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Mea Culpa: The San Francisco Chronicle Is, In Fact, Partly Right

Kevin Boer, Broker Owner, 3 Oceans Real Estate, Inc. ()

June 18th, 2007 · 1 Comment

There are two lessons here:  First, read the whole article before dismissing it out of hand.  Second, real estate now is, more than ever, hyper-local.

In my article yesterday about the San Francisco Chronicle’s Coverage of Bay Area real estate news, I implied I thought they were way off base.  I stand by my assertion that the local markets I serve remain very strong, but as reader Siddharth pointed out in a comment:

You overlooked reading a statement

“It is a bifurcated market, with continued brisk sales of homes in desirable neighborhoods, especially in the $750,000-and-up range.”

Indeed, after taking a closer look at the article, the Chron’s coverage was better and more accurate than I gave it credit for.  In spite of the dramatic headline and first paragraph, which implies doom and gloom across the entire Bay Area, author Carolyn Said does point out that there are “pockets of activity” where things are going strong.

The overall Palo Alto market, of course, remains one such strong pocket, with median prices pushing $2M…

Palo Alto -- All Quartiles

but as the numbers from our friends at Altos Research show, that strength is not market-wide.  Quartile 1 — the lowest quartile of prices — has seen prices dramatically retreat from their March 2007 high of $1.15M to a more sane level of $950K, perhaps a function of the sub-prime market fallout.
Home prices in the lowest quartile in Palo Alto have been dropping

However, quartiles 2 and 3 — the second-lowest and second-highest, respectively — continue their upward march, with quartile 2 at around $1.65M and quartile 3 at just under $2.4M.
Home prices in the second quartile in Palo Alto have been rising Home prices in the third quartile in Palo Alto have been rising

…while the highest quartile is dropping.

Home prices in the highest quartile in Palo Alto have been dipping

Wow!  Look at those deals…those of you who had been shopping for a $4.25M home now only have to pay $3.5M!

The moral of the story?  First, the Chron article is more balanced than I gave it coverage for, and secondly, not only is real estate local, local, local…but even within each geographic market, there are different sub-markets which behave seemingly independently.

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Tags: Palo Alto · Real estate

1 response so far ↓

  • 1 mike simonsen // Jun 19, 2007 at 5:47 am

    Fascinating how the sub-prime shakeout might be impacting the market for $1 million homes. My first thought was, “these aren’t sub-prime borrowers…” but then I realized it doesn’t matter. (I’m still pre-coffee, so it took a sec) In Palo Alto where most of the purchase is financed by some capital gain elsewhere, these are the buyers most impacted by the mortgage. And mortgage terms across the board are tightening up. The price in that group does seem to have peaked right when the subprime thing broke.

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