The Market is Heating Up in Los Gatos

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.

RE: The Market is Heating Up in Los Gatos

I'm confused can you please help me understand this.  The 3 month moving average chart looks well below last year and the acceleration upwards that you see going into the spring selling season doesn't seem to be as robust as last year's.  Am I missing something?  I understand the april month data looks much better but isn't that always the case (ie. April always looks better than March).  Do you see this trend continuing in May?

Thanks!

RE: The Market is Heating Up in Los Gatos

Hi Brian,

Sorry for my slow response. I was travelling for a few days and am just now getting caught up.

You are probably right that some of the uptick is simply "seasonal".

That said, we've had about 3 - 4 straight years of news worsening and worsening (despite those seasonal fluctuations) so seeing the change here is indeed positive news.

Not only that, but countywide, generally the inventory is being absorbed faster than new listings are coming on. We have not seen that for years.

On the other hand, it is very possible that this is just a glitch in the screen.  We are all aware that more foreclosures are still to come and that there was a moratorium in effect until recently.  If we get a new, large pool of foreclosed homes on the market (REOs - Real Estate Owned by the bank), it may undo the current trend.