Thursday, November 13, 2008

High End Real Estate Slowing?

Today, I was looking at a small cluster of custom homes in Los Gatos. Each had a minimum 2.5 acre lot. It's my understanding that these homes have been on the market for over 2 years and are priced in the $3-4 million range. They're certainly gorgeous with superior construction and amenities. But they don't seem to be selling. Why? It comes down to one of three things. One: they were overpriced to begin with. Two: the agents representing the sellers haven't been effectively marketing the property. Three: the values have declined and the sellers are not motivated to sell them at the "real" market value. What I do know based on factual evidence is that the median price of homes in Los Gatos dropped 15% from $1,550,000 to $1,315,000 in the last 12 months and the number of days it took to sell a home increased by 43% (from 51 to 73 days). While Los Gatos has dropped in value, areas like Palo Alto and Saratoga have seen little change in pricing... yet. Both areas are showing a drop in the number of homes sold by 13% from a year ago. -Gary

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