Silicon Valley Home Sells For More Than Twice Asking by Broderick Perkins Extolling the virtues of real estate agents, Century 21 is currently airing a television commercial that suggests the only time sellers would not need an agent's services would be when homes sell for twice the asking price. Pigs are flying. Silicon Valley's housing market went Super Nova Feb. 17 when a 55-year-old home on Palo Alto's Guinda Street closed for $2 million. It listed for 10 days at $929,000. A home selling for 215 percent of the asking price is likely a first for Silicon Valley, certainly since the market's current boom began in the early- to mid-1990s, and such sales could spread like a California wildfire. The market reached a previous milestone just weeks ago when statistics showed more homes were selling for more than the list price than homes that sold at or below list price. The market also has yielded a half-million-dollar average single-family home price and a home that sold for $1 million more than asking. In yet the latest, bizarre twist in a market some would say has gone mad, the Palo Alto home that sold for 215 percent of the asking price is a modest (at best) three-bedroom, two-bath, 1,573 square foot home in Palo Alto's historic Rinconada Park area about 1.5 miles from Stanford University and University Avenue, the town's main drag.
Rinconada, meaning "little corner," is taken from Rancho Rinconada del Arroyo de San Francisquito, the land grant that encompassed the original site of Palo Alto. The listing described the home as "super" in a "fantastic location" with a remodeled kitchen hardwood and linoleum/vinyl floors, formal dining room and a "spacious" living room with a fireplace. The one-story, ranch-styled home has no family room, an eat-in kitchen and a two-car attached garage, all on a 6,600 square foot lot. Adding dubious distinction to the area's history, the home is now an icon of freewheeling spending in a housing market that appears to know no bounds. "It's amazing isn't it?" asked Pat Jordan, the Coldwell Banker agent from Palo Alto who represented the buyer, a couple with three school-age children. "He was an Internet man and apparently didn't want to play the game. Rather than fool around and wait until price was $3 million, decided to just grab it and run. The guy was smart," said Jordan. The buyer's bid was one of 16 total offers on the house. A few came close to the $2 million offer. Others were laughable. "One million dollar offers were laughed off," Jordan said laughing. "You have to come in 25 to 30 percent over asking." As of Feb. 18, of the 362 properties that sold and closed in Silicon Valley this year, 223 sold for more than asking, 69 sold at the asking price, 68 sold for less and two did not disclose the selling price, according to Richard Calhoun, a San Jose real estate broker and statistician for the Santa Clara County Association of Realtors. The homes' average selling price was 105.6 percent of the asking price. The median asking price was $449,000, while the median sales price was $467,000, according to Calhoun. Calhoun said the more-than-asking sales price market is no longer an area-sensitive market applicable only to affluent, high end neighborhoods like Palo Alto, Saratoga, Los Gatos, Los Altos and the like. It's spread throughout Silicon Valley and much of the San Francisco Bay Area. "If it was area sensitive. the majority of properties would not be going for over asking price," Calhoun said. Low inventories are wreaking havoc on home prices everywhere in and around Silicon Valley. Calhoun said on Feb. 18, the market set a record low for "days-of-inventory" at 18.8 days. Days-of-inventory is a theoretical count of how many days it would take to sell all available listings if the sales pace continued unabated and no new homes came on the market. "This is even more shocking when you realize many listing agents are only listening to offers after the property has been exposed to the market for a week, which obviously (artificially) increases this number," Calhoun said. The previous record low days of inventory was 19.84 days on Dec. 27, 1999, when many thought a seasonal lull was responsible for the shortage of homes. Calhoun also put the latest inventory count at 632 homes for sale in a market of 1.7 million people and 300,000 owner residences. More than 33 homes sell each day, Calhoun said. Perhaps the next milestone will be a half million dollar median sales price, likely only weeks or days away and an easy jump up from Calhoun's latest median of $467,000. "The market still seems to be demand driven, which would indicate that prices will continue upward. Where the limit is, don't ask me," Calhoun said. | 
