What to Look for When Buying a Home

What do saavy investors look for when buying a home?

In a nutshell, they look for the "right things wrong".

That is, there are things that will make an investment untenable, and other things that will make it attractive!

The home must have these things:

- a good floorplan
- good structure (roof, plumbing, foundation, electrical)
- good location

To get it at a good price, the home probably should have these things:

- been overpriced and on the market awhile
- be structurally sound but ugly (wrong color carpet, paint)
- need simple fixes (change countertops, paint cabinets, change lights, floorcovering/paint, and landscape)
- be in an area with good appreciation (housing shortage)

Often when Realtors go shopping for their own homes, they consider houses that have been on the market too long, that are really decent homes but simply ugly! It's easy to change paint and carpet, to add skylights and to fix landscaping. A home like this that's been on the market will be a good buy - provided the seller is motivated to sell - in any market!

Going shopping? Ask your agent this question: "what home would YOU buy?"

Only thing is... to make the money, you have to be willing to do a little work!

This is true in Los Gatos, Saratoga, San Jose, Santa Cruz, or anywhere!

Nostalgia in a Cinnamon Bun

My kids attended Casa Maria Montessori (sadly, now closed) and St. Mary's Elementary School, both in Los Gatos. Many, many times I took them from school to the also-now-closed Good Earth Restaurant on North Santa Cruz Avenue to enjoy hot cocoa and oversized cinnamon buns. It's been years since that cheerful restaurant closed its doors, and my kids have not had a place in which to feast upon huge, locally baked cinnamon rolls since then.

Until now.

Thanks to Google Alerts, I see most articles and blog posts that come out with anything about our fair town (including some stupid stuff I could miss that actually has nothing to do with the town of Los Gatos). Recently the San Jose Mercury News did a piece on The Los Gatos Cafe Uptown and it mentioned the restaurant's yummy cinnamon buns.

The Handy teens, aged 18 and 16, had this to say about the rolls after feasting on them last weekend:

"I'm not sure if I was just hungry or they were incredibly good, but with every bite I just kept wondering if there was a way to get more into my mouth, it was so good...."

and

"It is really, really good when you eat it with the cinnamon butter..."

The Good Earth is gone, but the happy sentiments aroused by their much loved cinnamon buns are definitely back. It's a mouthful of nostalgia.

I'm sure that all of the food at "uptown" is good. I absolutely love the original Los Gatos Cafe in downtown. I rather suspect that the "uptown" branch will bcome my favorite of the two as it has the great food but without the lines and crowds that I avoid at all costs.

But wherever you go, do order (or take home) a cinnamon bun.

(This is not a paid blog post, and in fact the owners of this restaurant do not know that this blog post was going to be written.)

Los Gatos Real Estate Market Update

In contrast to much of Silicon Valley, the Los Gatos market is continuing to experience appreciation and is a fairly "balanced" market overall.

I. Single Family Homes

Compared to last year, August's closed sales of single family homes were smaller in number (off 6.5%) but up in price (median up 35.9%, average up 23.7%). Inventory is far lower than last year too - listings were down 26.4% from last year. The lower inventory is helping to keep this market balanced, as opposed to the buyers' market it is elsewhere.

Compared to last month, August's closed sales of houses in Los Gatos were down 6.5%, listings were up 6.2%, and prices were up noticeably (4.8% for the median and 7.2% for the average).

II. Condos and Townhomes

The condo market is somewhat similar in The Cats, with the numbers of listings and sales falling, inventory shrinking, and prices rising.

Compared to last year, the closed sales were down by a whopping 66.7%, listings were down by 23.5%, and prices were up strongly (28.2% median, 15% average). Normally, sales do fall off in August, so we expect to see a month to-month drop, but to see a drop from one August to the next is very noteworthy.

Compared to last month, sales of townhomes and condominiums were down 69.2% and listings were up 18.2%. Prices skyrocked though, up 45.7% for the median and 30.1% for the average.

III. Give me the Cliff Notes Version

For both single family homes, townhouses and condos, this summer has been a whole lot better a time in which to sell than the year before. Inventory is down, prices are up. Sales are down tremendously, but fewer homeowners are trying to sell now than a year ago. If you could not sell your home last year, try again - things are much improved! Just make sure your price is realistic and the condition is top-notch.

Often the Los Gatos market follows a fairly predictable pattern for inventory, sales and appreciation: in January there are more buyers than sellers, and prices get pushed up. This inequality of supply and demand tends to remain (most years) through late spring or into summer as inventory rises.

