Distressed Properties in Los Gatos: How Many Are For Sale?

Trulia is a great source for real estate information, but when it reports on the distressed housing sector, it relies on Realty Trac, which I have found to be inaccurate and unreliable much of the time. Twice I've had a subscription to Realty Trac and seen homes showing up on their database which were long since closed, for instance (so the numbers were inflated). If you are visiting these sites to get a sense of the distressed housing market in Los Gatos, please allow me to provide you information from our MLS as of today. You may be surprised that it's not quite as bad as it may appear on that site. 

A couple of disclaimers: first is that not all distressed homes are for sale. The first step in the foreclosure market is receiving a Notice of Default. Some people do "catch up" and that NOD never turns into a foreclosure.

In other cases, the home may be on the market with a NOD but is not actually a short sale - there's enough equity in the home so that when it sells, the bank will be paid off in full. Those types of sales are "under the radar" as our MLS only tracks homes identified as short sales and those known to be bank owned (which the agents are required to disclose).

That said, here's the information as of today on homes in Los Gatos which are short sales or bank owned. I am including the Santa Cruz mountain areas as well (95033). These numbers are far lower than in much of Silicon Valley:

Los Gatos	Total for sale	# Short Sale	# Bank Owned
95030 Houses	57	0	1
95030 Condos	7	0	0
95032 Houses	96	5	5
95032 Condos	38	3	0
95033 Houses	18	1	0
(no condos)
totals	216	9	6

One extreme, in these times of financial chaos nationwide, is to assume that Los Gatos is "tanking". That is one extreme that I hope I have helped to dispell here. The other extreme is to assume that we are somehow so insulated in our beautiful haven that we are not impacted by the crisis at all. Make no doubt, Los Gatans are feeling the effects of the mortgage meltdown and the crisis in our economy overall. The lack of available credit is hurting home buyers and home sellers, but also those who work in any industry where having credit matters or where spending is a matter of discretion. So Los Gatans who sell automobiles are hurting right along side those who sell houses or have anything to do with the Silicon Valley real estate market.  The lack of available money to loan is part of the formula which is pushing house prices down, of course.

So yes, Los Gatos is impacted by the mortgage crisis and general roller coaster on Wall Street. Some homeowners are in real trouble with their mortgages. Many residents who work in credit-dependent fields are making much less then they used to and in some cases have walked away from careers in lending and selling altogether. But the sky isn't falling on our housing market. The numbers, above, are proof enough of that.

For more posts on short sales and bank owned properties in Los Gatos (and nearby) please see:
http://www.realtown.com/LiveInLosGatos/blog/short-sales-and-bank-owned-homes

RE: Distressed Properties in Los Gatos: How Many Are For Sale?

Given the drop in the stock market, don't you think it is only a matter of time before los gatos real estate feels it.  Given AMT and high CA tax rates It is hard for someone making even $200k to save up the $250k necessary to put a downpayment on a $1.5mn 3Bd/2ba bungalow.  Not to mention the fact that the payments would then eat up most of their after-tax take home pay.  Beverly Hills for example feel 50% in 1993.  What do you think?  Are you seeing a lot of buyers who can still put a lot of money down?  Is the option money still out there?  

RE: Distressed Properties in Los Gatos: How Many Are For Sale?

Not everyone has to save the 20% because for many people, there's equity in a prior home that makes up the bulk of the downpayment.

I am still seeing people able to put large downpayments into a new property. Sometimes it's from selling another home, sometimes it's from savings. This last week I met a young guy who has managed to save a quarter of a million dollars by working a couple of jobs and living simply. 

Not everyone who moves to Los Gatos buys a 1.5 million home, either. Some folks start in a townhouse or a smaller home on the edge of town and either add on or don't try to move up into the school district or into a larger home. There are lots of variables.

What will happen next? It's hard to say. I've never seen times like these in my own 15 year career before. I do think that the areas with the best schools, nicer communities and lower crime will hold their value the best - and I think Los Gatos will do OK in the long run.

RE: Distressed Properties in Los Gatos: How Many Are For Sale?

Mary,

Thanks for the comment back.    From where I'm sitting a lot of people's equity in their home in say campbell is now down significantly.  Stock market portfolios are getting decimated.  I'm a money manager and I can tell you the amount of bad debt out there is unbelievable.  This is the worst market environment I have seen since the 1970s. 

$250k doesn't sound like that much with the average home price at $1.6mn.  Especially if that is all his money.  Whether prices fall or not, Los Gatos will still be a nice place to live. People need to stop thinking of their home as a way to fund retirment and think of it more as a roof over their head.   I'm seeing too many older retired clients living in $1.5mn houses with less than $400k in retirement savings.  That just isn't going to cut it in the long-run.  The sooner people go back to living within their means the better.

Keep up the good work.  I enjoy reading your blog from time to time.

Brian

RE: Distressed Properties in Los Gatos: How Many Are For Sale?

Hi Brian,

Thanks for your insightful comments. I agree with you 100% that people need to look at their homes as shelter rather than a retirement fund - and you are right that for decades, people looked at their homes as a retirement fund.

Also I agree about people's home equity is being hurt and their savings, if they have any in stocks, mutual funds, and bonds, are also falling in value. (My own biggest concern there is the college 529 plan we have for our kids - it's all in a Fidelity index fund, because that's how the state of California runs these things. With one in college now and one who'll be there in a year, I'm very concerned about our savings slipping away right when we need them.)

And finally, I also agree that no matter what happens to prices, Los Gatos will always be a highly desireable place to live. We have a great community, great schools, low crime, a fun and vibrant downtown, loads of involvement among residents, scenic beauty, and a climate so healthful that in the early 1900s, people were sent here to recover from various ailments.

We just have to weather this storm.