The Silicon Valley real estate market continues to improve, generally. It is a seller's market in the lowest priced homes, especially if they are in good areas such as the Rosegarden or Naglee Park. In those parts of Santa Clara County, we're seeing multiple offers and overbids.
As the price point rises, though, the market cools. In the most expensive parts of Silicon Valley, homes are not selling well and it remains a buyer's market. (Six months of inventory is considered balanced, 7 or more than 7 is a buyer's market, and 5 or less than 5 is a seller's market.)
In Cambrian Park, about half of all homes are selling and there are only 2 months of inventory. As of today, there are 100 single family homes available in Cambrian, 118 single family homes in some stage of "sale pending" and 51 have closed escrow in the last month. (Months of inventory = 1.96 - it's the inventory divided by the closed sales that month.)
In Almaden Valley, there are currently 113 single family homes for sale, 56 "sale pending", and 25 closed in the last month. The months of inventory in Almaden, a more expensive part of San Jose than Cambrian Park, is currently 4.52.
In Los Gatos, we have 167 single family homes for sale, 44 pending sales, and 25 closed in the last month. Months of inventory = 6.68.
In Monte Sereno, there are 29 houses available, 4 under contract, and 4 which closed escrow in the last month. Months of inventory is 7.25.
Finally, in Saratoga, 164 homes are for sale, 38 are pending sale, and 19 have closed in the last month. The months of inventory = 8.63.
That said, within each market that are smaller markets and a lot of the performance depends on how well the home in particular appeals to a broad audience, its general condition and how aggressively its priced. Many sellers are just "testing the market" and those homes may or may not sell.
What did sell recently in Los Gatos? Below, have a peek at some of the success stories. These are the houses in Los Gatos that not only got an acceptable offer, but passed all the hurdles of inspection, appraisal, and financing and made it to the finish line, the closing table.
SOLD
Beds
Baths
Home SF
Lot SF
List Price
Sales Price
Hernandez Av
4
3
3,131
10,396
$2,600,000
$2,500,000
Rosalie Ct
5
3 1/2
3,034
15,576
$1,699,990
$1,650,000
Johnson Av
4
2 1/2
2,125
6,250
$1,649,950
$1,560,000
Vista Del Monte
4
2 1/2
2,220
10,800
$1,699,000
$1,550,000
Amanda Ln
4
3
2,059
11,200
$1,350,000
$1,351,000
Camellia Te
4
2
1,821
8,550
$1,379,000
$1,295,000
Frank Av
4
2 1/2
2,765
16,960
$1,399,000
$1,275,000
Eastridge Dr
5
3
2,823
9,990
$1,250,000
$1,235,000
Loma Alta Av
3
2
2,254
4,840
$1,299,000
$1,225,000
Topping Wy
2
1
1,102
10,480
$1,150,000
$1,069,000
Old Adobe Rd
5
2 1/2
2,461
10,455
$1,099,950
$1,035,000
Montclair Ct
4
2
2,224
10,030
$979,000
$989,000
Harding Av
3
2
1,791
9,200
$1,009,900
$950,000
Via De Tesoros
6+
3
3,505
10,500
$949,900
$910,000
Calle Marguerita
5
3
2,746
9,350
$899,000
$907,500
More Av
4
2
1,800
8,288
$945,000
$885,000
Potomac Dr
4
2
1,389
8,125
$899,000
$880,000
Lester Ln
4
3
1,770
7,858
$859,000
$839,000
Cambrian View Wy
4
3
2,073
8,760
$864,900
$800,000
Jamie Ct
4
2 1/2
2,339
8,008
$756,218
$756,218
Blossom Valley Dr
4
3
1,602
7,920
$749,000
$749,000
Linda Av
2
1
1,115
7,888
$719,000
$726,000
Creekside Village Dr
3
2 1/2
1,390
1,742
$749,000
$675,000
Blossom Hill Rd
6+
3
2,784
12,144
$699,900
$610,000
Capri Dr
2
1
1,060
29,700
$599,000
$550,000
Average Values
3.48
2.42
2,135
10,200
$1,130,148
$1,078,869
On average, homes are selling upwards of 95% of list price in Los Gatos right now. As you can see, some are selling right at list and occassionally one sells a little over.
What about prices? Generally, it appears that prices are still slipping in some areas but are level in others. We may be close to (or perhaps just past) the bottom. Time will tell.
In the lowest priced areas of Silicon Valley as well as some prime areas of the more expensive west valley, though, the multiple offers and overbids are driving prices up. For entry level buyers, it's time to get off the fence. Home prices are rising and, equally importantly, interest rates are rising.
Those most negatively impacted right now are move-up buyers (who'd love to move up but are trapped by negative equity) and retirees who would love to sell and move to a retirement community but need to wait for more of a recovery. The retirees are doubly hit because they relied on retirement portfolios that may well be worth half of what they were worth a couple of years ago.
Where's the opportunity in this market? First time homebuyers, this is as good as it gets. You can now purchase a home with only 3.5% down (though you'll need another 2-3% for closing costs) with an FHA insured home loan. Not only are prices great, but there's an $8000 first time homebuyer credit that you may be able to use toward your closing costs. This is not an open ended offer - hurry!
