Home sales: Local real estate agents don't see a bubble about to pop Home sales: Local real estate agents don't see a bubble about to pop (September 14, 2005)

By Andrea Gemmet

Almanac Staff Writer

Fewer homes are being sold, prices aren't rising as quickly, and national experts are worried that the bubbling real estate market is going to pop.

Should Midpeninsula homeowners be worried? Probably not, according to seasoned real estate agents.

"What's going to happen for the balance of year is that it will probably be less frothy than it was in the first half, but there will still be a good, steady market," said Tom Lemieux of Coldwell Banker. "There will be more balance between buyers and sellers, but it certainly will not be a market that's in free-fall by any stretch of the imagination."

Mr. Lemieux, who closely tracks sales data for Menlo Park, Atherton, Portola Valley and Woodside, said he believes sales volume and prices will be at least as strong as they were last year. The number of home sales in Menlo Park and Atherton for the first half of 2005 is running at slightly more than half of the total sales in 2004, according to his statistics.

The median price of homes in Menlo Park rose 19 percent in 2004, and increased by about 28 percent in the first half of this year, he said. The rebounding luxury home market is largely responsible for the big jump in median prices, Mr. Lemieux said.

"In Menlo Park in 2003, we had just five sales above $3 million," he said. "Last year we had 16 and this year, through June 30, we've already seen 11 sales above $3 million."

Historically, more moderately priced homes see less fluctuation in prices because they have a broader base of buyers, he said. The market for higher-end properties in Atherton and Menlo Park, as well as in Woodside and Portola Valley, are more volatile because there are fewer buyers who can afford them, he said.

Bonnie Newson of Alain Pinel said that overall, the market is pretty robust, although it is uneven. Some neighborhoods are going strong, and others are hardly moving, she said.

Properties in Menlo Park and Atherton have been doing well, but sales have been slow in Woodside and Portola Valley in the past few months, she said. Atherton's Lindenwood neighborhood is especially hot, she said.

"It depends on the price point and if (the property) appears to be appropriately priced," Ms. Newson said. "All of the negative press about the bubble bursting has some effect."

Fewer buyers seem to be going for fixer-uppers, and instead are bidding on new homes or property that they can build on, she said.

"I think September and October are going to be very telling as to what happens," Ms. Newson said. August is usually slow, but this year's was "particularly slow."

Mr. Lemieux and Ms. Newson both remain confident that, even if a big market correction is in the offing for the nation or the state, the Midpeninsula real estate market will remain largely immune.

"One of the things that makes our market different is typically we have more demand than supply. There are no large tracts of land for developers to come in and build on, and it's a desirable area," Mr. Lemieux said. "If the market does fall back, I think those factors will contribute to (the local market) not falling off a cliff, whereas that may not be the case in the rest of the country."

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