The DeLeon Insight - March 2016 by DeLeon Realty

The DeLeon Insight Silicon Valley Real Estate Newsletter Local Specialization

Global Reach

Integrated Approach Marc h 2016

How to Effectively Build Your Dream Home

• Top Design Trends for 2016

The DeLeon Update: Market Trends

Average Price/Square Foot 2015 & 2016

01/2015 - 02/2016

01/2015 - 02/22/2016

Average price per square foot for single-family homes from 01/01/2016 to 02/22/2016 compared to a similar period in 2015.

Average Sales Price 2015 & 2016

01/2015 - 02/2015

01/2016 - 02/22/2016

Average sales price for single-family homes from 01/01/2016 to 02/22/2016 compared to a similar period in 2015. (Note that this is a small sample size due to the time of year.) *Data gathered from the Multiple Listing Service on 02/22/2016

2â&#x20AC;&#x201A; DeLeon Insight March 2016 - ÂŠ 2016 DeLeon Realty

How a Single-Story Overlay Zone May Affect Your Neighborhood By: Ken DeLeon, Esq. DeLeon Founder

oseph Eichler built 2,700 homes in Palo Alto, more than in any other city in America. These beloved architectural gems have found themselves in the spotlight of a controversy in Palo Alto and surrounding cities. The debate is about whether homeowners should be allowed to build two-story homes in neighborhoods that, originally, were solely composed of Mid-Century Modern single-story homes. This battle has culminated in two Palo Alto neighborhoods recently becoming single-story overlay (SSO) zones, preventing future construction of any two-story homes within those areas. This article explores how a neighborhood can petition to become an area with an SSO and whether precluding construction of two-story homes benefits or harms future resale value. Two major factors drive neighborhoods to become SSO zones. The first factor considered by Eichler owners is the loss of privacy that may occur if they are surrounded by two-story homes like those being built throughout Silicon Valley. The wonderful walls of glass in Eichlers that invite the outside in can also allow towering neighbors to peer right into the rooms, resulting in a proverbial fishbowl. Second, Eichler owners worry the delightful consistency of their neighborhoods, as well as their look and feel, is being disturbed. Singlestory homes with low-slung roofs, juxtaposed with large Mediterranean or Craftsman houses, seem architecturally incompatible. Before a Palo Alto neighborhood can become an SSO zone, two important criteria must be satisfied. First, 80

percent or more of the homes within the proposed boundary must currently be single-story. Second, at least 70 percent of homeowners within the boundary must sign the petition. Both of these criteria were met when the Greer Park and Los Arboles neighborhoods recently opted to become SSO neighborhoods. While the debate on becoming an SSO neighborhood may seem of interest solely to neighborhood residents, an interesting question of broader relevance is whether limiting development options will decrease or increase property values. Although limiting redevelopment to single-story homes may seem to inherently reduce new construction, there are some benefits to building a single-story home. Beyond occasionally lowering building costs, the greatest savings is in approval time. Many Silicon Valley cities, including Palo Alto, encourage singlestory construction since it has very little negative impact upon neighbors. Accordingly, single-story homes in Palo Alto are not subject to Individual Review or other time-consuming discretionary review processes. Thus, construction can begin immediately once plans and permits are complete, and the time required to build a new home significantly decreases. Combined with the assurance that new homes © 2016 DeLeon Realty

nearby will also be single-story, this makes the prospect of building a onelevel home much more attractive to neighbors and even some developers. Nevertheless, an important question remains—how does an SSO zone impact future resale values? Based upon data we evaluated, South Palo Alto homes within an SSO zone do not lose substantial value, nor are they more difficult to sell. The difference between the average home sales price of an SSO zone in South Palo Alto and that of South Palo Alto in its entirety is less than 1.5 percent. The difference in days on market between the two zones is only three days. Numbers only tell part of the story, however, and our experiences with buyers show a slight preference for nonSSO homes, which keep development and expansion options open for growing families. Nevertheless, because of the large buyer pool in Palo Alto and the demand for homes in all neighborhoods, the impact of such a preference does not appear to be material. Given the preference of many neighborhoods to remain single-story and have consistent architecture, coupled with the minimal impact on resale, expect to see a few more Eichler neighborhoods consider this option.

- DeLeon Insight March 2016 3

The Rise of Northern Mountain View By: Alex Seroff, J.D. Assistant Director of Sales and Mountain View Buyer Specialist

orth Whisman, Rex Manor, and Stierlin Estates are Mountain View neighborhoods that might not be familiar names to many, but that is about to change. These neighborhoods, originally made up primarily of small 1950s and 1960s homes, condos, and tilt-up office buildings, are seeing an increase in sales, prices, desirability, and general revitalization. North Whisman, bounded by Highway 85, U.S. 101, Middlefield Road, and North Whisman Road, is slated for great change and will look and feel very different over the next few years. Formerly home to Fairchild Semiconductors and other original tech companies in Silicon Valley, the neighborhood and the housing market within it languished somewhat once these companies relocated or folded. The trend has now reversed with owners gradually improving and expanding their homes, some of which sold for over $2 million in 2015. Most importantly, developers have decided to invest in North Whisman. There are presently five large-scale residential developments with over 160 row homes planned to come to market over the next several years if all are approved by the city. It is easy to see why developers are grabbing as

