Luxury home sales plummet in Bay Area
Buyers put off purchases as they expect prices to fall
BY SUE MCALLISTER
Mercury News
www0.mercurycenter.com
Sales of million-dollar homes fell 21 percent in the Bay Area in the first part of 2001 compared with one year ago, and the drop-off was more pronounced in Santa Clara County, where many potential buyers are waiting for prices to fall.
In Santa Clara County, sales of homes for more than $1 million were off 38 percent in the first five months of 2001, compared with the same period last year. Silicon Valley's bleak economic situation is causing buyers of high-priced homes to put off making major purchases.
``There are fewer millionaires, for
one thing,'' said Michele Musy, a real estate agent with Alain Pinel Realtors in Menlo Park. ``That equates to fewer people able
to be cavalier about what they pay for
houses.''
Only a year ago, the nine-county Bay Area stripped Southern California of its title as the state's center for million-dollar mansions (and teardowns). But the new data shows that while Southern California's sales are down 10 percent compared with last year, 200 more high-priced properties sold there from January to May 2001.
The data was compiled by DataQuick Information Systems, a real estate information firm, from county records. It includes closed sales of both single-family houses and condominiums.
While there are no more newly minted dot-com millionaires, there are still plenty of people who can afford a million-dollar home, especially those who are able to sell their existing homes and move up to something grander. But those buyers are now wary of overpaying and are proceeding slowly.
Alice Nuzzo, an agent with Century 21 in Los Altos, said buyers at last year's open houses asked when sellers would be accepting offers, but ``now people are coming into the open house and asking, `Is the price of this house going to be reduced?' ''
Nuzzo said listing prices in Los Altos and surrounding communities mostly have come down 15 percent to 20 percent since last year, a hard reality for some sellers to face.
Shailendra Joshi, a homeowner in San Jose, is one of many price-conscious shoppers in the market now. He's looking for a Palo Alto house in the million-dollar range and hopes to move his family before his son enters high school in fall 2002. If he found the right home, he'd buy now. But he thinks prices are going to keep dropping this year.
``I'm a bargain hunter,'' Joshi said.
While last year's IPO millionaires overpaid for homes in already high-priced neighborhoods, Joshi said, buyers today -- himself included -- are from a different school of thought. ``When they want to make a major purchase, they will think three times before they give the money away,'' he said.
In Santa Clara County at the end of May, the inventory of unsold homes priced at $1 million or more was at about half a year. That means it would take that long to sell those homes at the pace of sales in May. The supply of homes priced at less than $500,000 would take about half as long to sell, according to a report by Richard Calhoun of Creekside Realty in San Jose.
From January to May 2001, million-dollar-plus sales made up 7 percent of the market in Santa Clara County, compared with 8 percent last year, and 2.8 percent in 1999. For the Bay Area as a whole, the figures were 4.5 percent for the first five months of this year, 4.7 percent in 2000 and 2.3 percent in 1999.
Kenn Callahan, a Coldwell Banker agent in Los Gatos, said he thinks the majority of homes listed at more than $1 million are still overpriced, even by last year's standards, which is why buyers are shunning them. Part of the problem lies with sellers, but real estate agents are also to blame, Callahan said.
``Agents were taking overpriced listings just to get them, and then start hammering the sellers on the price,'' he said. So, the houses come on the market at unreasonable prices, then sellers have to chase the market down.
``I typically tell my sellers, `Even in this market, if we don't get an offer in three weeks, we're too high.' '' |
