What Buyers are Faced with Today....

As I noted earlier, most lenders in many cases are now requiring 30% down and near perfect credit. This requirement can vary depending on the size of the loan and the purchase price. While we've come a long way from the "sub prime 100%" finanacing days, the pendulum seems to have swung a little too far the other way.

We saw the 4th Q of 2008 drop nearly 20% in areas of Palo Alto. Taking a $1,500,000 home, this would lower it's value to $1,200,000. Seemingly good for a buyer. But they need MORE MONEY down now than they did if they were going to purchase the home at $1.5 million! Today, to buy a $1,200,000 home they would need $360,000 down. Previously, a buyer would have likely needed 20% down and on a $1,500,000 purchase that would have been $300,000 down. Couple this with the fact that many buyers share a perception that our market still has a drop left in it, and you can see why we are seeing a very stagnant market in Palo Alto across the board. We've got 5 closed sales in North Palo Alto since December 1st, 2008. Ouch.