much land as possible in the neighborhood as the Google Quad is just across North Whisman Road and Symantec’s campus is just one block down Middlefield Road. Proximity to work is one of the main criteria for entry-level homebuyers, and buying in North Whisman will afford walkability to two of the largest employers in the area. When developers build new homes in an area, this often starts a trend of rising property values and, with this number of projects planned or under construction, it is nearly inevitable that the desirability of North Whisman will continue to grow. Rex Manor is another neighborhood projected to see much positive change in the coming years. Bordered by Shoreline Boulevard, Middlefield Road, Farley Street, and Central Expressway, Rex Manor was historically and is still one of the most reasonably priced neighborhoods in Mountain View. However, in 2015, prices in Rex Manor proved that “reasonably priced” is a relative phrase. The cheapest homes are the original bungalows of 800 to 1,000 square feet that are now selling for over $1 million. Builders are snapping up these lots and there is a steady stream of new construction. In the last half of 2015, two new homes sold, one for $2.1 million—a number shocking even to those most bullish on this market. Besides general housing trends, Rex Manor specifically is benefiting from the number of young Googlers with

just enough funds to buy in Mountain View. In fact, Google has just leased an impressive, 111,443-square-foot, fourstory building to be built just north of the neighborhood, which will only increase the desirability of Rex Manor. Stierlin Estates also had a notable 2015, bucking the general market trend of fewer transactions with eight sales closed last year as compared to two in 2014. Being an older neighborhood typically with few sales, this is indicative that the original owners are selling and the next generation is moving in. It is highly likely that younger owners will want to remodel and expand the homes to fit the modern family lifestyle. These modifications often have a domino effect; once a few owners have remodeled, more feel comfortable investing in their homes. With more modern homes in the neighborhood, prices typically rise. There are strong signs that North Whisman, Rex Manor, and Stierlin Estates are on the rise. Further investment in these neighborhoods in the form of new construction, either by developers or owners, is coming. Young Mountain View residents looking for a first home as well as investors would do well to consider purchasing in these neighborhoods poised for strong appreciation.

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- DeLeon Insight March 2016 5

How to Effectively Build Your Dream Home By: Ken DeLeon, Esq. DeLeon Founder

he demand to purchase a lot and build a custom home in Silicon Valley is higher than ever before. The three main reasons for this, in declining order, are: 1) the lack of new homes being offered by speculation builders, 2) the large profits these builders make when they do build homes for speculation, and 3) the general obsolescence of the existing housing stock in Silicon Valley. Should you choose to build your dream home, DeLeon Realty can lead you in understanding this segment of the market and avoid pitfalls that can occur when taking on this project. The primary driver for the rising demand to purchase a lot and build a custom home is that the number of new homes built by developers on speculation has greatly declined since the Great Recession. For example, 41 brand-new homes in Palo Alto were sold on the Multiple Listing Service (MLS) in 2006. As the economy weakened, this number declined each year until 2010, when it was reduced to a mere five homes. This extreme drop of 88 percent recovered somewhat as the economy improved, but

still only 21 new homes, about half the number as before, sold on the MLS in both 2014 and 2015. Simply put, many developers either folded during the recession or became more risk-adverse, focusing instead on building custom homes, which is less dependent upon the economy. This dearth of options has forced many who sought a new or newer home to build the home themselves as an alternative. With less supply yet strong demand, developers have recently made large profits when building on speculation. One of my clients purchased a lot in Old Palo Alto for under $3.5 million and spent nearly $2 million on building a large, high-quality house with a basement totaling 5,500 square feet. I then sold that home for $8.25 million! With many developers making well over a million dollars for their work, custom buyers are starting to ask themselves why they should not take on the project themselves. Then they can reap the dual benefits of cost savings and lower property taxes as a result of the lower purchase price of the lot relative to a completed new home. Finally, as Silicon Valley families continue to rise in affluence, they are finding the

housing stock to be too old and too small for their goals. Our aging housing stock lacks many modern amenities such as open floorplans, large closets and bathrooms, and an abundance of windows and natural light. Many families will endure the building process to get the home of their dreams. Proper Planning and Assistance While reasons abound for why you may want to build your own home, so too do potential obstacles. First-time builders are often plagued with problems and time delays, and cost overruns can become the norm. Proper planning and assistance will help you achieve your goals within the time and budget you planned. 1) Buy the Right Lot in the Right City If Dickens were considering building a home in Silicon Valley, he would look at the various building departments in each of the cities and likely say, “It was the best of towns, it was the worst of towns….” Even areas that may seem similar at first blush have very different attitudes towards redevelopment.

For example, take the small but very affluent towns of Atherton and Woodside. Atherton is the easiest of the elite towns to build a home in; there is not even a design review process. If you simply stay within the planning setbacks, quick approval is almost guaranteed. The generous floor area formula allows building a home of over 10,000 square feet, including the basement, on an acre. This ease and expedience of building was illustrated by one of my clients who bought a lot, submitted plans for approval, and completed construction on a home of over 10,000 square feet all in less than 18 months. Conversely, in Woodside, it can sometimes take nearly 18 months just to get a permit fully approved. The town has a very restrictive and thorough design review process to ensure that new homes fit in with the rural, equine atmosphere beloved by town residents. There are advantages and disadvantages to each town’s building process, but make sure your real estate agent provides you with an informed analysis on how long it will take and how much it will cost to build in any area you are considering.

build, make sure you purchase a prime lot. Given the high costs of building, I recommend that clients pay the premium for an excellent location because once the home is complete, the value of that premium will double. Conversely, a poor location or busy street can negate the value of quality construction. Additionally, you want to be certain that there are no issues with the lot that will impair the ability to build your home. The most common issue is a heritage tree, such as an oak or redwood, which often requires that the home be built around it at greater expense. Ideally, pick a site that has these beautiful trees on the perimeter and not in the center of the lot. Other issues to focus on are the lot size and dimensions, for it is desirable to have enough frontage for impressive curb appeal as well as a large enough backyard after the setbacks to have a nice place for playing or entertaining. At DeLeon Realty, we have our construction consultant or a highly reputable builder preview any lots our clients are considering to ensure there are no issues that would prevent our client from having a smooth building process.

