Los Gatos Had a Cross-Dressing Crook Captured in 1895

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.

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.