes, Lennar, Greystone and others have built a variety of real estate projects appealing to homebuyers of all ages and in all price ranges from upper end, single family detached luxury homes to basic, first time buyer townhomes and condominiums. 

All of these amenities combined with relaxed market conditions make Rivermark a good value for the savvy buyer.  Consider the Rivermark listing I mentioned at 4467 Billings Circle, gem of a home with one of the largest backyards in the development and a great family friendly floor plan.

During the frenzy of the Silicon Valley dot com boom buyers were outbidding each other for an opportunity to live in Rivermark.  Despite stormy real estate market news, well-located, properly priced and marketed Silicon Valley real estate is a good investment. 

Although some of the homes in Rivermark are similar in style and size, 4467 Billings Circle was priced at $1,099,000 taking into consideration the additional value of location and lot size in comparison to another home with the same floor plan on a smaller lot and less desirable location which had languished on the market for months priced at $1,010,000.  

Today’s home buyer is tech savvy and looking online for homes so in addition to the usual open houses, MLS and agent tour, 4467 Billings Circle had a starring role in it’s own video debuting on many popular social media sites including YouTube.