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Why So Many Chinese Buyers in Palo Alto and Along the Peninsula?

Why So Many Chinese Buyers in Palo Alto and Along the Peninsula?

Everybody reads about the large supply of Chinese buyers who are buying homes here along the Peninsula.  There are many agents, one prominent one who we all know and now has a plane to fly his Chinese buyers around, who target the Chinese buyers very heavily.  Buy, why are there so many Chinese buyers and why are they buying here?

We all marvel at the prices being paid and the recent appreciation of 30% per year for the past couple years.  For those of us who live along the Peninsula, you may be surprised to know that real estate in Palo Alto, Atherton and Menlo Park may be a bargain when compared with other international locales. Heck, we aren’t even as expensive as New York.  Who would have thought 10 years ago that an investor from Shanghai might find a Manhattan penthouse affordable? Of the 10 most expensive cities in the world, New York is the only one from the U.S., said a recent report from England-based real estate consultancy Knight Frank and researcher WealthInsight. Monaco, Hong Kong, London, Singapore and Geneva all outranked New York. Sydney, Paris, Moscow and Shanghai rounded out the list. San Francisco, Palo Alto and Atherton, not even on the list.

In Hong Kong, which saw double-digit real estate price increases from 2009 to 2012, the average luxury home was valued at around $11,000 per square foot, the global real estate firm Savills said in a 2012 report. Yes, $11,000 per square foot! London, with its own booming real estate market, averaged $5,300 per square foot, while New York checked in at $4,100. Atherton and Palo Alto generally sells for $1,500  to $2,000 per square foot, quite a deal compared to the big guys.

For the 12 months ended in February, 788 homes worth more than $10 million each were sold in the U.S., according to real estate website Zillow. Slightly more than half were in the Los Angeles and New York areas. San Francisco, south Florida and Colorado ski resorts Aspen and Vail also saw some of the most-expensive transactions. Chinese Buyers, in particular, Chinese homebuyers increasingly are buying up high-end property in the U.S., Realtors said. China’s strong economic growth has generated dozens of billionaires and thousands of millionaires in recent years. They are attracted to America’s stronger property rights and a relatively stable political and economic climate, according to the National Association of Realtors.

So, why are so many Chinese buyers scooping up luxury properties? Because they are rich and prices here are a deal and they have property rights that might be hard to come by in their own country.  Hard to blame them.

With the worldwide economy getting better, I can’t see much of a slowdown to the pace of buying from our overseas friends.  Gary Kurtz of Alain Pinel in Menlo Park has Chinese buyers that he has never met but converse with on a regular basis and are looking for investment homes here in the Atherton area.  I find lots of Atherton and Palo Alto off market homes and I know they will make a relatively quick decision and buy without seeing as they trust my word and insight into the market.  It seems to be a win-win situation for sellers, Chinese buyers, agents and all in the luxury real estate industry.


Alain Pinel Realtors Now Number 5 in Nation

Alain Pinel Realtors Now Number 5 in Nation

Not to toot our own horn, but Real Trends named Alain Pinel Realtors the number 5 largest broker in the nation with sales of over $10 billion dollars for 2013.  Not bad considering we are a regional company that is still privately held.  We have 29 offices and I would say a large percentage of the deals are coming from Menlo Park, Palo Alto and Los Gatos areas.  Our office is typically the number one or two office for the company as we have about 70 agents in our office and typically total over a billion dollars in sales annually.

Since I’m in the Menlo Park office, I have an affinity to Menlo Park, Palo Alto, Atherton, Woodside areas as my home territory but do expand to surrounding areas such as Los Altos, Los Altos Hills, Saratoga, Portola Valley, Mountain View and wherever is appropriate for my buyers and sellers.

Luxury real estate is my passion as is the company and our agents.

Billionaires Living In Palo Alto

Billionaires Living In Palo Alto

The highly anticipated Forbes list of billionaires shows that an unusually high number of them own Palo Alto real estate.

Ten of those billionaires live there to be exact.  Palo Alto real estate has been surging all year, now with the list showing that 10 billionaires live there, I’m guessing even more people from around the world will want to check out the real estate market and see what it’s all about.

The highest ranking billionaire to live in Palo Alto is Larry Page of Google, whose net worth is estimated at 23 billion.  Not bad for a 39 year old guy who looks like he’s about 20.  I think he owns the entire top floor of the condos on Alma street, so that is one nice penthouse condo.

Mark Zuckerberg comes in at the second highest ranking billionaire to live in Palo Alto and has a net worth of $13.3 billion.  He bought the house from an agent at our company last year and it’s just a nice home in a nice area and he didn’t go crazy with a mega mansion.