Once you finalize the area in which you wish to

2) Assemble the Right Team Finding an architect and a contractor who share your vision and maintain clear lines of communication is essential to an enjoyable building process. In the strong economy of Silicon Valley, the best architects and contractors often have wait times, sometimes exceeding six months. You will want to work with a successful real estate agent with the connections and clout necessary to ensure your project is at the top of the list. When choosing an architect, two of your top considerations should be the architect’s expertise in the city you are building in and your trust in that ability to draft your plans to reflect the home you desire. First, you should ensure that any architect you select has experience with the building department in your chosen city. While there are many famous architects in San Francisco and Los Angeles, I recommend that clients choose a local architect who has worked closely with the city of choice. I have heard of individuals losing months, even a year, as their architects battled the city in fights that could have been avoided with in-depth knowledge of the building codes of the city. Second, architects often self-select to build unique dream homes, while others provide functional floorplans borrowed from past designs that will be more expeditious to design and build and are better for resale.

- DeLeon Insight March 2016 7

I frequently consult with clients who are having plans drawn to ensure that their dream homes will also be good investments with strong resale value. One floorplan feature required to maximize resale potential is building at least three bedrooms and two bathrooms upstairs. I had owners who bought a lot with another agent and then built a stunning custom home with only two bedrooms on the second floor, which worked perfectly for them since they only had one child. However, they did not get top dollar when we resold their home as they had narrowed the buyer pool. Buyers with two children generally do not want one of their children on a separate floor.

avoid the subterranean feeling of a basement with low ceilings and dark finishes.

To aid in the planning process, our construction consultant assembles several good builders for our clients to meet with and interview. He also evaluates the builders and shares costs from past experiences. Generally, when constructing a custombuilt home, costs can range from $200 to $500 per square foot depending upon the quality of construction. We provide good builders at each price-point so that the client can make a fully-informed decision. The architectural style of a home can dictate pricing as well. Contemporary homes are the most expensive to build because Other floorplan elements excellent for of the steel required to support the open resale include: floorplan and showcase the glass walls. • a junior master suite downstairs for Craftsman homes are moderately expensive aging parents to stay in; because of their crown molding, wood • a very open great room combining the trim, and built-in storage. Mediterranean kitchen with the family room and leading to homes are the least expensive to build, as the backyard; and stucco is inexpensive and the trim-work • high ceilings, if a basement is built, to can hide construction flaws; however, this

architectural style is becoming passé and may not age well from a resale perspective. Even after assembling the team, our construction consultant provides our clients with continued advice, helps negotiate the costs of the bid as low as possible, and works to have the construction stay on track. What he enjoys most is when clients ask how much his time will cost, and he gets to say with a smile, “This is all part of the package.” From a timing perspective, you should budget six months to complete your plans and permits, and 12 to possibly 18 months for construction, if building a basement. Whether the lower cost when building your own home is worth the time it will take you is an individual choice. Should you choose to build, you will want a real estate team that can help you successfully navigate this path as you embark upon the process of obtaining your dream home.

Facebook’s Effect on the Appreciation of Menlo Park Housing By: Tabitha Huang, J.D. Menlo Park Buyer Specialist

he Menlo Park housing market has been fairly consistently experiencing double-digit annual appreciation rates since 2011, as well as an astounding 69 percent overall appreciation since 2011. This should come as no surprise as the marked increase in housing value is tied to the evergrowing presence of Facebook within Menlo Park. The amount of Menlo Park office space occupied by Facebook has been on an impressive growth trajectory since the social networking giant moved to the city. In 2011, Facebook began its Menlo Park operations, leasing approximately one million square feet of office space on 57 acres located at Willow Road that it just purchased in 2016. Prior to moving, Facebook purchased two nearby lots totaling 22 acres. Later, in June 2014, Facebook acquired 59 acres, and in February 2015, Facebook purchased an additional 56 acres with tentative plans to construct up to 2,000 new housing units for permanent employees and up to an additional 1,500 units for interns. In December 2015, Facebook announced yet another lease in Menlo Park of 210,000 square feet from Intuit. Facebook is now the largest landowner in Menlo Park’s Bayfront industrial area, owning approximately 200 acres.

Facebook’s exponentially growing property portfolio is aligned with the company’s increasing employee population. Since moving into Menlo Park, Facebook’s employee count has quintupled, from 2,127 in 2010 to 11,996 as of September 2015. In fact, the number of employees working at Facebook’s Menlo Park offices (approximately 5,500) may soon outnumber the residents of the adjacent Belle Haven neighborhood (approximately 5,647 residents). Facebook has approximately 1.6 million square feet of Menlo Park office space at its disposal, along with an additional 1.16 million square feet for various projects pending approval from the city. Mark Zuckerberg has also taken amazing altruistic strides in giving back to the local community, including his $120 million pledge in 2014 to improve Bay Area public school systems. The first $5 million of this fund supported priorities in mid-Peninsula school districts, including the Ravenswood City and Redwood City School Districts. Additionally, Zuckerberg and his wife recently announced opening The Primary School (TPS), an integrated system for children of underprivileged families to access both personalized learning and health benefits. TPS will substantially benefit communities in need and act as a positive driver for Menlo Park as a whole. Of course, Menlo Park’s housing market is closely tied to Facebook’s growing presence.