Some years the balancing point is in May, others in July - it varies. By summer, though, usually there are more listings than buyers and prices quit rising. In the second half of the year, prices may be stable, they may drop slightly, or they may do some dropping in August and rising again between Labor Day and Halloween, when we get a second burst of folks who want to get in before the year ends. Often inventory shrinks in winter and again in late summer. In the first graph above, you can see that pattern roughly played out.

Where are we now? It is early September and if the market follows what is typical (which is what we are seeing now), we will have a very healthy market this month and next. For buyers, there's usually more selection as houses come on the market. For sellers, there's a renewed interest among buyers and well-priced, well-staged, and well-marketed real estate sells well. Now is a good time to both sell and to buy in Los Gatos.

If you would like more information on the market (both condos and single family homes in Los Gatos, Saratoga, San Jose and around Silicon Valley), please see my online Silicon Valley real estate market report. Or call me at 408 204-7673 for a private and confidential consultation.

Smokey and Eerie Skies from The Lick Fire

The fire in the eastern foothills of Santa Clara Valley began almost 3 days ago and was first spotted from the James Lick Observatory - so has been dubbed the Lick Fire. The first day and a half, an enormous plume of smoke could be seen rising in the hills by south San Jose and Morgan Hill from Henry Coe State Park.  Smoke and haze hung over the eastern range; it was in contrast to the rest of the area between there and the coastal foothills, where the sky remained blue.

But chiarascura didn't last. For a day now, the haze has thickened. Smoke is pouring in, and not much of it seems to be escaping.

We can't see the plume anymore. We can't even see that bank of hills anymore. Too much smoke.

This morning I drove my kids to school in and near downtown San Jose (Notre Dame High School and Bellarmine College Prep). Heading east on Blossom Hill Road, we were shocked at the eeriely discolored sun hanging low in the sky. It was a pinkish red, a look that you might see just at sunset on a fall or summer evening - but not when the sun was so high in the sky. (Photo above taken with Palm Treo.) It was just creepy.

Because the fire is located in a remote region of the park, with rough terrain and no roads, it's difficult to get close enough to even fight it.

Often fires begin because of a cigarette tossed carelessly. Earlier this summer, a fire ignited when someone used a power mower to cut back brush and a spark it threw ironically began the blaze that clearing the brush was intended to prevent.

This fire was said to have been caused by a person burning things in a barrell at a private hunting camp. No one has been named, but this mishap turned nightmare could turn into a financial liabilty approaching two million dollars. The fire may grow to 30,000 acres and will go down as one of the largest ever in the Silicon Valley area.

Today the heat will be at a high for the week, which means that the smoke will continue to accumulate, firefighters will still contend with extreme conditions and the fire will have no natural incentive to stop. When will it be contained? No one knows, but they have a long way to go.

Rain would be good right about now.

Want to Buy a Home? Where to Start?

Each week, I get inquiries from people who are thinking of buying a home here in Los Gatos or in Saratoga, San Jose or elsewhere in Silicon Valley. Some of them are fairly local, and some are potentially relocating here. Sometimes they want to "start the process" by having me show them homes. That's usually not the best way to proceed.

The trouble with starting by viewing homes is that such a buyer may or may not be looking in the right price range - potentially wasting the time of everyone involved (themselves, their agent, and the people who clean up and leave their home for an hour or two so they can see it). Open house viewing, of course, is another thing - it can be an easy way to zip in and out of houses with little inconvenience to anyone. It can provide a sense of neighborhoods and what homes are going for. But the home buyer could, of course, be looking at the wrong price range with this approach. Look too low, get discourged. Look too high, and when the price range is later reset to what is realistic, everything will look awful.

So what is the most efficient way to investigate the possibility of home buying?

For most people, it's best to start with the budget. How much do you want to spend? What will be comfortable for you and still help you to meet your needs? Often that's not the same thing as how much you can spend.

That said, "it all depends". It depends on how much cash down you have, what kind of loan you are comfortable with, qualify for or can accept.

There are a few simple rules of thumb that can be a starting point. Some folks say that you can afford to buy 3-4 times your annual income. So if you are making $50,000 per year and your spouse or home buying partner is making $75,000 per year, together you'd qualify (using this rough rule of thumb) for $375,000 to $500,000. That won't buy you much in Silicon Valley, so often people will use loan products that enable them to get more home for the budget by doing interest only loans (the most common now) or a loan that's fixed for a few years and then converts to adjustible (with a lower interest rate than a 30 year fixed loan).

