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.

The spring is here and the real estate market is picking up adequately. Inventory is growing and so is the activity. More homes are getting sold. Desirable areas are still hot. Los Altos homes under $2M (if they are priced competitively) are sold fast with bids above the asking price. The same is happening in Palo Alto, Mountain View, Cupertino, Saratoga and Sunnyvale. If the property for sale is situated on a nice street near a good school, and is priced well, it will sell with multiple offers over asking price.

Sunnyvale, in the Cupertino school district, it hot. There are hardly any homes for sale in the Homestead High School area or the Ortega Park area, which belongs to Fremont High school; homes are being sold for more that 10% above asking price. There were a few ranch- style regular homes that were priced a little over a million within the last 2 months that were sold for around $1.2M. I wonder how these buyers can afford to pay a huge mortgage, raise their kids, send them to after school activities and even send some to private schools and survive. Many of the engineers were fortunate to work at start-ups, or sell high-tech stocks to finance a large down payment. But how do others who work many hours on a fixed salary survive?

Education is the most important factor in the decision to buy a house. Buyers will do everything to live near a good school. This motivation drives the prices up.
There are other neighborhoods that look nice and clean. They sell if they are beautifully remodeled or very aggressively priced.