The increase in Menlo Park’s median sales price is represented in the graph below. The most minimal appreciation in the Menlo Park housing market occurred between 2010 and 2011, immediately before Facebook moved into the city. From 2011 to 2012, there was approximately 10 percent appreciation, which coincided with Facebook commencing business operations in the city in 2011. As the Facebook employee count continued to rise in 2012 and 2013, so too did housing values rise by approximately 14 percent between 2012 and 2013. Menlo Park had the most appreciation from 2013 to 2014 at approximately 24 percent, which not only is consistent with the steady increase in employees, but also corresponds with the Facebook purchase of 59 acres of land, the company’s largest land purchase to date. Not surprisingly, Menlo Park houses saw the most appreciation from 2012 to 2014, which correlates with Facebook stock more than doubling during that period. Given the proven propensity of Facebook to successfully develop its business and workforce, combined with Zuckerberg’s extraordinary charitable efforts to improve schools in the area, the presence of Facebook is certain to bring about enduring and pervasive benefits to all city residents. As a result, Menlo Park should continue to see strong appreciation in the years to come.

- DeLeon Insight March 2016 9

Five Reasons to Be Excited About Sunnyvale Real Estate By: Aaron Hsu Sunnyvale Buyer Specialist and Data Analyst

he heart of the high-tech industry in Silicon Valley, the home of tech giants like Yahoo!, Juniper Networks, and AMD, and the keeper of a clean, suburban setting boasting outstanding schools and prize-winning parks—this is Sunnyvale, home to over 140,000 residents living in one of the safest and most innovative cities in Silicon Valley. No wonder, then, that the median price of Sunnyvale single-family homes has risen by over 14 percent per year in each of the last three years. A unique combination of fundamental economic drivers contributes to this astounding appreciation and continues to positively impact Sunnyvale real estate. Here are five reasons that make Sunnyvale a prime choice for homebuyers. Town Center Development After nearly half a decade of litigation, the 36-acre Sunnyvale Town Center project is finally moving forward. Originally designed to include nearly 300 residential units, along with retail, office, and movie theater space, the project was put on hold by several years of lawsuits. However, in August 2015, the California Supreme Court ended the litigation, and in December 2015, Sunnyvale approved the purchase of the property by a team of experienced developers. Once development is complete, the Town Center will be a major asset to Sunnyvale’s downtown neighborhood. Top Employment Growth Sunnyvale’s prime location in the center of Silicon Valley makes it a home of choice for employers. The U.S. Bureau of Labor Statistics recently ranked the San JoseSunnyvale-Santa Clara metropolitan area as having the highest employment growth in the nation, with the number of employees increasing by over 5.2 percent between January 2014 and January 2015. This corresponds to over 50,000 new employees

in the area, all with housing needs. Amenities like the downtown area and proximity to public transportation make Sunnyvale exceptionally attractive to this growing professional population. Increasing Commute Times Given this outstanding job growth, Bay Area commute times continue to grow longer. According to the Metropolitan Transportation Commission, congestion has increased by nearly 40 percent over the last five years. As people value their time increasingly more, they will seek to move closer to their places of work. With its central location and close proximity to major employers including Apple, Lockheed Martin, and Google, Sunnyvale is a natural choice for those seeking to reduce commute times. Increasing Cost of Rent The increasing number of jobs and employees in Sunnyvale and the surrounding areas of Silicon Valley has also significantly increased demand for rental housing. The average rental price of a one-bedroom apartment has sharply risen from $1,352 in 2010 to $2,477 in 2015, an 83 percent increase over five years. With steep increases expected to continue and mortgage rates at historic lows, a growing number of renters

will ask themselves why they are not creating equity instead. This will serve as a continuing source of housing demand. Excellent Schools The quality of local public schools has a very positive effect on property values. Sunnyvale is endowed with excellent schools, including California Distinguished Schools such as Cumberland Elementary. Even schools that are not quite at the benchmark API score of 800 yet are showing strong and consistent upward trends. Meanwhile, properties assigned to top-scoring Cupertino schools continue to show extremely strong appreciation. For example, Sunnyvale homes assigned to Stocklmeir Elementary (API 974) showed average yearly appreciation of 17.6 percent between 2012 and 2015. With its ideal combination of exciting new development, strong continuing economic growth, and excellent outlook for local public education, Sunnyvale is well-poised to continue showing strong appreciation. This will be especially true in areas close to top-scoring schools and amenities like transportation and downtown. With these strong advantages in its favor, Sunnyvale will continue to thrive as an attractive and exciting market for homebuyers.

