MARKET WATCH :
“Home for the Holidays” takes on new meaning this year…

The traditionally slow holiday real estate market is hot this year in the mid-Peninsula. Buyers are out there even during the holiday season, snapping up the limited number of available homes, which are getting multiple offers and selling quickly, often at over the asking price.

A home I listed in Palo Alto was just sold in 7 days with 5 offers..

Inventory is way down in the mid-Peninsula, which is keeping prices up. With many sellers waiting for the spring selling season, few new listings are coming on the market right now. Most of the inventory consists of homes still on the market from earlier in the fall. In Palo Alto, only 68 homes were available in November compared with 89 a year ago. And yet, November sales jumped from 23 last year to 38 this year with 28 homes still pending.

All this adds up to a lot of competition for a relatively small number of properties.
As a result, homes are selling quicker than in recent months and at higher prices.

Buyers are out in force. The threat of the first time homebuyer credit and higher conforming loan limit expiring brought out a lot of buyers over the last few months. Even though those programs have been extended, the buyers are not pulling back. With the economy showing signs of recovery, consumer confidence is up.

Buyers know that prices and interest rates will soon rise and they hope to get the home they want before that happens.

I predict everything will slow down during the last two weeks of the year, then pick up in mid- January where it left off. But don’t expect a lot of new inventory in January because sellers following conventional wisdom will wait until spring. I don’t believe conventional wisdom will apply this year. Waiting for spring is not likely to result in a higher sale price because more homes will come on the market and interest rates, which are at historic lows, may start rising.

A good listing priced correctly is still going to attract multiple offers this winter, especially in Palo Alto.

Are we returning to the market of yore? Possibly—there are glimmers of hope in the national economic situation. Job losses have slowed and holiday retail sales are better than expected. The rate of foreclosures is down and the market should be able to absorb remaining foreclosures without creating a depression in prices.

There’s no doubt that the market has bottomed out in terms of prices.

My advice for sellers: Don’t underestimate your ability to sell your home during this winter. I see a lot of pent-up demand that is likely to keep activity high through the usually slow first quarter. If you wait until spring, you’ll be competing with a slew of homes I expect to come on the market now that prices are on the rise. If you’re considering selling, contact me for an accurate and timely market analysis of your property.

My advice for buyers: Don’t be shocked if you have to compete for properties. You may have to bid above listing price to have your offer even considered. If you want a killer deal, look for a property that’s been on the market for 90 days or more and bid low. Otherwise, be prepared to be flexible with price, because you are likely to face multiple-offer situations that will generate over-list selling prices.

Sales for the month of November 2009 compared with November 2008:

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