It’s a healthy thing for Agents, Buyers, Sellers and anyone with an interest in real estate to stop on occasion. Take a breath. Gather perspective. Hit the pause button on Mr. Toad’s Wild Ride. Check in, check the oil and check assumptions at the door.
These periodic realty checks are meant to power things down. Chase out any ghosts lurking in the machine. Clean the windshield and polish the rear view. Flush, purge, detox, juice fast and otherwise execute a clean core dump of any and all bogus information we’ve mistakenly internalized as the truth about real estate.
At the count of three we’re all going to turn off, tune out and drop all the mind-numbing noise and well-meaning chatter floating around the market’s ether.
We’ll simply consider where we’ve been and where we are as we head into the great unknown known of the future. (Didn’t Donald Rumsfeld say that?)
This week’s headlines in the Merc, Business Journal, Chronicle, etc. et al, proclaimed that Bay Area Real Estate is Back!! Or at least back to pre-great recession levels. Which would mean 2007 levels…since all those mortgages finally hit the fan at the end of 07 before the bubble completely imploded in 08.
So…just a few questions: Is that true? Are we really back? The whole Bay Area? Even Santa Cruz County – here at the southern tip of the Silicon Valley gulag?
There’s so much misinformation and disinformation in information these days that I’m not sure where to start. Specially cause I know some of you are trying to make important life decisions based on the occasional bones of bold font that the media tosses in your direction.
Here goes: The notion that real estate prices are back up to 2007 levels is only partly true. Prices are back or above 2007 levels in some of the Bay Areas’ elite local markets like San Francisco, Palo Alto, Atherton.
Los Gatos and Saratoga? Close but not quite there yet. East Bay? Lagging behind but rising. Santa Cruz County? Definitely doing better – but nowhere near 2007 prices. In fact, we seem to be at least temporarily stalled for the moment.
Final analysis? Add all those off market multiple offers and wildly crazy overbids happening in a select few areas to the improved market data from most of the rest of the region, average them together and it certainly can look like we’re back to where we left off in 2007 – before we were so rudely interrupted.
But if you are in one of the peripheral areas outside the epicenter – don’t count your equity before you sell. It ain’t real until escrow closes. List prices are not comps. Sold prices are.
Here are a couple of warning labels I’d like to stick on today’s column. 1)Santa Cruz is not Los Gatos. Or Saratoga. Their $1.5 mill is our $700k. 2) Don’t list your home with the expectation of 22 offers. That’s somewhere else. Not here. It’s an invitation to disappointment.
One more warning about my warnings: Just because things may not be as good as you imagined them to be doesn’t mean that the market isn’t doing well. We’ve been terribly spoiled by our checkered past. We somehow came to believe that if prices weren’t going up at a rapid clip, then they must be falling.
Perhaps a small part of the lesson of our late not so great bubble and recession is that when things are going up too much too fast, that’s the kind of market that’s not real. And a healthier market is one that looks more like now. One without multiple overbids and 40% annual appreciation.
Next week: How, why and where the Santa Cruz County Market is stalled.