Design Tech High School Relocating to Oracle’s Redwood Shores Campus By: Chris Fisher Redwood City and Redwood Shores Buyer Specialist

uring the Oracle OpenWorld 2015 Conference, Oracle CEO Safra Catz stated, “Seventeen years ago, Larry Ellison told me that he’d love to have a school where students learn to think. Our support of d.tech [Design Tech High School] reflects Larry’s vision for a unique high school founded on principles we believe in: innovation, creativity, problemsolving, and design thinking. We couldn’t be more excited to build this school on our campus and to see the positive impact it will undoubtedly have on the students, teachers, Oracle employees, and the Bay Area community.” Scheduled for completion by the fall of 2017, the Oracle campus in Redwood Shores is slated to be the new home of Design Tech High School, or d.tech. This school is currently located in Burlingame with enrollment in their freshman and sophomore classes. After completion of the school’s brand-new, state-of-the-art facility of 64,000 square feet, total enrollment will be approximately 550 students after junior and senior classes are added. Founded in 2014, d.tech launched a curriculum designed to be personalized and tailored to the needs of each individual student with the goal of developing the passions of each student. With guidance from their teachers, students have the ability to

learn at the pace they need with tools that work for them. The d.tech curriculum centers around several areas, including the humanities, STEM (science, technology, engineering, and mathematics), life skills and enrichment, and design advisory. The study of human experience is achieved through courses in English, world language, and social science, while STEM courses focus on the premise that technology is rapidly evolving and will continue to develop at a fast pace. Life skills and enrichment classes focus on making each student a well-rounded person, and include courses in visual and performing arts, health and wellness, financial literacy, and socialemotional skills. In addition to the other course areas, students also participate in the four-year design advisory, d.tech’s primary elective course. First-year students take a course called Foundations in Design Thinking that builds the foundation for developing skills like creativity, collaboration, and self-management. Sophomore, junior, and senior classes are asked to identify problems within their own communities and/or the world to see what solutions they can offer to the problems identified. With the guidance of their instructors, students will learn how to present real solutions to real problems.

Dr. Ken Montgomery, d.tech’s executive director and founder, says, “D.tech will be the world’s first educational institution located on a high-tech campus, which will give students immeasurable opportunities. We are incredibly grateful to Oracle for giving d.tech a home—a place to inspire and nurture students who will transform our community and world for the better.” In addition to the announcement of d.tech relocating to the Oracle campus, residents of Redwood Shores also received exciting news from the Belmont-Redwood Shores Elementary School District. In November 2014, Measure I was approved, which authorized $48 million in bonds for facilities expansion and improvements within the school district. To address continued increasing enrollment, Redwood Shores Elementary recently had two new classrooms added to its campus as part of the district’s first round of expansion. The second round of expansion will include an expansion of Sandpiper Elementary, which will also allow for elementary enrollment growth, plus a middle school option to serve as an alternative to Ralston Middle and Nesbit. As Redwood City school scores continue to rise, so too will its real estate values.

- DeLeon Insight March 2016 11

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Elevate Your Landscaping By: Jillian Mrsny Interior Designer

uring the winter, many of our yards become areas we would rather avoid than enjoy. The once-green lawn that was dried out from the drought probably now looks more like a mud puddle than lush grass. Sometimes we lose plants during the winter from the cold weather or our own lack of a green thumb. Don’t fret over that barren landscaping! Now is the perfect time to start planning a springtime update for your yard. Here are a few suggestions that can be used to elevate or even completely renovate your current yard into a personalized outdoor space for warm-weather enjoyment. When planning improvements for an outdoor space, it is important to find options that add to the space rather than detract. Adding a paved patio, a winding path, or even a gravel area will be a perfect starting-point. Portable elements like outdoor fireplaces and fire-pits make great conversational pieces, are relatively inexpensive, and can usually be found at your local hardware store. Permanent features like built-in barbecues and outdoor kitchens are not only great for entertaining but also offer

technology-free alternatives for gatherings big and small. These permanent features are also excellent assets for attracting buyers when it comes time to sell your home. The addition of an outdoor space is also beneficial in creating an extra, versatile entertaining area for your home. Outdoor living areas are great ways of extending your indoor living areas without requiring extensive permits or expensive construction. You can provide year-round visual interest to an outdoor living area by adding a sunshade, a moveable umbrella, or even a gazebo. Privacy screens are also useful additions to smaller spaces as they can create intimate areas while hiding unsightly areas like garbage bins. Additionally, individual privacy screens can create visual barriers without the expense of an entire fence. Accent lighting, chandeliers, or string lights can give your yard a pleasant, revitalized ambience. With the advent of solar and battery-operated lights, you can illuminate paths and features like fountains or statues without having to do invasive digging or running wires. Soft-spot landscape lights are great for garden paths, and the distance placed between these lights will help outline the areas you want to illuminate.

String lights or lanterns can be used in tree canopies, above an arbor, or hung from the end of a porch or a deck. Luminarias, or small paper latterns, are great options for adding colored lighting both as temporary and permanent installations, and can be hung from trees, decks, placed along pathways, or even used to decorate tabletops. Updating existing outdoor overhead lights and wall sconces are helpful in elevating your home’s exterior to match your newly updated landscaping. Though lighting plays a large part in forming the tone of a space, the mood of an outdoor area can be improved by using simple accent items. The addition of pillows or updated upholstery to your outdoor furniture may help the space achieve a softer, fresher vibe. Even using a few colorful plants can transform a drab, barren yard into a personalized space for year-round enjoyment. Whether revitalizing your landscaping with small updates like lighting or completely replacing a dried-up area with a new feature like a fire-pit or a dining area, these projects can be easily achieved in any style or size of yard. Take advantage of these wet months by game-planning for your spring landscape design.