Laurene Powell, wife of the late Steve Jobs, comes in next on the list of Palo Alto billionaires and holds a net worth of $10.7 billion.  They have lived in the house on Waverley Street for many years and recently completed a renovation after Steve’s death.

Seven other billionaires from the Forbes list own Palo Alto real estate that they call home and can be read by clicking on the link below.

Palo Alto real estate billionaires

I have met or worked with several of the billionaires on the list and know the on and off market listings in Palo Alto quite well.  If you are in need of an agent to buy or sell a home,  please don’t hesitate to contact me at 650.543.1202 or gkurtz@apr.com for a confidential conversation.


Palo Alto Housing Inventory Lower Than You Think It Is

February 28, 2013 Real Estate News No Comments
Palo Alto Housing Inventory Lower Than You Think It Is

It’s the end of February, the weather is a bit warmer and all is well in Palo Alto.  All except the housing inventory as the numbers remain unseasonably low.  Broker tour for the city of Palo Alto is on Friday, so that means most agents put their new listings on MLS by early Thursday so their new listing can make it on the Friday broker sheet.  As of today, there are 29 homes for sale in all of Palo Alto, and a total of 8 condo’s.  The average number of sales in a month for Palo Alto is somewhere in the 40’s, depending upon the month.  Knowing that 5 of the 29 have been on the market quite a while and probably not an easy sale, this means that all buyers are after about 24 homes.  But, the real number to look at is to take the inventory of 29 homes and separate them out by price range.  You have 8 homes in the 3 million plus range, 8 in the 2-3 million range, 10 in the 1-2 million dollar range and 3 under a million.

The price range is the true identified of what is out there as most buyers fit into only one of the price ranges.  For example, if you are looking for a home over three million, then you don’t really care to see the homes in the 1-2 range so your inventory is really only the 8 in your range.  So, housing inventory is a very personal number that is always a subset of the big number all the agents talk about.  For most buyers, there are really approximately 8 homes in the Palo Alto housing inventory that they really care about.  This shortage of housing inventory is why prices are going up as I know there are more than 8 buyers out there so it tends to create the situation where a buyer just wants to buy a house and they pick one of the 8 they see as the inventory doesn’t seem to be getting any better.

So, until more people decide to sell, this housing inventory number is much smaller than you think it is.

Homes For Sale Listing Not Accurate on Popular Online Websites

Homes For Sale Listing Not Accurate on Popular Online Websites

Home buyers and sellers often quote Trulia, Zillow or Redfin as their main source of real estate information. If they are out looking for a home, they check these popular online sites daily to see what’s on the market. All real estate agents know that the information definitely isn’t up to date for homes along the peninsula as there is so much off market activity and it’s kept between agents who work the areas a lot, so the online sites don’t have a clue to what’s really for sale here.

A new report by Redfin proves what we agents have known for a long time – the information on these sites isn’t accurate at all. I personally have received calls about listings that have sold months ago and have grown to find it fairly normal, but I never understood how bad the statistics really are. The study found that approximately 36 percent of the listings on the websites were no longer active.

Wow, 36%!

That’s a big margin of error. Do they do it so they can keep potential buyers and sellers on their sites longer and sell more page views and advertisements? Do they do it because there is a shortage of inventory in many areas and they don’t want to look like there isn’t enough information to keep home searchers happy? I’m not sure what the reason, but read the full article here.

This gets back to a plug for using a local real estate agent who has the latest information plus the off market listings.  I would estimate 20-30% of the business in this area if done off market, so if you really want to find a house, call a reputable agent.  I can help you with your real estate needs in areas such as Menlo Park, Palo Alto, Atherton and surrounding areas.  There are also plenty of other good agents as well who are professionals and take their jobs very seriously.  Working with clients to buy and sell luxury real estate is a demanding job as there are high stakes and very successful buyers and sellers who only accept the best agents to handle their transactions.  Relying on these websites seems like a step in the wrong direction and in an area of intelligent, successful people, this isn’t always the smartest choice.

Atherton Real Estate Sales Update for September 2011

Atherton Real Estate Sales Update for September 2011

Atherton luxury real estate sales figures for the month of September, 2011 compared to September 2010.  As you can see, the numbers are staying steady as listing prices are way up, but sales prices continue to remain down a bit from last year.

Menlo Park Real Estate Market Update

March 21, 2011 Real Estate News No Comments
Menlo Park Real Estate Market Update

The median list price home in Menlo Park this week is $1,098,500.

Inventory has been lightening lately and the Market Action Index
has been trending up. Though days-on-market is increasing, these
are mildly positive indications for the market.

Supply and Demand

Home sales have been exceeding new inventory for several weeks.
While still a Buyer’s market, prices seem to have responded by
moving upward. If the demand trends continue, expect prices to
keep marching upward, especially once we see a Seller’s Market.

