The Housing Shortage on the Mid-Peninsula

A lot of people are talking about the housing shortage which has been driving the cost of buying and renting out of reach for many people who want to live in the mid-peninsula. What we are facing today is the result of many years of under-investing in our housing stock, and our transportation infrastructure coupled with demographic changes and the highest job growth in the entire United States over the past 5 years.

 

“Peninsula population growth has reached record levels measured by annual increase in the past few years. This is true even as the contribution from natural increase has declined as in most parts of the state. Net migration has turned positive and reached record levels since 2010 as job growth on the Peninsula has surged.”-Source: Center for the Continuing Study of the California Economy-June 2016.

 

I have been following the ongoing debate in the local online forums and it seems that many people don’t understand the economic and social forces at work. I have seen and heard comments from people who are quite convinced that greedy landlords and developers are to blame for rising prices. Some suggest that foreign buyers are responsible, snapping up properties as investments and leaving them vacant. Others chastise their neighbors for selling homes at a vast profit to “developers” who often times are their new neighbors seeking to build a new larger home in an established neighborhood.

 

Many of the “solutions” offered are focused on alleviating the symptoms of a problem that is too often characterized in terms of bad motives, mistrust and misunderstanding. Rent control, measures to reduce the number of jobs being created, and outlawing foreign ownership of real estate are just a few of the ideas that have been put forward in public forums, in front of planning commissions and at city council meetings.

 

I am a long time (28 years) Menlo Park resident who loves the area and raised my children here. I am also a person who has made her living in the real estate business for over 10 years so I want to present a factual and unemotional perspective on the changes driving our local real estate market. I think it is important to offer some insights that may help people see the issue more clearly. Over the next 4 installments I will address the key factors that I believe are driving the current market. They are:

 

* Regional job Growth

* Housing stock

* Demographic shift

* Transportation Infrastructure

 

Each of these topics is complex but I want to attempt to illustrate how interconnected they are and central to achieving a well-reasoned understanding of what is happening in our local market. I hope you find this series helpful and insightful and I welcome your comments.

 

Fall 2016

Welcome to RealEstateWrites or REwrites!

Today, I want to focus on the noticeable activity in West Atherton since June 2016.  Recorded on the MLS, there were 7 estates that sold above $13,000,000.  As you read below, please know that some of the information regarding square footage is approximate due to limitations of information provided on the MLS.

Most notable were the sales of 5 newly constructed homes pictured below each description – not all have closed escrow as yet:

  1. 47 Camino por los Arboles listed for $34.8M (approximately 17,000 SF interior living space inc guest house) with 165 Days on Market (DOM) – Close of Escrow (COE) due 9/28 – Listed at $2,047/SF.47-camino-por-los-arboles

2. 91 Selby Lane listed for $14.9M (aprx 12,402 SF interior living space inc guest house) with 320 DOM – COE due 10/5 – Listed at $1201/SF91-selby-lane

3. 59 Barry Lane listed for $21.8M (aprx  12,800 SF interior living space inc guest house) with 54 DOM – 4 day escrow indicating an all cash sale but sale price not published – Listed at $1703/SF59-barry-lane

4. 5 Carolina Lane listed for $16.9M (aprx 11,300 SF interior living space inc guest house) with 149 DOM – Sale Price $16.4M or  $1496/SF5-carolina-lane

Three additional MLS recordings in Atherton of homes selling above $13M are the following:

5 Faxon Forest (age 9 years) listed for $16.9M (aprx 9500-11500 SF living space inc guest house) with 82 DOM – Sale Price $15.5M or $1632-$1348/SF5-faxon-forest

95 Atherton Avenue (age 21 years) listed for $15.2M (aprx 9983 SF living space inc guest house) with 343 DOM – Sale price not published yet.  Lot size is 2.14 acres and plays an important role in value of property.

95-atherton-avenue

149 Tuscaloosa Avenue (age 41 years) listed for $14.8M (aprx 4980 SF living space inc guest house).  Sale Price $13M   This might have been a land value sale as the home is original condition and lot size is 1.88 acres with a generous width of 205 linear feet.  Land value for this property calculates to $159/SF.149-tuscaloosa-avenue

INSIGHTS

Based on these sales, the summer was a healthy seller’s market for West Atherton.  These numbers are a mix of list prices and sale prices but generally at this time represent the latest available information for a new construction average of $1611.75/SF  for the 5 homes listed above. Once we are aware of the closed sale prices, we can assess a more accurate average.  The median of these 5 homes (again, mixing list and sale prices) is $15.5M.

There are not enough data points to make any assumptions for land value for the mid-year sales.  By comparison, a land value sale in March at 88 Tuscaloosa (1.335 acres) recorded on the MLS at $139.32/SF.  This property frontage was 153 linear feet as opposed to the 205 linear frontage of 149 Tuscaloosa (1.88 acres) which yielded $159/SF.   

Averaging numbers for Atherton is not really a perfect indicator or predictor since each property is so distinctly different; however, it does give you some overall sense of the market there.  If you would like more detail on the above properties, or  you are interested in active listings in Atherton, please let me know (mgilles@apr.com or 650.814.0858).

Stay tuned for my insights on Menlo Park for my next blog post where I will look at the new construction sales there as well as the overall luxury market that ranges from $5M to over $7M!