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The number of California homes that sold for a million dollars or more last year rose to the highest level in six years, and Silicon Valley neighborhoods continue to rank among the highest on the list of these high-end home sales.
A report from real estate information service DataQuick indicates a total of 39,175 California homes sold for a million dollars or more last year, up 45.1 percent from 26,993 in 2012. It was the highest number sold since 42,506 in 2007, according to DataQuick.
Hillsborough, Saratoga, Menlo Park, Cupertino, Los Altos, Woodside and Los Gatos, which are located in the five districts served by members of the Silicon Valley Association of REALTORS® (SILVAR), were on the list of communities with the highest number of million-dollar home sales in the state. Hillsborough had 436 million-dollar home sales last year, with the most expensive home selling for $13.3 million; Saratoga, 332 million-dollar home sales, the most expensive purchased for $12.3 million; Menlo Park, 321 million-dollar home sales, the most expensive purchased for $5.5 million; Cupertino, 317 million-dollar home sales, the most expensive sold for $3.8 million; Los Altos, 267 million-dollar home sales, the most expensive purchased for $14.3 million; Woodside, 273 million-dollar home sales, the most expensive sold for $12 million; and Los Gatos, 243 million-dollar home sales, the most expensive sold for $4.8 million.
David Tonna, president of SILVAR, attributed the rise in high-end home sales in the region to a robust economy and rising home prices. “We are fortunate to have an economy that has made a comeback quickly, thanks to tech companies that are growing, some by leaps and bounds. The high demand for homes and lack of inventory has led to the appreciation of many homes,” explained Tonna.
Statewide, 840 homes sold for more than $5 million last year, an all-time high and up 20.3 percent from the previous high of 698 in 2012. In the $4-$5 million range a record 596 homes sold, up 29.3 percent from 2012. In the $3-$4 million range, a record 1,455 homes sold, up 31.3 percent from 2012. In the $2-$3 million range sales totaled 4,492, a record and up 37.4 percent from 2012. In the $1-$2 million range, 25,352 sold last year, up 42.5 percent from 2012.
The DataQuick report indicated the most expensive confirmed purchase in 2013 was a 15,355-square-foot, 8-bedroom, 14-bathroom beachfront Malibu mansion which sold for $74,500,000. The largest was a 25,447-square-foot, 16-bedroom, 18-bathroom mansion in Indian Wells that sold for $2,250,000.
According to the real estate information service a record 10,602 homes that sold for $1 million or more were bought with cash, up from 7,791 in 2012. Cash was used more frequently the higher up the price scale. Of those who did finance their purchase last year, the median down payment was 30 percent of the purchase price.
It is expensive to live in the heart of Silicon Valley, but buyer demand for homes, including million-dollar homes, continues to be strong. Real estate information service DataQuick lists the following Silicon Valley communities among the highest ranked areas for million-dollar homes sales in California in the second quarter.
- Hillsborough topped the list with 134 sales in 2012 Q2, up from 118 in 2011 Q2, with the most expensive home purchased for $5.28 million.
- Saratoga ranked second with 126 million-dollar homes purchased in 2012 Q2, up from 93 in 2011 Q2, with the most expensive of purchased at $5.35 million.
- Cupertino ranked fifth (after Manhattan Beach and Newport Beach in Southern California) with 105 million-dollar homes sold in 2012 Q2, up from 88 in 2011 Q2, with the most expensive home purchased for $2.45 million.
- Los Altos ranked sixth after Cupertino with 102 million-dollar home sales in 2012 Q2. The most expensive home was purchased for $6 million. Los Altos had 81 million-dollar home sales in 2011 Q2.
- In Los Gatos, the most expensive home purchased cost $4.66 million. There were 67 million-dollar homes purchased in the zip code of 95032, up from 44 in 2011 Q2. In the Los Gatos zip code of 95030, 62 million-dollar homes were purchased last quarter, up from 31 in the second-quarter last year.
Despite the hype over Facebook’s IPO, Menlo Park and Palo Alto made the list, but had fewer million-dollar home sales in second-quarter 2012 than the same time last year, according to DataQuick. Menlo Park had 100 million-dollar homes sold in second-quarter 2012, down from 124 last year, with the most expensive home purchased for $4.8 million. Palo Alto had 62 million-dollar homes sold, down from 69 in 2011 Q2, with the most expensive home purchased for $3.15 million.
