We are back in full action. Inventory is growing as fast as expected in the spring. The “for Sale” signs are springing up like mushrooms after the rain. If you drive through the neighborhood during the afternoon time you’ll see ‘open house’ signs pointing in all directions. Homes are being sold fairly fast, especially in desirable areas with good schools.  Some homes in the most attractive areas in Sunnyvale, close to Helena and Wright Ave, were sold under or at the asking price. The agents told me that they were very surprised. Other homes, near Ortega Park in Sunnyvale, were sold with multiple offers way above (18%) asking price. All these homes in both areas needed a lot of work (what we call TLC “tender love and care”).

People always ask me “how much do you think this house will sell for?” or “how much this property is worth?” I run the comps (homes that were sold lately in that neighborhood) and even though I really know all these homes, it’s hard to predict. Who knows how desperate the other bidders are, how many homes they lost out on by trying to offer just enough to get the house and not too much. Who knows what other motivations the buyers have. Some are being vacated from their rentals and are sick of moving, some want to invest their savings in real estate instead of a rocky stock market.  Sometimes we have the chance to raise our bid and win the house but the buyers are not ready to pay so much more than the asking price. Buying a house is not just mathematics. Feelings and emotions play a crucial part in the decision to buy and pay the outrageous sum of money for a hut in the Silicon Valley.

The real estate market of 2007 looks like a repeat of 2002. The inventory went over 5000 homes and some took more than 200 days to sell. There was correlation between the number of homes for sale and the closed sales. This pattern repeated itself yearly. Lower inventory in January, with less activity and higher supply of home in the summer with more homes getting sold. 2007 started like a normal year but ended with abundance of homes for sale and less activity. The inventory remained high whereas less homes got sold. The laws of supply and demand dictated lower prices and transition to a buyers’ market.

This condition does not reflect the Real estate market of desirable areas. Palo Alto, Los Altos, Mountain View, Saratoga, Cupertino and South Sunnyvale are behaving differently. Many homes in these areas are still being sold for over asking price.