- DeLeon Insight March 2016 13

Top Design Trends for 2016 By: Nicole Chavez Sr. Interior Designer

eady to go out with the old and in with the new (trends)? A few fads with more modern twists will continue to stay trendy throughout 2016, but it is time to ditch mason jars and chalkboard paint and switch back to clean lines and fun patterns. It is the year of statement pieces and bold choices. Mixing materials and surprising details are back in style, and implementing textures will bring your interior up to date. Additionally, paint magnate Pantone nominated this year’s colors as “Serenity” (pastel blue) and “Rose Quartz” (pastel pink), suggesting more soothing tones are coming into vogue. Here are the top 10 home design predictions for 2016: 1. Patterned Tiles Geometric patterns and honeycomb shapes will make a bold new appearance in everything from tiles to wallpaper to artwork. Expect to see these shapes on kitchen backsplashes, bathroom shower tiles, accent walls, and even fireplace mantels. 2. Formal Dining Rooms Get ready to pour more attention into your dining room. Time to move out the office and media room equipment and prepare your formal entertainment space. Gathering for special meals isn’t negotiable anymore, so it’s time to start planning some parties!

5. Black Stainless-Steel Appliances Are you over the shiny steel appliances in your kitchen? The dark metal alternative is making a buzz this year; consider LG’s new Black Stainless collection. 6. Sustainable Design We can expect a big push towards ecofriendly interiors. An easy way to achieve this goal is by incorporating natural materials, like stone and wood. Find elements that not only look great, but are also well-made and minimize the impact on our ecosystem. Whenever possible, look for artisan products, which are often locally made. 7. Old World Ornamentation Expect bursts of nostalgia, like brocades, tapestries, and Georgian or Empire antiques. Fringe, cording, and tassels will soften the austerity of modern upholstery. Look for dramatic drapes, too. 8. Bold Blues Given Pantone’s preference of pastel colors for this year, the trend of bold blues seems to be on the opposite side of the spectrum. However, design experts are predicting cobalt, navy, and royal blues will be the go-to hues. Whatever hue you choose, blue can give a truly intimate and relaxing atmosphere to any space. Consider

3. Statement Pendants Chandeliers have always been our go-to for that one special light fixture, but 2016 is the year of the statement pendant. Experts also predict gold lighting fixtures will increase in popularity. 4. Mixed Metals Boasting instant glam power, modern metallics add a sleek touch to any room, whether in steel, chrome, rose gold, or copper. Don’t be afraid to mix and match for added visual interest.

giving your walls a new coat of blue paint, or bring some blue to your kitchen cabinets. Adding a pop of this color is a great way to stay current without making a major commitment. 9. Nubby Wool Rugs Nubby wool or other natural fibers will be the dominant texture, especially for area rugs. Bringing softness to dramatic statement pieces, the natural hues of these elements create the ultimate indoor/outdoor vibe. Alternatively, try a geometric version that can work with both contemporary and traditional interiors. 10. Outdoor Prints Plant-inspired décor is making a comeback. As with any print, remember that a little goes a long way. Use one print on one or two furniture pieces that will be focal points of the space. To ensure your take is not too over-the-top, consider using prints that are outside of their natural color scheme. At DeLeon Realty, our design team knows it is imperative to stay on top of new trends so we can best advise our clients on up-to-the-minute styles. By keeping your home current, you will have fresh, stylish spaces that will be much more likely to attract buyers when the time comes to sell.

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www.DeLeonRealty.com

Visit DeLeon Realty’s website for exclusive listings before they hit the MLS, alongside the most custom content in the industry. ®

(650)488-7325 | DeLeon Realty | CalBRE #01903224

- DeLeon Insight March 2016 15

Disclosing What You Know: Disclosure Obligations for Sellers and Agents Under California Law By: Kyung Lee, Esq. Assistant General Counsel

and that settlement and erosion problems are commonly associated with such soil. Moreover, the agents had also observed uneven floors during their inspection. In sum, the Easton decision emphasizes that agents’ obligations are to conduct a “diligent” investigation (with the goal being to make accurate disclosures); to be cognizant of “red flags”; and to not bury their heads to the obvious.

alifornia law requires sellers of residential property to make various disclosures to a prospective buyer. Specifically, among other things, sellers must deliver a statutory Transfer Disclosure Statement (the “TDS”) to the buyer prior to executing a sales contract. In turn, the TDS contains a checklist, notifying the prospective buyer of problems (or potential problems) with the property and stating that the representations are those of the sellers exclusively and not the sellers’ real estate agent. If the sellers are represented by an agent, the agent has a portion of the TDS to complete, as well. Under California law, what are the disclosure obligations of sellers and their agents? This article is not exhaustive, but it sets forth some helpful pointers regarding the nature and scope of these obligations. An Agent’s Disclosure and Inspection Obligation Generally. Under California Civil Code Section 2079, a seller’s agent must (a) “conduct a reasonably competent and diligent visual inspection of the property” and (b) disclose to the prospective buyer “all facts materially affecting the value or desirability of the property that an inspection would reveal.” (Cal. Civ. Code § 2079(a).) Of note, such an inspection does not include “areas that are reasonably and normally inaccessible” or areas that are off the site of the property. (Id. at § 2079.3.) Neither is the agent required to inspect public records or permits concerning the title or use of the property. (See id.) As for what “material” means in this context, courts have held that “[u]ndisclosed facts are material if they would have a significant and measurable effect on market value.” (Assilzadeh v. Calif. Fed. Bank, 82 Cal.App.4th 399, 410 (2000) (italics added).) An Agent Must Follow Up on “Red Flags.” As noted above, a seller’s agent must “conduct a reasonably competent and diligent visual