Market Action Index: 19 (strong buyer)
Index above 30 implies Seller’s Market conditions. Below 30, conditions favor the buyer.

Real-Time Market Profile Trend
Median List Price $ 1,098,500
Median Lot Size  6500 SF
Average Days on Market (DOM) 97
4,501Median House Size (sq ft) 1690
Median Number of Bedrooms: 3
Asking Price Per Square Foot $636

Despite this week’s down tic, price trends have generally been
moving up lately. Prices are below the market’s high point, and
so watch the Market Action Index as an indicator of how long this
trend will last.

The Rich Are Defaulting On Mortgages At Alarming Rate

The Rich Are Defaulting On Mortgages At Alarming Rate

Don’t look around at your neighbors too closely, but the well-off are losing their master suites and saying goodbye to their wine cellars.

The housing bust that began among the working class in remote subdivisions and quickly progressed to the suburban middle class is striking the upper class in privileged enclaves like the many luxury real estate towns we service along the Peninsula. Menlo Park luxury real estate, Atherton luxury real estate, it’s all in the same boat.

Whether it is their residence, a second home or a house bought as an investment, the rich have stopped paying the mortgage at a rate that greatly exceeds the rest of the population according to David Streitfeld.

More than one in seven homeowners with loans in excess of a million dollars are seriously delinquent, according to the real estate analytics firm CoreLogic. Homes priced over a million dollars are considered luxury real estate in many areas.

By contrast, homeowners with less lavish housing are much more likely to keep writing checks to their lender. About one in 12 mortgages below the million-dollar mark is delinquent.

Though it is hard to prove, the CoreLogic data suggest that many of the well-to-do are purposely dumping their financially draining properties, just as they would any sour investment.

“The rich are different: they are more ruthless,” said Sam Khater, CoreLogic’s senior economist.

As a recent example, five luxury properties in Los Altos were scheduled for foreclosure auctions in a recent issue of The Los Altos Town Crier, the weekly newspaper where local legal notices are posted. Four have unpaid mortgage debt of more than $1 million, with the highest amount $2.8 million.

Not so long ago, said Chris Redden, the paper’s advertising services director, “it was a surprise if we had one foreclosure a month.”

In Las Vegas, Ken Lowman, a longtime agent for luxury properties, said four of the 11 sales he brokered in June were distressed properties.

“I’ve never seen the wealthy hit like this before,” Mr. Lowman said. “They made their plans based on the best of all possible scenarios — that their incomes would continue to grow, that real estate would never drop. Not many had a plan B.”

The defaulting owners, he said, often remain as long as they can. “They’re in denial,” he said.

Here in Los Altos, where the median home price of $1.5 million makes it one of the most exclusive towns in the country, several houses scheduled for auction were still occupied this week. The people who answered the door were reluctant to explain their circumstances in any detail.

At one house, where the lender was owed $1.3 million, there was a couch out front wrapped in plastic. A woman said she and her husband had lost their jobs and were moving in with relatives. At another house, the family said they were renters. A third family, whose mortgage is $1.6 million, said they would be moving this weekend.

At a vacant house with a pool, where the lender was seeking $1.27 million, a raft and a water gun lay abandoned on the entryway floor.

Lenders are fearful that many of the 11 million or so homeowners who owe more than their house is worth will walk away from them, especially if the real estate market begins to weaken again. The so-called strategic defaults have become a matter of intense debate in recent months.

The delinquency rate on investment homes where the original mortgage was more than $1 million is now 23 percent. For cheaper investment homes, it is about 10 percent.

With second homes, the delinquency rate for both types of owners was rising in concert until the stock market crashed in September 2008. That sent the percentage of troubled million-dollar loans spiraling up much faster than the smaller loans.

“Those with high net worth have other resources to lean on if they get in trouble,” said Mr. Khater, the analyst. “If they’re going delinquent faster than anyone else, that tells me they are doing so willingly.”

Willingly, but not necessarily publicly. The rapper Chamillionaire is a plain-talking exception. He recently walked away from a $2 million house he bought in Houston in 2006.

“I just decided to let it go, give it back to the bank,” he told the celebrity gossip TV show “TMZ.” “I just didn’t feel like it was a good investment.”

The rich and successful often treat their homes as business investments and make decisions on their personal items in a similar way that they would for their businesses.  Bottom line decisions without the emotion that other homeowners may have towards their residences.  A default is a strategic default, not a failure.

“They may be less susceptible to the shame and fear-mongering used by the government and the mortgage banking industry to keep underwater homeowners from acting in their financial best interest,” Mr. White said.

