During my 31 years in the real estate business selling properties up and down the San Francisco Peninsula, I am often asked what is so special about Menlo Park or Palo Alto or Los Altos?
Why are homes more expensive in these areas compared to San Carlos (my home for the past 23 years), Redwood City, Belmont, and Mountain View?
On a quarter Q4 to quarter Q3 comparision:
Menlo Park home values up 1.2%
Palo Alto home values down -0.4%
Los Altos home values down -2.9%
while Mt. View is -7.1%, East Palo Alto is -16.7%, Redwood City is -8.4%, San Carlos is -7.3%, and Belmont is -9.4%.
The year to year data is similar Menlo Park up slightly, Palo Alto and Los Altos down slightly, and the other cities down a fair amount ranging from -4.9% to -37.3%.
As I have told my clients "when times are tough, the more desirable markets hold up better".
But for those doomsayers out there, please note for EVERY CITY except East Palo Alto, the 5 year and 10 year annualized change are ALL POSITIVE. So even after two fairly tough years, home values in these San Francisco mid peninsula cities has gone up over the past 5 to 10 years.
Average increases over 10 years at about 6% per annum. East Palo Alto had a 10 year annualized increase of 5.3%.
A $500,000 property purchased in any of these cities 10 years ago - on average - would be worth $909,000 today.
Say this property was purchased with 20% down or $100,000 10 years ago, the current equity of $509,000 would represent a 17.67% return on the downpayment. This is a "broadbrush" calculation for illustration purposes.
Of course, if the market should continue down for another year or two, the 5 and 10 year annualized returns would be reduced. But I think this data does show the strenght of our local market in the worst economic conditions most of us have ever seen in our lifetimes.
The media often uses Zillow data to paint a bleak picture of the real estate market.
Using Zillow's own data, I believe one can make reasonable arguments that our market is doing pretty good all things considered.
If there are any stock market guys out there, I would be interested to see 5 and 10 year annualized stock market returns after the current collapse.
Consider real estate in your retirement accounts. Want to learn more, just let me know.
Comments(0)