Silicon Valley / San Jose Business Journal by Mary Ann Azevedo, Reporter

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Google (GOOG) has purchased numerous office buildings in Mountain View, part of a multipronged property quest that underscores the startling expansion plans of the digital titan.

All told, Google this year has spent an estimated $115 million to buy 16 buildings in Mountain View, including a four-building complex a few blocks from the downtown. The purchases are on both sides of Highway 101. The locations and prices were obtained from public records and realty experts.

The shopping spree for buildings comes on the heels of Google’s 715,000-square-foot lease of a four-building Sunnyvale complex known as Technology Corners. That marked Google’s largest Silicon Valley outpost outside of Mountain View.

In addition to the building purchases, Google has proposed a 1.2 million-square-foot campus at NASA Ames. Google has also leased an old Hewlett-Packard (HPQ) campus off Ellis Street in Mountain View. And it is planning a project on city-owned land.

Including all of Google’s efforts — property purchases, building leases, and development and construction proposals — the company is planning to add 3.5 million square feet to the 4.3 million square feet that Google currently occupies in Mountain View. The realty strategy is long term and will play out over several years.

 Were Google to fill all of these spaces today in a hypothetical expansion, the buildings could potentially accommodate more than 11,000 employees in the South Bay. At present, Google has 29,000 employees, worldwide.

“The ‘pie in the sky’ objective for Google is probably bigger than we can even imagine,” said Chad Leiker, a vice president with Kidder Matthews, a commercial realty brokerage.

“We have a multipronged real estate strategy that includes developments like the NASA Ames campus, new off-site leases, and the development of properties in the North Bayshore area,” said David Radcliffe, a vice president of real estate and workplace services for Google.

Google emphasized it’s unlikely to move into existing properties right away. For example, Google won’t occupy the Sunnyvale buildings until sometime in 2013, after existing tenant leases expire. And the NASA project will take years to complete.

“We’re pursuing all of these projects to give us the flexibility needed to handle future growth according to business need,” Radcliffe said.

Some Google property deals have gone far afield from Silicon Valley.

In Manhattan, Google spent $1.8 billion last December for a 15-story building that occupies an entire city block, the biggest transaction of 2010 involving a single U.S. building, reported Real Capital Analytics. In Ireland, Google this year spent $140 million to buy Dublin’s tallest commercial block.

Yet even what Google has obtained in Silicon Valley through leases or property purchases might be only the tip of the iceberg.

Many buildings that Google bought this year are in areas that Mountain View has under review for allowing greater building densities.

What Google really wants is the land beneath the buildings, local experts say.

“Over the long term, those buildings will be developed into something much more than they are today,” said Michael Saign, a vice president with Cornish & Carey Commercial, a realty brokerage. “Many will be torn down.”

Most of Google’s current hiring, analysts say, is coming in a few key areas. These include display advertising sales, local commerce sales such as its Google Offers discount coupon service, mobile technologies like the company’s Android software, and the Google+ social network.

Previously, Google predicted 2011 would be its biggest year for hiring, with plans to add 6,000 workers. Halfway through 2011, Google had added 4,400 employees.

From Google’s earliest days, co-founders Larry Page and Sergey Brin have always believed their company was destined to evolve into a big and influential company, said Steven Levy, whose recent book “In the Plex” documents Google’s technology, culture and history.

“A lot of people have grandiose visions,” Levy said of Brin and Page. “Theirs turned out to be accurate.”

Mountain View officials see Google’s hectic activity as a great sign.

“It’s exciting that the company continues to be interested in Mountain View,” said Ellis Berns, the city’s economic development manager. “It’s great that Google is looking at growing and staying here, at the unique opportunities here.”

Home sales fell 3.5 percent last month to a seasonally adjusted annual rate of 4.67 million homes, the National Association of Realtors said Thursday. That’s far below the 6 million that economists say must be sold to sustain a healthy housing market.

The dismal report on home sales contributed to a rough day on Wall Street. Stocks plummeted in midday trading on fears that the global economy is slowing. The Dow Jones industrial average fell more than 400 points within the first hour of trading.

Many people are reluctant to purchase a home two years after the recession officially ended. Sales are lagging behind last year’s 4.91 million sold — the weakest in 13 years.

Bigger down payments, tougher lending rules, high debt and a shortage of desirable starter homes have kept many would-be buyers away. Even people with good credit and enough money for a down payment are holding off because they are worried home prices will keep falling.

First-time homebuyers made up just 32 percent of sales. First-time buyers are critical to strong housing markets and normally make up about half of all sales. Their purchases of low and moderately priced homes also allow sellers to move up to pricier homes.

The weak data show “the housing market will not save the U.S. economy,” said Paul Dales, senior U.S. economist at Capital Economics.

Since the housing boom went bust in 2006, sales have fallen in four of the past five years. Declining home prices and super-low mortgage rates haven’t been enough to boost sales this year.

The average rate on a 30-year fixed mortgage fell to 4.15 percent this week — the lowest level on records dating back to 1971.

Some sales are falling apart at the last minute. At least 16 percent of deals were canceled ahead of closings last month. That’s four times the number in May and the highest level since such records began being kept more than a year ago. A sale isn’t final until a mortgage is closed.

