Saratoga News | August 7, 2002

August 7, 2002 Saratoga, California Since 1955

Photograph by Kristopher Gainey

Coldwell Banker Realtor Chris Ray calls the local real estate market 'interesting.'

Local housing market keeps rolling along

By Jean Newton

The status of the economy and the stock market are nerve-wracking for many people, but the real estate market keeps trundling along in spite of some uncertainty. Many seasoned Realtors view the current market as a "win-win" situation for both buyers and sellers, while others think the slowing economy is causing a transition into a more normal market.

"It's definitely an interesting market," said Chris Ray, a Realtor with Coldwell Banker in Los Gatos. "I think buyers are fearful of losing jobs as the economy slows down, so some buyers are afraid to pull the trigger."

On the other hand, said Ray, interest rates are historically low, spurring some buyers to get into the market. As interest rates go up, buyers may have more of an incentive to jump back in. "Buyers and sellers are sometimes far apart these days. Sellers still want top dollar, so Realtors are earning their money by getting buyers and sellers together."

Ray calls the current market a transitional one and cites inventory as a key factor. He said the estimated number of homes in the county is approximately 385,000. An average market would find 1 percent of the homes for sale or roughly 3,850.

"Currently it's peaked past that and is an additional sign of a transition. At the absolute high of the market in 1999 and 2000, the inventory was down to below 600 homes for sale. When there is less to chose from, that creates demand. Now there are enough homes to keep the prices from rising and to satisfy buyers," said Ray.

Although he is often asked whether it's a good time to buy or whether the market is crashing or tanking, Ray said the answer isn't clear-cut since it depends on the individual situation. "For instance, buying and selling in the same market is different than trying to outguess what will happen in the market. That's when a buyer can get bit," Ray said.

While some may see the market as volatile right now, Ray said his business is not volatile since he concentrates on first-time homebuyers. Last year Ray, who has been a Realtor since 1996, had $17 million worth of home sales. This year, in the first six months, he's already up to the $13 million mark.

Realtor Deeann Mahoney of Alain Pinel Realtors in Los Gatos finds the market very active and healthy overall.

"We're moving away from a strong seller's market into a more normal, even market. Well-priced homes in good locations are still selling. The high-end market is moving very slowly. I think the slight slowdown is typical this time of year, as most people take summer vacations, but is exacerbated by increasing inventory and fussier buyers."

If the price is right, homes are selling, said Realtor Roz McIntyre of Bugati Royale Properties in Sunnyvale.

"The homes selling the fastest are those that are spick-and-span and ready to move into," said McIntyre. "With the job layoffs, the market supply is growing rapidly. This is a sure sign of summer but also is a sign that many homeowners have a need to move up, move out or simply can't afford the mortgage payment due to loss of jobs."

A seasoned Realtor, Judy Jarvis Ellis of Alain Pinel Realtors in Palo Alto describes the current market as beneficial for both buyers and sellers.

"Pent-up demand fueled by buyers wanting to invest in 'terra firma'—a home, something they can touch and feel rather than the stock market—buoys the purchasing of homes currently coming on the market. Historic low interest rates enable more buyers to achieve the American dream of owning their own home and facilitate the move-up market for families who want to expand into a larger property," Ellis said.

One of the trends Ellis is picking up on is that of affluent, well-educated and established professionals evaluating the sacrifices they must make to maintain a home of any size in this area. She finds that some are seriously considering moving to attractive areas, perhaps into smaller homes but with a sophisticated cast to them, or into affluent areas such as Montecito near Santa Barbara.

Across the state, the median price of existing homes in California rose in June 21.3 percent compared to the same period a year ago, according to a report by the California Association of Realtors and Real Estate Solutions, a real estate information service.

The median price of an existing, single-family detached home in California during June 2002 was $324,370, compared to the $267,410 median for June 2001. The June 2002 median price increased 1.5 percent from May 2002. In Santa Clara County, the median price of a home was $575,000, as compared to $546,000 one year ago.

The median price of a Los Gatos home for June '02 was $1,045,000, compared to June '01 at $869,500. The median price of a Saratoga home was $1,310,000 in June '02, compared to $1,425,000 one year ago, while the median price of a Cupertino home was $875,000 in June '02, compared to $857,500 in June '01.

Although home sales were up 1.4 percent from last year, resale activity posted a 13.9 percent decrease in June compared to May 2002.

"To date, overall sales volume for existing, single-family homes in California is up by nearly one-fifth for the year," said Leslie Appleton-Young, vice president and chief economist for the California Association of Realtors.

As the stock market becomes more questionable, it's possible that home sales will continue to pick up as investors put their money into real estate, which many perceive to be a more stable investment.