Most consumers don't realize that there are two sets of real estate forms used by Realtors and other real estate professionals in Silicon Valley and nearby areas. The California Association of Realtors provides the paperwork found throughout most of the state ("CAR forms"). The Peninsula Regional Data Source authors a more regional set ("PRDS forms").
Did you realize that they are a little different, and each provides different protections and "teeth"?
Here are a couple of the key differences within the purchase agreement between buyer and seller:
The CAR purchase agreement is an "as is" form; the PRDS purchase agreement states that the home will have certain basic conditions met (no leaks, all systems functional)
The CAR purchase agreement allows repairs to be done by a handyman; the PRDS form requires that repairs be done by a licensed contractor
One has more penalties built in for defaults; one allows the seller to cancel more easily on a buyer who's not performing
The listing agreements vary too - one protects the agents' position better than another.
There are pros and cons to each of these sets. When you go to list, sell, or purchase a home, be sure to discuss the plusses and minuses of each with your agent. One set is not 100% better for you as a buyer or a seller. There are clauses in each, though, which may protect your interests best.
One caveat: if you are buying a bank owned home, it is very likely that the bank will require you to use the CAR form. They cannot get up to speed on regional contracts and they will insist on the "as is" nature of the CAR form (PRDS can also be "as is" if a box for that is selected). Some banks may use their own forms, or send back an extremely lengthy addendum that may cancel out half the clauses in whichever purchase agreement you use. Don't be afraid to seek out a good real estate attorney if that is the case. Realtors and other real estate salespeople are not attorneys and this would be an ideal time to call in professional legal help.
Something else to consider is that you may be able to use some paperwork of each set. CAR has a myriad of forms for realty transactions, many more than PRDS does. One of the best addenda in use today is the CAR short sale addendum. It is exceedingly clear about timeframes and responsibilities. Just because you are working with a PRDS purchase agreement does not make a CAR addendum unusable in most cases.
Buying and selling real estate in Los Gatos, Monte Sereno, Saratoga, and San Jose does involve a lot of options and decision making. This is another element to consider because just like all the other choices you face in home buying or selling in Santa Clara County, the choice you make on the forms you'll use may impact your outcome. Hire a good agent who works with both sets, can explain the pros and cons of each in terms of your position, and is not dependent on just one of them alone.
This unique home tastefully blends the classic 1924 Craftsman style architecture with not just modern amenities, but the award-winning designer-owner's tasteful style. Located in Redwood City.
The real estate market in Los Gatos is more like a puzzle than a solid picture: it really is lots of contiguous micro markets. The state of the market varies on neighborhood, price point, school district, and other defining factors (size, views, acreage). This is especially true when studying the condo or townhouse market in Los Gatos. So when thinking of buying or selling a condo, it's good to get to the micro level (what's happening in that particular complex or within a mile or so of it).
That said, it's also helpful to see the bigger picture (a bird's eye view) - not just the overview of sales for condos in town, but also how that market is in relation to neighboring areas such as San Jose's Almaden Valley, Saratoga, or Cupertino. Yesterday I did a post on exactly that at my Valley of Hearts Delight blog:
What is interesting is that while there are fluctuations on the level of town or neighborhood, the overall trend is actually quite consistent. I invite you to check it out!
The Los Gatos real estate market is heating up, particularly in the homes that are most affordable (and featuring Los Gatos Schools) but noticeable in many areas and price points.
Below please find a graph displaying prices and sales (median and average) for single family homes in Los Gatos. This graph uses a 3 month moving average to level out any odd bumps in the data such as seasonal fluctuations.
(image from www.PopeHandy.ReReport.com, a subscription service of mine, and used by permission)
The actual (not seasonally adjusted) "months of inventory" in Los Gatos looks even more dramatic. Below, find the absorption rate for not just Los Gatos, but also Monte Sereno, Saratoga, Cupertino, and the average of all four:
When looked at together, the overall trend becomes exceedingly clear that the market is changing.
Sellers, the market is better now than it's been in many months. If your home is not getting activity, it's time to get it in line with the market.
Buyers, it's still in your camp in many markets, but your advantage seems to be slipping.
No one knows whether the market will continue along this trend or if this is just a blip in the Silicon Valley real estate market landscape. The threat of more foreclosures throughout Santa Clara County will be the thing which can tip this one way or the other.
It's easy to let months go by and never proactively have a look at the exterior of our homes to see if anything is amiss. The weather is great right now, so I suggest you set aside an hour or two to give your residence a visual once-over. If you can do this twice a year, at least, you'll have a far better chance of correcting any problems while they're still small.
What should you look for?
Outside, check under the eaves of your house to see if there are any brewing issues like wasp nests, water damage or leaks from the roof. Does the wood appear to be warping, softening, or showing any unusual bulges or discoloration? (If yes, consider contacting a roofer or pest control operator.)
How are the gutters? Peeling paint can allow rust to happen and shorten the life of the gutters. Keep the gutters free of debris. RustOLeum may help extend the life of your gutters and comes in a wide variety of colors (and is findable at your local hardware store).
