Hat tip to Richard for sending this in…..how much more can buyers take?
A house in Sunnyvale just sold for close to $800,000 over its listing price.
Your eyes do not deceive you: The four-bed, two-bath house — less than 2,000 square feet — listed for $1,688,000 and sold for $2,470,000.
“I think it’s the most anything has ever gone for over asking in Sunnyvale — a record for Sunnyvale,” said Dave Clark, the Keller Williams agent who represented the sellers in the deal. “We anticipated it would go for $2 million, or over $2 million. But we had no idea it would ever go for what it went for.”
This kind of over-bidding is known to happen farther north in cities including Palo Alto, Los Altos and Mountain View. But as those places have grown far too expensive for most buyers, future homeowners have migrated south to Sunnyvale, a once modest community that now finds itself among the Bay Area’s real estate hot spots.
Close to tech employment centers, it makes for a convenient commute — and prices there, too, are now pushing the limits of middle-class buyers. The house that sold for $782,000 over asking in Sunnyvale — it’s on Prunelle Court — is about a mile from Apple’s new spaceship campus.
The buyers, who work in tech, had been hunting for a home for a while — but kept getting out-bid, said Mini Kalkat, the Intero agent who represented them: “They lost two before they bid on this one, so we kind of knew what the numbers would be. It’s a crazy market, but there’s a way to maneuver the market.”
The property is one of more than 50 South Bay homes that sold in the last month for at least $200,000 above the listing price. More than half of those deals were made in Sunnyvale. Others were made in Cupertino, Saratoga and West San Jose, according to Alain Pinel agent Mark Wong. He compiles a monthly list of such “over-asking” transactions.
Over-asking sales are at least partly the result of agents’ sleight of hand. It’s become common strategy to list homes under their market value in order to entice Silicon Valley buyers; they are all too willing to fight over the few houses available in this chronically tight market.
Read full article here:
I live across the street from this house. [I’m a long time lurker on this blog and have an interest in SD since I attended UCSD in the mid-90s]
The headline of the newspaper story is kind of “click-bait” because the overall price is not that exceptional for the area. My back door neighbor bought a similar house for 2.25M half a year ago so it isn’t like the comps are way off.
I suspect that by setting the asking price artificially low the listing realtor is trying to do something akin to forcing an auction by soliciting lots of bids and then somehow walking them up against each other.
I wish the types of auctions that Jim advocates were used instead – it is much more straight forward.
Thanks Richard!
I agree, in hot areas like yours, buyers have become numb to the shenanigans – the author even called it sleight-of-hand.
But an aggressive list price to incite a bidding war isn’t a bad thing. It worked here – more from the article:
The house on Prunelle Court sold in seven days last month, and the deal closed Sept. 1.
The property attracted more than 20 bids, and the winning bid “wasn’t an outlier,” Clark said. “There were lots of people who gave very good, high prices” for the property, which he described as “nothing special, just a typical Sunnyvale house in a nice Sunnyvale neighborhood.”
The backyard and front yard are small. The side yard is “unusually large, which I think was enticing to a lot of people” along with the home’s move-in condition, according to the agent.
These days, it seems most buyers work in tech.
“I sell lots of houses in Sunnyvale and every time we have a buyer, they work at one of the tech companies, usually one of the big ones,” Clark said. “And they generally use their stock options to make the purchase.”
In this area, the stock options are like Monopoly money, and people don’t mind throwing it around. But the whole environment is ripe for abuse.
I am so old. I remember 2000. I remember expired options and the tax bill. When you start getting into these price levels for basic housing I begin to think outside the box. Way outside. At )2.5m why isn’t the choice between a Trimiran or deep draft live aboard parked at your own island?
Hey Richard! I’m a neighbor, over in Cupertino. 🙂
Jim, I stand by my statement that only a MAJOR earthquake up here has the potential to drop housing prices to a reasonable level. I don’t think a tech crash is possible, at this point. I just hope I have some money saved up when that big one hits!
Hi Kwaping – nice to hear from a fellow norcal person.
I agree that earthquake is a real risk to housing prices here. However I do believe that a correction due to a tech downturn is possible and becoming more and more likely.
It seems to me that in places like Cupertino, Sunnyvale, Los Altos, Palo Alto, etc the people that buy into the area now are couples where both people have high paying professional level jobs AND also nowadays money from RSUs.
Since supply is really constrained here I think that the pricing which is based on the two professional incomes is sustainable because there are a lot of couples like that relative to the overall supply. However the RSU aspect is not sustainable IMO.
When I look at my neighborhood the recent arrivals (say in the last 2-3 years) are all people with money from Google, Linkedin, Apple, Visa, etc. However in the very long term will those companies be as generous with RSUs in the future?
Richard
Anyone else see parallels between Silicon Valley and Detroit, only about 100 years removed? At some point down the line (and it might be a long time down the line…but it will happen) Silicon Valley will not be the world moving center of industry that it is today. And when that happens everyone will wonder what the hell people were thinking chucking down that amount of money for an otherwise unremarkable home in a boring place. I actually feel bad for the people who bought it. I am sure they have great jobs and are happy about their choice, but it just seems crazy to me- why not retire to a neighborhood that looks exactly the same, with less traffic, at 1/20th the cost, in a place like Des Moines or Omaha?
As bad as the prices are in San Diego (and they don’t approach SV) it is least exceedingly beautiful and pleasant here. People WANT to live and be here. I don’t think anyone can say the same thing about SV.
What an incredible coincidence. My good friend and I were discussing stuff over brewing beer this morning. He just got back from Sunnyvale. Cleaning out the house he grew up in. Just the other side of the High School. Aka walking distance to Apple. And get this. An untouched Eichler at his peak. The atrium is untouched and the only “change” is some carpet over the original lineoleum. They want to rent these 2300 sf. Any suggested price?
RobDawg – probably about $4K per month
Richard