Buyers have canceled purchases after appraisals showed that the homes were worth less than the buyers’ initial bids.

“Buyers are worried about falling house prices, the job outlook, the stock market and gridlock in Washington,” said Patrick Newport, U.S. economist at IHS Global Insight.

Sales were also hampered in the West by new maximum loan limits by government-controlled mortgage buyers Fannie Mae and Freddie Mac. On Oct. 1, the maximum loan in high-cost areas will fall from $729,750 to at least $625,500 and, in some areas, to $550,000. Some buyers will be unable to finance their purchases in cities where homes are more expensive, such as New York, San Francisco and Washington.

Foreclosures and short sales — when a lender agrees to sell for less than what is owed on a mortgage — made up about 29 percent of all home sales last month. That’s up from about 10 percent in past years. And a wave of foreclosures are being held up, either by backlogged courts or lenders awaiting state and federal probes into troubled foreclosure practices.

Investors have targeted foreclosures and other deeply discounted properties. Their purchases accounted for 18 percent of sales in July.

The median sales price fell in July to $174,000, according to the Realtors’ group. June’s large jump in sales prices was attributed to missing data that had not been collected from Phoenix, which has been hit hard by foreclosures and dropping prices.

Most economists say home prices will keep falling, by at least 5 percent, through the rest of the year. Many forecasts don’t anticipate a rebound in prices until at least 2013.

Sales were uneven across the country. They rose 2.7 percent in the Northeast and 1 percent in the Midwest. They fell 1.6 percent in the South and 12.6 percent in the West.

The glut of unsold homes declined slightly in July to 3.65 million homes. At last month’s sales pace, it would take 9.4 months to clear those homes. Analysts say a healthy supply can be cleared in six months.

The house is unsold after three years. Should the owner sell it super cheap or give it to the bank?

By Steve McLinden of Bankrate.com

Q: I’ve had my house on the market for three years, starting with a regular real-estate agent and, lastly, talking briefly with one of those “we buy houses” people who seems a little shady. Should I sell to one of them, let the house go into foreclosure or keep dropping the price and hope someone takes it on the conventional market? I am getting desperate.

A: Sorry to hear of your protracted plight in real estate. First, while the “we buy houses — fast closing” people are typically legitimate businesses, they pay only rock-bottom dollar. For example, expect only about $60,000 or so on a $100,000 home these days with them. Ouch! You don’t say how much equity you have in the house, but it is unlikely you will recoup any of it in such a scenario. Don’t forget you’ll need to get a big enough sum to pay off the existing mortgages and any liens against the house. Those “we-buys” tend to get money on very short-term notes from hard-money lenders who charge high interest rates and usually lend on the expected value of a house, post-repairs. So those investors will need to flip the property pretty quickly, often to another investor.

Instead of going that lowball route, you could sign a new listing agent to market the place as a “motivated seller” property, signing a short listing agreement while impressing on the agent that a quick turnaround is a high priority. You’ll still face folks trying to steal a deal, but if you price the place right, you might at least get into a multiple-offer scenario where your low, low — but not giveaway — price is met or even exceeded. At present, you should be able to negotiate a commission that’s a trifle lower than the standard 6 percent.  Sadly, sometimes a foreclosure is the only viable option for many well-meaning sellers these days. But I would first urge you to contact your bank to work out a short sale, which means selling your house for less than the mortgage balance, or try making other arrangements. Realistically, though, short sales can take a long time and have high failure rates. Offering a deed in lieu of foreclosure to the lender is faster than a short sale and carries about the same possibility of you being pursued by the lender for the difference between the sale price and what you owe, known as a deficiency judgment. In a deed in lieu, you are contacting the bank and stating that you can’t continue to make the payments and believe foreclosure is imminent. This at least saves the lender the expense and time of foreclosing.

You are in the same boat with a lot of folks these days. But don’t give up, and don’t give away the farm.

Most people believe that buying a home is always superior to renting. Indeed, many subscribe to the wisdom that real estate is always a good investment. However, this, of course, is simply not true. There are definitely situations where renting a home is the smart choice.

To begin with, it is entirely possible that renting is cheaper. Consider a numerical example. Let’s assume you buy a 350,000 home in a nice suburb of a major city. Assuming you get a good mortgage rate of 5 percent over 20 years and you scraped together 25k for your down payment that means your mortgage payments will come out to $1427 a month. But then, to be realistic, a homeowner needs to figure in 2 to 3 percent of the homes value per year to be spent on repairs. That comes out to $729 per month, bring the monthly payment up to $2159. This does not even include any condo association fees or other hidden costs that many times come with owning a home. Depending on the area, the same house could likely be rented for between $1000 and $1500 a month.

Renting a home is also a safer choice than buying. First of all, there is risk of your house temporarily loosing value, based on the financial situation. Of course, “temporarily” can mean up to 10 years. Also, depending on the market and your own financial situation, a fixed rate mortgage may be beyond your means. Opting for an adjustable rate mortgages come with a whole other set of risk. Additionally, the risk of foreclosure is something that the renter simply does not face. Many homeowners depend on two incomes to pay their mortgage, and often do not consider the possibility that own of those jobs might disappear. This is especially a risk in the current economy. A shock to household to income is less of a big deal to a renter, who does not risk the loss of a major asset.