Step back from the house to get a view of your roof. It needs to be free of debris; if you have large trees nearby this may be an ongoing challenge! Having pine needles, leaves, etc. accumulate on the roof can cause moisture to be trapped on the roof and accelerate aging, invite moisture problems like fungus and dry rot, and possibly induce leaks. If it's a cedar shake roof, are the shingles beginning to curl or split? For any type of roof, when was it last inspected? If your roof is more than three or four years old, it probably needs some "tune up" work done - small repairs that will keep water from getting into your home. A licensed, referred roofer can do small tune ups on the roof for a few hundred dollars and prevent problems from arising. Plan to have it looked at by a professional every few years and it will last much longer!
Now focus on the chimney cap. Do you have a spark arrestor and rain cap? If not, you need one. (I wrote about this on my other blog site: What’s on your chimney?)
While you're at a distance from your house, study your garage door frame. Does it look straight? Many people overload the garage rafters with heavy items, causing a sag to appear. Hopefully you don't find the top of the garage door frame out of alignment! (Make sure to keep only very light items like empty moving boxes at the top of your garage unless the home has been modified for extra weight.)
Check all windows and doors and their frames for any gaps, leaks, or damage.
Check all vents (attic vents and crawl space vents) for tears or openings. You don't want nature to roost in your home's attic or crawl space! While you're checking vents, also check your dryer vent. Lint buildup can and does cause fires.
Finally, check the perimeter of your home and grading of the soil next to it. The soil should be a few inches below any vents and the grading go down from your house out toward the fence or street - it should cause any water (as in rain or sprinklers) to run away from the house. You do not want water to move toward the house! Our clay soil is "expansive" and as it moves from dry to wet or wet to dry, the soil expands and contracts. Unfortunately, the soil is a lot stronger than a concrete foundation so the end result of the movement can be a cracked foundation.
Likewise, downspouts need to carry the water away from the home and when it's the rainy season, they should be extended several feet away from the house to prevent water eeking into the crawlspace. Water intrusion into the crawl space also invites problems like termites, fungus, mold, dry rot. In other words, nothing good comes from having water under the house, so don't let it!
Sometimes I get calls from people wanting to get a "steal of a deal" on higher priced Silicon Valley real estate by purchasing short sales and bank owned properties in areas with great public schools like Cupertino, Saratoga, Monte Sereno, Los Gatos, and Almaden Valley.
Unfortunately for bargain hunting home buyers who are seeking premium school districts in Santa Clara County, there just aren't that many of them.
It's very easy to find distressed properties for sale in less expensive areas. In fact, for the first quarter of 2009, 95% of all sales in the Alum Rock area of San Jose, which is one of the poorest areas of Silicon Valley, were either short sales or bank owned properties.
It's a different story in most of the expensive west valley markets, though. We see far fewer of these in places like Palo Alto or Los Altos (or Los Gatos, Monte Sereno and Saratoga). There's a very direct correlation between the best public schools, low crime, higher income, and higher education levels of homeowners with lower numbers of foreclosed homes.
Here are the numbers of available homes for sale, which I've culled from our MLS, without further elaboration:
MLS Area - info as of 5/3/09
Type
Active Listings
Short Sales
Bank Owned
16 (Los Gatos/Monte Sereno)
SFH
200
11
4
Condo/TH
52
5
1
17 (Saratoga)
SFH
172
10
2
Condo/TH
20
1
0
14 (Cambrian Park)
SFH
129
28
11
Condo/TH
38
12
4
13 (Almaden Valley)
SFH
124
6
3
Condo/TH
19
2
0
18 (Cupertino)
SFH
162
2
1
Condo/TH
62
5
0
15 (Campbell)
SFH
155
26
11
Condo/TH
70
17
5
So, bargain hunters, what CAN you do to maximize your potential in this market?
Easy: don't go after the turnkey home. The perfect home with everything remodeled is getting lots of attention because most buyers want exactly that. Aim for the home that needs updating and remodeling, though, and you will have a far better chance to make a great deal because you won't be trying to outbid every other buyer.
A blog about Los Gatos real estate, homes, houses, condos, townhomes, housing market, neightborhoods, history, events, businesses, parks, schools, photos, issues, and lifestyle.
Mary Pope-Handy
Realtor, CRS, ABR, SRES, E-PRO
Luxor Real Estate Group
Mailing Address for Mary: PO Box 440 Los Gatos, CA 95031-0440
877 397-5391 (office/toll-free)
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It's easy to let months go by and never proactively have a look at the exterior of our homes to see if anything is amiss. The weather is great right now, so I suggest you set aside an hour or two to give your residence a visual once-over. If you can do this twice a year, at least, you'll have a far better chance of correcting any problems while they're still small. 
Finally, check the perimeter of your home and grading of the soil next to it. The soil should be a few inches below any vents and the grading go down from your house out toward the fence or street - it should cause any water (as in rain or sprinklers) to run away from the house. You do not want water to move toward the house! Our clay soil is "expansive" and as it moves from dry to wet or wet to dry, the soil expands and contracts. Unfortunately, the soil is a lot stronger than a concrete foundation so the end result of the movement can be a cracked foundation.
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