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The Los Gatos real estate market struggled this summer. Noticeably declining prices were required to effect home sales in some price points, in which it seemed as though housing prices dropped quite sharply and rapidly. Please see www.PopeHandy.ReReport.com for a full interactive report on Los Gatos, Saratoga, Monte Sereno, San Jose, Campbell, and all of Silicon Valley.
There are a number of ways of gauging the real estate market in Los Gatos. We'll look at several of them to get a sense of what's happening.
A particularly accurate method of learning how the real estate market is performing can be obtained by studying the absorption rate. That's the rate at which the current inventory of available homes would be absorbed, or bought up, if no new listings came on the market. Below please have a look at the months of inventory, or absorption rate, for single family homes in Los Gatos since August 2007. NB that shorter months means it's more in the sellers' favor, and longer is more in the buyers' favor. (The National Association of Realtors says that longer than 6 months is a buyers' market.)
As the numbers indicate, it got harder to sell as the summer months progressed. May (reflecting April sales) was the best month since December. So homes listed May and later were challenged by comps that made the situation appear more rosey than it was in reality. (Graph created by Mary Pope-Handy using MLSListings.com data.)
Below, please find a "Market Barometer", care of the Real Estate Report, to which I subscribe, for the town of Los Gatos.
By this accounting, too, April and May were the better time of the year for selling in 2008, and prior to that it was the summer of 2007 before there was a really strong looking Los Gatos real estate market. And a glance over all the years shown reveals that 2005 was a great year for selling homes in Los Gatos.
Next, let's look at median prices in Los Gatos - both 95030 and 95032 - and also Monte Sereno, since it's so close geographically. This chart is from Altos Research, and is another subscription service I have, but instead of closed prices, this reflects asking or list prices. It is interesting to see that Monte Sereno fared the best and the 95032 part of Los Gatos (which generally is less expensive than 95030) the worst, with 95030 right in the middle. The wealthier the area, the better it seemed to do by list price in the last year. And that makes sense as the higher priced homes are less dependent on loans.
Next, let's view the Days on Market in the same three areas: Los Gatos 95030, Los Gatos 95032, and Monte Sereno (which is also 95030). All three follow the same general trends, though Monte Sereno (the green line) swings higher and lower than the two zip codes in Los Gatos. Interestingly, the 95032 zip code decreases its days on the market in recent weeks while the other two areas continue their upward climb. (Again, based on active listings in Los Gatos and Monte Sereno, not closed sales.)
Next, let's review inventory. Here we see that the inventory is rising recently.
Once again, Monte Sereno is the healthiest - it has the lower levels of inventory that correspond to lower days on the market and a higher median price.
Since it appears, from this data, that much of "how the market is doing" appears to be by price point, let's break out the data by median list price quartile within each area.
Los Gatos, 95030
Los Gatos, 95032
Monte Sereno, 95030
The highest priced markets are showing the most change during these months and the lowest priced homes are far more flat in the two parts of Los Gatos than in Monte Sereno.
Overall, list prices are fairly flat (looking at all markets in Los Gatos and Monte Sereno) - nothing really dramatic has happened here in the last 3 months for the majority of Los Gatos homes. Overally, days on market are rising. And overall, inventory is rising.
All of these point to a market which is increasingly a buyers' market, and this idea is strongly reinforced by the very first graph, which displays the absorption rate (for all of Los Gatos).
The glimmer of hope in the broader market comes from the fact that the number of sales is rising countywide for the second month in a row afte 46 solid months of declining sales. It could be that this is the bottom of the market - and the very most ideal time to buy. If this is the case, we'll see improvement in these numbers for Los Gatos in the next few months.
Furthermore, trends that may impact one part of Los Gatos, Monte Sereno, Saratoga, or anywhere else in Silicon Valley may not be of direct consequence elsewhere in Santa Clara County. A quick look at the REReport shows that Palo Alto, Cupertino and other areas are quite strong, despite a high number of foreclosures in South San Jose. So, too, with Los Gatos. What happens in Blossom Manor, Surrey Farms, the Edelen District, or the Almond Grove District may have little to bear with things that happen in the hills behind La Hacienda, new townhomes off Winchester Blvd, older condos on Los Gatos Almaden Road, or the comfortable ranch homes near Quito Road. And all of them are a different market than the large homes on Santa Rosa Drive, Aztec Ridge, or Matiliaja.... Because the real estate market here is a collection of micro markets, it's important to ALSO get information on your exact neighborhood and type of home and property (view, equestrian, vineyard, something in the Williamson Act) if you are in the market for buying or selling.
Please call or email me if I can be of help to you in buying or selling your home here in the Los Gatos area.
Mary Pope-Handy
cell 204-7673
mary@popehandy.com
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