Silicon Valley Association of REALTORS® (SILVAR) president Suzanne Yost, who is an associate broker with Alain Pinel Realtors in Los Gatos, is not surprised that many of the communities located within SILVAR’s five districts made the list. “Silicon Valley’s economy is healthy compared with other parts of the state because it is the heart of innovation, with many successful tech companies,” said Yost.
Yost added, “Our members have reported a surge of foreign buyers. They are attracted to the region’s weather, diversity, excellent schools, good mix and proximity to shopping, entertainment, the arts and services. We’re not that far from San Francisco, close to the freeways and airports. Buyers know they can’t go wrong and they are willing to pay the price for these amenities.”
SILVAR has five member districts, allowing members to work closely with their communities. They are the Menlo Park/Atherton District (including Portola Valley, Woodside and East Palo Alto), Palo Alto District, Los Altos/Mountain View District (including Los Altos Hills), Cupertino/Sunnyvale District and the Los Gatos/Saratoga District (including Monte Sereno).
At this month’s Palo Alto District tour meeting, Palo Alto brokers said the market environment has greatly improved from a year ago. While inventory is still low, it has been slowly rising.
Keller Williams managing broker Bob Stelzer indicated demand is coming back strong, and there has been a significant rise in listings since April. His data showed Menlo Park with 52 current active listings compared with 26 in April; Palo Alto 51, compared with 29 in April; and Los Altos 45 compared with 24 in April. High-end property sales increased substantially in the first half of this year in comparison to the same time last year.
Sellers are becoming realistic, according to the brokers. Many sellers caught up in the hype of Facebook’s IPO and thinking they would strike gold by waiting for prices to skyrocket, now realize the phenomenon did not create the “super market” they thought it would. These sellers are now ready to sell.
Broker Tim Foy of Midtown Realty, however, believes inventory is low because people are still looking for stability. Despite the uptick, he expects low inventory for a while. “It won’t change overnight. It’s a market reality,” commented Foy.
According to Alain Pinel Realtors broker Bob Gerlach, it’s not the Facebook IPO phenomenon that is driving the market, but rather, it’s interest from Chinese and other foreign buyers. He said majority of transactions through his office are with Chinese cash buyers. Foreign interest in property in the area has created a “dramatic effect” in the market, said Gerlach.
Gerlach indicated an obstacle to the market rebound is a pocket of sellers who can’t sell because they don’t have better places to go. Buyers these days are more selective. “It is a discretionary market,” he noted.
The brokers said listing agents need to make their sellers aware that despite the high demand, not all houses are “entitled” to top market prices because today’s buyers are more informative. There is more discretion now regarding “housing with a blemish,” added Foy.
Menlo Park Mayor Richard Cline (far right) is pictured here with SILVAR President Gene Lentz and Menlo Park/Atherton District Chair Penelope Huang.
At their first meeting of the new year, Menlo Park Mayor Richard Cline told members of SILVAR’s Menlo Park/Atherton District that there is significant amount of activity in the city and he expects it to pick up well into this year.
Cline said the Menlo Gateway Project has been given the green light by voters. The City of Menlo Park has approved amendments to the General Plan and Zoning Ordinance and map proposed by the Bohannon Development Company to construct three office and R&D buildings, a hotel, health club, cafe/restaurant, neighborhood-serving retail and community facilities and three parking structures. The development would take place on two sites located near the US101/Marsh Road interchange.
Cline is optimistic the project will provide a good revenue stream for the city. “It will also redevelop an area (eastern Menlo Park) that needs redevelopment,” Cline said.
Last November, voters also overwhelmingly said yes to Measure L, which will reduce pension benefits for all new employees, except police. Measure L will raise the retirement age for new city employees from 55 to 60. It also will cap the pension benefits received.
So far, there is no change to the downtown plan, said Cline. He said more collaboration is needed in coming to an agreement and it could take a while. “Lots of things keep us from doing it; it’s planning by politics … It depends on who is in the city council,” he remarked.
He noted a major problem encountered downtown is many property owners are not residents and they don’t keep up the buildings. They need to place more amenities and upgrades, so the downtown can attract new businesses.
Cline expressed his frustration regarding the debate about the city’s growth – between those that believe there is a need to revitalize the city and develop a successful long-range strategy of growth for the city and those who believe by doing so they will be sacrificing the “quality of life” residents currently enjoy.
Cline stressed the city needs revenue or it will stagnate. Older buildings downtown need to be revitalized. The city needs a long-range plan regarding how it will get there.
Silicon Valley Association of REALTORS® says ... 