The CoreLogic data measures serious delinquencies, which means the borrower has missed at least three payments in a row. At that point, lenders traditionally file a notice of default and the house enters the official foreclosure process.

In the current environment, however, notices of default are down for all types of loans as lenders work with owners in various modification programs. Even so, owners in some of the more expensive neighborhoods in and around San Francisco are beginning to head for the exit, according to data compiled by MDA DataQuick.

In Los Altos, Los Altos Hills and the most expensive neighborhood in adjoining Mountain View, defaults in the first five months of this year edged up approximately 10% over 2009 and over 400% from 2008.

The East Bay suburb of Orinda had eight notices of default for million-dollar properties, up from five in the same period last year. On Nob Hill in San Francisco, there were four, up from one. The Marina neighborhood had four, up from two.

The vast majority of owners in these upscale communities are still paying the mortgage, of course. But they appear to be cutting back in other ways. Many of the luxury real estate areas have downtown areas that are filled with empty storefronts, typically unusual in well to do areas.  Discretionary spending of the rich is affecting the little guys, who of course have mortgages to pay, thus the vicious circle.

But this is still Silicon Valley, where failure can always be considered a prelude to success.

In the middle of a workday, one troubled homeowner here leaned over his laptop at the kitchen table, trying to maneuver his way out from under his debt and figure out the next big thing.

His five-bedroom house, drained of hundreds of thousands of dollars of equity over the last 13 years, is scheduled for auction July 20. Nine months ago, after his latest business (he has had several) failed in what he called “the global meltdown,” the man, a technology entrepreneur, said he quit making his $9,000 monthly payments.

“I’m going to be downsizing,” he said.

The man spoke on the condition of anonymity because, he said, he did not want his current problems to interfere with his coming reinvention. “I’m a businessman,” he explained. “I have to be upbeat.”

Things seem to be turning a bit as some areas are showing nice price increases and we all have to stay upbeat and fight to keep on top, irregardless of whether you are looking to buy or sell off your luxury real estate.  If things don’t look great, just look around at your neighborhood, you’re not alone.

Home Sales Surge As Tax Credit Deadline Approaches

April 28, 2010 Real Estate News No Comments
Home Sales Surge As Tax Credit Deadline Approaches

But What Will Happen After April 30?

New-home sales jumped in March as buyers rushed to qualify for a federal tax credit and realtors homed in on the soon-to-expire credit as a way to ramp up interest.
Sales of new single-family houses jumped 27% last month to a seasonally adjusted annual rate of 411,000, according to the Census Bureau. That was up from the revised pace of 324,000 for February.
The Census estimate is based on a small sample and is frequently subject to large revisions.
Some economists believe the latest report may overstate the increase in sales activity and that the credit is simply moving sales forward that otherwise would have occurred later in the year.
Still, some home builders say foot traffic at developments has picked up in recent weeks, spurred by buyers hoping to qualify for a federal tax credit. The credit is available to many people who sign a contract to buy a principal residence by April 30 and complete the purchase by June 30.
“The tax credit has been a huge boon to the industry,” said Tim Minton, executive vice president of the Home Builders Association of Raleigh-Wake County in North Carolina. He said inventories of unsold homes in his area have dwindled, and “the national builders are starting to ramp up new production.”
The tax credit can be as much as $8,000 for first-time home buyers and as much as $6,500 for people who already have owned a home for at least five consecutive years during the previous eight years. The credit is available for individual taxpayers with annual incomes of as much as $145,000 or joint filers with incomes as much as $245,000.

Atherton Average Home Price: $5.6 Million

March 22, 2010 Real Estate News No Comments
Atherton Average Home Price: $5.6 Million

The statistics are in and the average price of a home that was sold in February was 5.6 million dollars, up from a typical January low.  Not a bad statistic if you might be selling, but a challenging number if you are on the buying side.

I have seen several 10-12 million dollar homes that are just hitting the market, so maybe that is why the average listing price in February was $6.23 million and rising.  Here are the statistics for the past year.

My Contact Information

Gary Kurtz
BRE# 01710776

Kathy Kurtz
BRE# 01876966

HOM Sotheby's International Realty
1200 Newport Center Drive, # 100
Newport Beach, CA 92660

949.565.5201 (cell)
949.478.7769 (office)
650.796.5507 (Silicon Valley #)

Contact me now with any questions:

Kurtz Real Estate Group

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Why So Many Chinese Buyers in Palo Alto and Along the Peninsula?

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Why So Many Chinese Buyers in Palo Alto and Along the Peninsula?

Everybody reads about the large supply of Chinese buyers who are buying homes here along the Peninsula.  There are many agents, one prominent one who we all know and now has a plane to fly his Chinese buyers around, who target the Chinese buyers very heavily.  Buy, why are there so many Chinese buyers and […]