Disclose Only Facts, Not Opinions. Sellers and their agents should disclose only facts–not opinions–in their disclosures to a prospective buyer. For instance, let’s say that the property has a water leak, and the sellers know with certainty the cause of that leak. In such instance, the sellers should disclose that information to the prospective buyer. But if the sellers are less than certain about the cause, they should not speculate, surmise, or offer their opinions as to the cause of the leak. Facts, not opinions, are what the disclosure obligation requires–and volunteering any information beyond just the facts is not required or advisable.

inspection of the property.” (Cal. Civ. Code § 2079(a).) This means that, if an agent observes “red flags” indicating potential problems during an investigation, the agent has a duty to further investigate those “red flags.” In Easton v. Strassburger, 152 Cal.App.3d 90, 104 (1984), for instance, the Court of Appeal found the seller’s agents should have requested a soils report or taken other steps to ascertain the existence of soil problems – given that the agents knew the home was built on fill soil

Disclose Only Facts, Not the Purported Legal Ramifications. Relatedly, given that the

paramount objective is to disclose only facts (and nothing else), it follows that sellers (and their agents) should refrain from making representations about the purported legal ramifications of certain facts. For example, let’s say sellers disclose that their property is subject to certain zoning restrictions. The disclosure obligation ends there; they are not required to also disclose information about the purported adverse legal ramifications or consequences of such zoning restrictions. As one court stated, “[I]t is not the obligation of the seller to research local land-use ordinances and advise a buyer as to their effect on the realty.” (Sweat v. Hollister, 37 Cal.App.4th 603, 609 (1995).) Indeed, the “existence and effect of city ordinances . . . constitute information as readily available to the [buyers] as to the [sellers].” (Id. at 608.) “Short Sale” Status. What about a seller’s obligation to disclose the property’s “short sale” status? One court has spoken relatively directly on this issue. In Holmes v. Summer, 188 Cal.

App.4th 1510, 1514 (2010), the property at issue was “overencumbered” and could not be sold at the agreed-upon purchase price–“unless either the lenders agree[d] to short sales or the seller deposit[ed] . . . $392,000 in cash into escrow to cover the shortfall.” Against this backdrop, the Court of Appeal found that the seller’s agents were required to disclose to the buyers that there was a “substantial risk that the seller could not transfer title free and clear of monetary liens and encumbrances.” (Id. at 1515.) Disclose Both Prior and Pending Lawsuits. As noted before, sellers are required to deliver a TDS to the buyer before executing the sales contract. Among other things, on the TDS, the sellers must disclose lawsuits affecting the property. One question is whether the sellers must disclose only pending lawsuits, or alternatively, prior lawsuits as well. In Calemine v. Samuelson, 171 Cal.App.4th 153 (2009), the Court of Appeal addressed this question.

There, the seller had disclosed the fact of the condominium’s prior water intrusion–but had failed to disclose two prior lawsuits relating to this issue. The Court of Appeal reversed the trial court’s decision and held that there was a triable issue of fact “as to whether the prior litigation was a material fact which should have been disclosed.” (Id. at 155.) In light of this decision, sellers are well-advised to disclose both pending as well as prior lawsuits. Fortunately, for sellers and their agents, the onus does not fall solely on them. Prospective buyers must also exercise reasonable care to protect themselves, including those facts known to the prospective buyers or within their diligent attention and observation. (See Cal. Civ. Code § 2079.5.) Regardless, sellers and their agents should be thorough, detailed, and above all, fact-based in their disclosures to prospective buyers.

- DeLeon Insight March 2016 17

Top 15 Reasons to Buy a Home with DeLeon Realty 1. We have the greatest expertise. Our buyer specialists work as a team to provide you with the best advice. Unlike most experienced agents who divide their attention between buyers and timeconsuming listings, our buyer specialists focus only on working with buyers. This gives them time to specialize in their territories so they can learn everything you will want to know. 2. We are highly educated. Reflecting the intelligence of our buyers, our team is composed of bright and driven individuals who have the background to answer all of your questions. Combined, our buyer specialists have 15 graduate degrees from fine schools like Stanford, Berkeley Law, Columbia Law, NYU Law, Rutgers Law, and UCLA. 3. We provide our clients with exceptional advice. Over the last 10 years, Ken and the DeLeon buyer team have directed their clients to returns of over 15 percent per annum when they purchased and then sold a house with DeLeon. This compares to three percent per annum for Santa Clara County over the same 10-year period (both

statistics taken from the MLS). Ken utilizes his mathematics and economics training to accurately project neighborhoods with the greatest appreciation potential. 4. Our construction consultant provides invaluable service and advice. As part of our complimentary one-stop service, our construction consultant will evaluate homes in need of updates and provide an opinion on the quality of a home. If you purchase a home, he will recommend the best team and negotiate remodeling bids on your behalf, with all savings passed on to the client. 5. Our contractor repairs your home for free. All buyers who buy a home with us receive seven hours of free contractor time for minor repairs or improvements, such as items noted in a home inspection report. Our contractor can also direct you to the best service providers whenever we need specialized trades for your home projects. 6. Our interior designer helps you customize your home. Whether buying furniture or choosing the perfect paint colors, our interior designer is there to assist you in tailoring your home, all on a

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complimentary basis. 7. Our in-house attorney protects you from legal disputes. If an issue comes up during your purchase, you will receive 25 hours of free legal service from our in-house attorney, who has two Stanford degrees and is a Columbia Law School graduate. No other brokerage provides this level of legal protection for their clients. 8. We have the most experience. With over $2 billion in sales experience, we have learned the lessons to successfully and strategically help you navigate the homebuying process. Ken is the hands-on leader of the buyer team. No other buyer agents have such experience and resulting expertise. 9. We are a local company that gives back to our communities. Most brokerages are national or regional corporations. DeLeon Realty is an innovative Silicon Valley company that has given approximately $200,000 over the last two years to local schools and charities. We will continue to support the neighborhoods we serve as we continue to succeed.

