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Entries Tagged as '94301'

Bamboo is the New Granite (Extended Remix Version) — A Contemporary Townhome in Downtown Palo Alto

January 22nd, 2007 · 8 Comments

Michael Hall and I had a lot of fun putting together our first property video review, and now that we’ve worked the kinks out, we thought we’d give it another spin, with more detail. Wellcomemat allows you to create “chapters” within the video so you can jump from one place to another. Very neat!

Interestingly, the first post sparked an email conversation with some folks about countertops: Is bamboo really the new granite?

One emailer had this to say:

Don’t believe everything you hear! It discolors easily, needs to be sealed annually, and can chip/crack. Composite stone is the new granite. :)

Somebody else said:

I hear concrete is the new kitchen counter granite. Next it will be back to those laminate ones…I don’t even remember what it’s called!

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Tags: 94301 · Home reviews · Palo Alto · Real estate · Wellcomemat.com

Part 2: There’s always a story in the numbers…creating FUD from that story is the media’s job; making sense from it is mine

October 26th, 2006 · 2 Comments

A friend of mine named Eilam, also a numbers sort of guy, made an interesting comment about my previous post in which I dissected the year-to-date real estate numbers for Palo Alto, CA. He challenged me to look still deeper into the numbers and try to figure out whether I had the cause-and-effect in the right order.

I essentially asserted that, “Homebuyers were buying increasingly smaller homes from January to July, and increasingly larger homes thereafter, and that’s what led to prices going down between January to July, and upwards thereafter.”

Eilam asks if instead it might be this way around: “From January to July, homebuyers decided they wanted to buy less expensive homes, so they simply bought smaller ones. Thereafter, they loosened the purse strings, and therefore bought more.”

His exact quote:

Thanks. Good analysis.

However - it does beg a follow-on question. What can we learn from the down-tick and later up-tick in sizes of houses being sold ? Is there rhyme-and-reason underling the observed trend (which you very accurately analyzed) ?

I think ’sizes=total price’ (i.e. it isn’t that people are all of a sudden interested in larger or smaller houses at certain times of the year).

What is interesting to ask is: is this a pattern change in demand or in supply (i.e. is the reason smaller houses were selling for a while because larger ones were not on the market, or because they were on the market but people were not buying ?).

Also - what would be interesting is to overlay it with a possible ‘culprit’: interest rates.
Is the swing in ‘house sizes’ (again in my mind possibly an ‘alter-ego’ of total-purchase-price) correlated to changes in interest rates ?


Great question — I would have expected nothing less from Eilam — and my answer for now is, “I’m not really sure.”
Here’s what I (think I) know and don’t know so far:

  1. Since Altos Research’s data only goes back a year, I’ll have to go to another data source to find out if this is a seasonal trend — ie for whatever reason, people buy increasingly smaller homes in the first half of the year, and increasingly larger homes later on. I strongly, strongly doubt that’s the case. I have the data that will answer that question locked up in a 250MB Access database, but I haven’t had time to release and analyze it.
  2. Interest rates may indeed be the reason. I don’t have a quick-and-dirty way of putting interest rates and Altos Research data on the same graph, so for now this will have to do:

    Palo Alto median home prices:

    pamedian.pngInterest rates (from Freddi Mac)

    30-year fixed mortgage rates climbed steadily from 6.15% in January to 6.76% in July, and then crept down to 6.40% in September. As mortgage rates were climbing, home prices were going down, and when mortgage rates started going back down, home prices started going back up. Eilam’s theory may indeed be correct in that prospective homebuyers ratcheted down their size requirements to stay within a budget.

  3. If this theory is correct, we should see a similar pattern in other towns. The results below don’t show a similar pattern; I’ve included towns both more and less expensive than Palo Alto.Menlo Park:

    Los Altos:

    Redwood City:

  4. Conclusion? I’m still not sure! Possibilities:
    • It’s unlikely that Palo Alto home buyers are more interest-rate sensitive than their neighbors in Menlo Park, Redwood City, Los Altos, and Woodside.
    • It’s possible that people who buy homes during the school year tend to have fewer or no kids and thus need less space, and those who buy during the summer tend to have more kids and need more space. Sounds like a good theory, but wouldn’t it be the same for other towns as well?
    • It may just be something completely random, an artifact of the characteristics of the homebuyers that happened to be on the market in Palo Alto this year.

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Tags: 94301 · For buyers · For sellers · Palo Alto · Real estate · Real estate data

There’s always a story in the numbers…creating FUD from that story is the media’s job; making sense from it is mine

October 25th, 2006 · 8 Comments

If there’s one thing I learned from my tenure in consulting (apart from the names of the cabin crew on the mid-Sunday afternoon American Airlines flight from SFO to JFK…) it’s that the numbers always tell a story.

Remember this neat little chart from our little “Frolick with the data” yesterday, provided by those whiz-bang numbers folks at Altos Research?


Statistically-challenged reporters (is there another kind?) look at this and concoct two dramatic headlines, depending on whether you look before or after July 2006: “Prices drop dramatically!” or “Prices increase dramatically!”

Both headlines are, technically, true — in the same sense that your favorite team’s one-game loss could be a “losing streak” and a one-game win could be a “winning streak.”

What’s behind these numbers?

Quite simple: The variation in prices this year in Palo Alto is due nearly entirely to the difference in home size. Put another way, home prices fell between January and July because smaller homes were selling, and home prices rose between July and October because larger homes were selling. Boring facts like that don’t sell newspapers, however, which is why you’d never get an explanation like that in the San Jose Mercury News.

Check this out:


From January to July, median prices dropped 17%, most steeply between January and May, and less steeply from May through July. From July till now, prices have increased 13%.

Now let’s look at what happened to median home sizes during that time:


Uncanny, isn’t it? From January to July, we get a 20% drop in median square footage, and again we have a more steep decline from January to May, and a less steep one from May to July. From July till now, we have a 13% rise.

The fall and rise of median property prices matched nearly identically the fall and rise of median home sizes. The mild difference between the two sets of numbers — a 20% drop in sizes, but only a 17% drop in prices — is fully explained by the differences in price per square foot:


So what’s the real story? It’s not “Prices are falling!” or “Prices are rising!” but something far more boring and completely unlikely to sell newspapers: The price per square foot of homes in Palo Alto has stayed pretty much the same this year, varying by less than 3%. For the first 7 months, there was a steady 20% decline in the size of homes being sold, followed by a steady 13% increase in size.

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Tags: 94301 · Altos Research · For buyers · For sellers · Palo Alto · Real estate · San Jose Mercury