Living in one of the best, most stable communities helped us maintain high home prices which appreciated immensely during the last 30 years. We did have some dips during that time but generally our homes appreciated about 5 times over, (milk, bread, fruit and vegetables hardly doubled in price). Very few homes get sold here. People prefer to stay put.
The easy access to shops, I-280 and I-85, the proximity to Cupertino, Los Altos or Palo Alto schools makes it ideal neighborhoods to live in. South Sunnyvale, Cupertino, Los Altos, Palo Alto and the good parts of Mountain View maintained high prices. A 3-bedroom ranch-style house in the South Sunnyvale, priced at $950K was reduced in price after a week to $908K and attracted 4 offers to raise the price to above $910k. Generally, in these desired areas the prices are about 20% lower than the peak time on March 2008. Back then, a 3 bedroom ranch style home was priced at $975K and after reviewing 11 offers sold for $1.109M. Invested funds lost many times more than 20%.
The banks’ new guidelines are very strict - they demand higher down payments and better credit. The new limit for Conforming loan starting January 2009 is $625,500. Buyers will have to pay a higher down payment or get a second loan. The underwriters who decide if you can get a loan and on what terms, expect a fully documented file. Stated income (in which you would state that you earn a certain amount without proving it) is gone. Many foreign families from overseas go back home to their native land. Most of them lived in rental homes so it didn’t affect the prices much. The banks are getting more organized and more in control of the situation but a new wave of layoffs is arriving and we all hope that the employment market stabilizes.

The turmoil in the economic market is not felt in the New Trader Joe’s in Cupertino. Just next to a new Starbucks and across from Home depot on the Corner of Bollinger and De Anza Blvd. It’s beautiful, new and so familiar. The courteous sales lady even gave me a new, sturdy Trader Joe’s grocery bag.

It was Saturday afternoon. The place was packed with shoppers, all cashier stations were open and people waited patiently for their turn to pay. Here you can find good wines, tasty cheese and beautiful flowers for a reasonable price.

Foothill Produce is swarming of shoppers, it’s becoming a habit to stop by Felipe’s place and buy all the fruit and vegetable and even milk and ethnic goodies before going to Trader Joe’s. The products are fresh and abundant, nicely displayed and the prices are so competitive. If you like the Milk Pail in San Antonio shopping center and Oakmont Market in Cupertino on Homestead & Blaney, you’ll love this place. Felipe, the manager and buyer for the produce in the Milk Pail for the past 15 years has just turned 45. A couple of years ago he helped his little brother Frederico open his very successful Oakmont market. Frederico is doing so well that he is opening another store in Campbell next month.

Felipe’s wife and his beautiful daughter Saira are helping him run the place. They are so happy to see him all day and work with him. Saira, a very smart and intelligent lady, a student in UCLA, has taken time off from school to help Felipe run his new grocery store. It’s a family operation. They all help and support each other. Felipe and Frederico go to the market every morning at dawn to buy the best products and get the best deals so they can pass it on to the most fastidious buyers. If you are looking for a product, a certain cheese, a rare fruit, a Mediterranean delicatessen, Greek yogurt or Russian dish, they’ll get it for you.

Felipe is always busy cutting and cleaning the fruit and vegetables

Felipe’s wife is so happy to spend the day with him and help him. Before he would be away for most of the day working for others.

You can see variety of milks and milk products for reasonable prices. Plenty of spices and products from Israel, like coffee, pickled cucumbers and olives, dried goods and sweets, and you can ask him if you want him to bring you a certain product from Israel, or Russia, or Greece.

We hear and read all these predictions and market analysis about the market in the Bay area and the U.S. Everyone claims to know what is going to happen and why.

Foreclosures and short sales are still here to stay for a while. There are still many homeowners who owe more money to a lender than the value of their home. Sometimes it is more than a $100,000 difference. Many home owners, in order to avoid an ugly stain on their credit history, try to sell their home in a “short sale”. They (or their agent) approach the lender who is willing to forgive some of their debt in order to cut his losses short. The lender might agree to get less money and avoid having to deal with foreclosure. There are many short sales everywhere. It’s a long, tedious process and if a buyer can cope with it he might get a house for a better price.

If you are looking for a house for your family in a good school area, namely Palo Alto, Los Altos, Cupertino, Saratoga and South Sunnyvale, you are in a totally different market. To my personal experience, all of the homes in the Cupertino school district that I submitted offers on or represented the seller within the last month had 4-7 offers and people offered up to 6% over asking price. Back in February – March of this year buyers offered 10-15% more than asking price to win a home. In Los Altos, a few days ago, a $2,395,000 house with 2294 S.f. was sold (all cash) for $50,000 over asking price. The asking prices remained the same. The difference is how much buyers are willing to pay over asking price. There are very few ’short sales’ in these areas because prices are holding strong.

There is a feeling in the air that the inflation is getting worse. Bernanke didn’t lower interest rates, and oil prices, food prices and everything else are getting more expensive. Mortgage interest rates are on the slow rise (1/2% last week and 1/8% yesterday and today it went down ¼%). You can expect either a rush to buy homes before interest rates rise even higher or buyers to be scared away because they cannot afford higher interest rates. It would be wise to watch the rates very carefully before locking the rates because they can change during the day.