Typically, if buyers come to me without having spoken in detail with a lender, I suggest that they speak to a lender soon after our first meeting - I know lots of experienced, ethical lenders who will assist them in choosing a loan type and setting up their target price range. Once that is established, they can start the paperwork submission process and are free to go shopping - and if they find the ideal home, they are far closer to being able to write an acceptable offer than if they were house-hunting "blind" to their true financial picture.

Getting the financing set upfront has several benefits to the buyer: no wasted time looking in the wrong price range, not having to make the loan choices under pressure (once a home has been located and then the loan has to fit the home), and the ability to line the financing up in advance so that the sellers will prefer to deal with them because the loan is not nearly as much of a question.

To start with the budget, find an excellent lender. There are many good ones, but not all lenders are equally good (or ethical, or experienced). If you're thinking of homebuying in Los Gatos, Saratoga or San Jose - or anywhere in Silicon Valley - don't just pick a name out of the phone book. Instead, call me and I'll happily give you the name of a good lender (or more if you want more).

Like a good Realtor, a good lender is your partner in homebuying. It's important to find the right match and to get the ball rolling early in the process. You'll save time and heartache by lining your financing up early on.

The Spa of Los Gatos

Los Gatos affords many nice places in which to be pampered. I can't say I've tried them all, but one I return to time and again is the Spa of Los Gatos. Yesterday I enjoyed an hourlong massage there (finally using a giftcard from Christmas!) and it occurred to me that I might want to say a good word about this haven for folks who are in need of some relaxation, as I have been. (This is not a paid blogpost and the folks there do not even know that I am writing this.)

Located across from the post office, near the Town Park Plaza, the Spa of Los Gatos is easy to find and a relatively easy place in which to find a parking spot, too. The folks there ask patrons to arrive 15 minutes early - I suspect it helps to create a more relaxed beginning when we don't arrive full of adreneline for being late - but they do not take the time to make you wait in a long line. Each time I've been there, I'm quickly escorted in, given a locker and shown where to wait for the technician.

The setting is relaxing once the visitor gets past the frosted glass door. There, lights are lower, the decor is a muted Mediterranean, music is soft and an effort is made to slow the tempo before the tecnician is even seen. The locker rooms are well appointed (water, brushes, hair products, dryers etc.) and comfortably private. Robes and sandals are provided, and patrons are asked to make their way to a soothing lounge where they'll be met by the technician.

With low music and lights, the waiting lounge is a funny kind of tease because there are magazines to be read but the light's too dim to actually read  - at least for me. There are teas and juices available, and water sprinkled with lemon juice too. Large armchairs are the place to sip on a beverage and wait. Everyone's in a terry robe and plastic sandals that have a lot of ergonomic feeling bumps under one's feet. Some try to read but quickly give up. Reading won't work. Sip on the beverage and try not to look at the other patrons (like in an elevator). Soon your name will be called. And by the time he or she calls your name, you'll already be a step or two deeper into relaxation just because of the setting.

The Spa of Los Gatos offers several types of massages, and even if you always pick their sigature Sweedish Massage (as I have done), it'll be a little different each time. Over the years I have probably been there a half dozen times, and each time has been enjoyable and relaxing - and a little different, as each person giving the massage is different and reads your needs a little differently too.

The rooms are very pleasant, with the same low light and quiet music that sets a restful tone. There are always choices for the massage oils (cocoanut vs lilac vs unscented, as I recall). And the tecnicians I have had seem to be flexible with either conversing or not depending on the customer's mood or personality. Some days I haven't wanted to talk and other days I have - and it seems to me that no matter my inclination, the people who worked on me made me feel relaxed both physically and emotionally. And that was very nice to be "met" where I was each time.

After the massage, the Spa offers a very nice, private steam shower. Some resorts have a common, co-ed sauna (not for me!), but here it's a private room with a shower that doubles as a steam room. So you can have a steam bath for a few minutes, shut that off, and then shower if you like. There is no sense of being rushed either. The shower has a lot of pressure and an adjustable head to vary the spray and that's nice too.

From start to finish, my visits there have encompassed about two hours for a one hour massage. The results tend to last awhile as the professionals there seem very adept at slaying the knots in my back.

Other types of massages are available, involving heated stones and water sprays and all kinds of interesting things which someday I'm sure I'll try. And I know there are lots of other places in Los Gatos where I could get a massage too, but so far, I've been so happy here that I haven't ventured elsewhere.

Los Gatos: it's a great place to be pampered.