10. We have the best network around. Consistently ranked the top team in Northern California and currently the #1 team in America, the DeLeon team has more sales volume than any other team or agent. Our relationships with other top real estate agents in Silicon Valley, coupled with our superior market knowledge, mean that we can direct you to the best homes both on and off the market. 11. We have a reputation for thoroughness. Most local real estate agents know and admire Ken and his team. They know that our clients are prepared on all issues related to a sale before submitting offers. This provides both protection for the buyer and certainty for the seller, a true win-win. Other agents are thus comfortable endorsing our offers, as they know we are more likely to close.

12. We will assist you with orchestrating your move. Our moving concierge will save you time, money, and stress by helping you navigate your move and directing you to movers we have thoroughly vetted and pre-negotiated savings with on your behalf. 13. We help our buyers with their estate planning at no extra cost. Our in-house attorney will draft a “pour-over” will and revocable living trust upon request of any of our buyers purchasing homes for over $3 million at no cost to the client. This invaluable service will help you eliminate probate costs in the future and provide certainty and security for your family. 14. We protect our buyers’ privacy and limit their liability. Our in-house attorney will create a limited liability company that

shields your name to ensure privacy when purchasing your home plus protecting your wealth by limiting your liability. This complimentary service is available to all of our buyers purchasing a home for $3 million or more. 15. We are not on commission, so we will not pressure you. Our innovative and improved model aligns incentives with our clients. Like attorneys, all of our buyer specialists are on salary. We have a team approach that creates greater collaboration and better client results. Most importantly, you never have to be concerned that we are pushing you into an unwise investment. It does not cost more to work with the best! Call our team at 650-543-8539 or email buyers@deleonrealty.com to learn more about how DeLeon Realty can best assist your homepurchasing goals.

- DeLeon Insight March 2016 19

DeLeon Market Conditions Atherton Snapshot Atherton Median Sales Price & Price/Sq. Ft. Ratio

Atherton Inventory # of new listings

Cupertino Snapshot Cupertino Median Sales Price & Price/Sq. Ft. Ratio

Cupertino Inventory # of new listings

Hillsborough Snapshot Hillsborough Median Sales Price & Price/Sq. Ft. Ratio

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Hillsborough Inventory # of new listings

DeLeon Market Conditions Los Altos Snapshot Los Altos Median Sales Price & Price/Sq. Ft. Ratio

Los Altos Inventory # of new listings

Los Altos Hills Snapshot Los Altos Hills Median Sales Price & Price/Sq. Ft. Ratio

Los Altos Hills Inventory # of new listings

Menlo Park Snapshot Menlo Park Median Sales Price & Price/Sq. Ft. Ratio

Menlo Park Inventory # of new listings

- DeLeon Insight March 2016 21

DeLeon Market Conditions Mountain View Snapshot Mountain View Median Sales Price & Price/Sq. Ft. Ratio

Mountain View Inventory # of new listings

Palo Alto Snapshot Palo Alto Median Sales Price & Price/Sq. Ft. Ratio

Palo Alto Inventory # of new listings

Portola Valley Snapshot Portola Valley Median Sales Price & Price/Sq. Ft. Ratio

Portola Valley Inventory # of new listings

DeLeon Market Conditions Sunnyvale Snapshot Sunnyvale Median Sales Price & Price/Sq. Ft. Ratio

Sunnyvale Inventory # of new listings

Redwood City Snapshot Redwood City Median Sales Price & Price/Sq. Ft. Ratio

Redwood City Inventory # of new listings

Woodside Snapshot Woodside Median Sales Price & Price/Sq. Ft. Ratio

Woodside Inventory # of new listings

- DeLeon Insight March 2016 23

PRSRT STD ECRWSS U. S. Postage Paid Palo Alto, CA Permit No. 1

DeLeon Realty 2600 El Camino Real, Suite 110 Palo Alto, CA 94306

LOCAL POSTAL CUSTOMER

How to Find a Bargain in a Hot Market Thursday, April 7th, 2016 6:00 - 8:00 p.m.

Please join DeLeon Realty for a seminar focused on finding the best bargain. You will gain invaluable insight into the real estate market from the most successful real estate agent in Silicon Valley, Ken DeLeon. Also, meet Michael Repka, our managing broker and general counsel, and DeLeon Realty’s talented area specialists, who focus on specific neighborhoods throughout Silicon Valley.

Venue: Palo Alto Hills Golf & Country Club, Grand Ballroom 3000 Alexis Drive, Palo Alto

To RSVP, please contact Kimberly Vigil at 650.543.8500 or by email: RSVP@deleonrealty.com ®

650.488.7325 | www.deleonrealty.com | CalBRE #01903224