Los Gatos, California
Los Gatos real estate, neighborhoods, condos, houses, homes, market trends, history, events, lifestyle, parks, events, businesses, home, Mary Pope-Handy
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Feb. 15, 2008
A few days ago, I did a post about the biggest, most common mistakes sellers make that cause their homes to not sell. The # 1 error is overpricing, and often that's connected with hiring an agent who tells you what you want to hear instead of what you need to hear (or sometimes it's the agent not understanding the market and accidentally misguiding the owner).
Are prices rising or falling in Los Gatos? Both! It depends on what part of town, what price point, what school district, you are considering. We don't have just "one market". It is imperative to understand the micro-markets to get the pricing right.
So let's look at "the market" and "the markets". Let's have a look at the information that homeowners are using to determine how to price their Los Gatos (or Saratoga, or San Jose) home. Below, see a general view of the "Los Gatos Real Estate Market" for single family homes (very broad, including two zip codes and even more school districts). This is relating to list price, not sold prices.
Would this help you to understand pricing trends? To a degree, yes it would.
But it would also add a lot of insight to see how the market is performing within zip codes:
As you can see, there is a vast difference in performance between the town as a whole and the 95032 zip code.
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What is going on here? Clearly, the 95030 part of town shows rising list prices, while offered amounts in 95032 have been falling. The zip codes are a little different demographically, with 95030 being more expensive and being all within the prized Los Gatos School District. Some of 95032 is in that same district, but some is assigned to the Union School District or the Moreland School District. (Unfortunately my data is not available by schools.)
Another point to consider is the pricing range. Here's a view of Los Gatos single family homes by listed price quartiles:
The town overall appears to be "flat". But is the market really flat?
And let's see again the quartiles, but this time broken out by zip code:
In 95032 you see a distinct slide in the 2 middle percentiles especially, but also in the lowest range of homes.
Now let's see how things look in 95030:
In contrast, pricing are rising across the board in the 95030 area. The highest cost homes have suffered the most volatility in the market.
For months, we've heard that we have a "bifurcated market" here in Silicon Valley. We know that homes in east San Jose, south San Jose, and south county are under a huge oppression of short sales and foreclosures. Prices have fallen dramatically. At the same time, homes in Palo Alto and areas closest to it are experiencing a strong sellers market. Los Gatos does not have a ton of short sales or foreclosures, but it does have both a buyers market and a sellers market all at the same time.
The above chart looks like there isn't much movement, just a slow and gradual upward push...but have a peek along the quartile lines and you'll see it's not really flat. Here's a view of the 1st quartile of each zip code over the last year (I'm not going to run all 4 here, contact me if you want more info about a different price point):
and ...
If a home is "in the schools" and has no issues (like high voltage lines, train tracks, busy road, or a disfunctional floorplan), and if it's priced between one and two and a half million and is priced appropriately, marketed well etc, there's a good chance it's going to receive multiple offers.
If a home is NOT in the Los Gatos School District, prices are falling and buyers are probably waiting rather than buying in most neighborhoods.
To complicate matters, we have very few solds to use as comparable properties. If agents and sellers are using "comps" from 6 or 9 months ago (when the last similar home sold), they might be too low in 95030 and too high in 95032 (mostly along school lines, in my experience). It is imperative to adjust for market conditions. For example, if a home was worth $1,500,000 last March (since the charts begin there), it has possibly swung up or down in value by $100,000 to $200,000 depending on the area of town.
Warning: if you are in an area where prices are falling and you list your home too high, you may experience the unpleasant phenomena of "chasing the market down". A Realtor friend of mine from Long Beach, Laurie Manny, did a post on this topic that I highly recommend: "Chasing the Market Down - Are You Guilty?"
What is the market in your area of town doing? I would welcome feedback. Are homes selling, and if so, are they going fast? Are they "just sitting" and taking price reductions? What do you see happening in your area, with your type of property? Feedback is posted immediately - please chime in!
(Coming soon - a similar post on condos and townhomes in Los Gatos.)
Oct. 7, 2007
August is often a quiet month for real estate here in Los Gatos (and Silicon Valley
generally), but September and October are very often quite active.
This year, August was far better than September. The "mortgage mess" seems to be at fault. I noticed mid-month that we
weren't getting anything like normal activity. The numbers bear this out.
A very clear way of measuring the market activity is by looking at the absorption
rate or "months of inventory". This is a look at how long it would take for the current
inventory to sell if no new homes came on the market, but sales continued at the same rate.
As an example, imagine a bathtub full of water. If no new water is added to the tub, how long would it take for the water
to drain out? That's how the absorption rate, or months of inventory, works.
Tonight I ran the absorption rate going back ten years. (If you want that much data, email me - I'll send you my excel
spreadsheet.) For the sake of simplicity, I'll share with you just the numbers going back to early 2007.
The numbers below all represent "months of inventory" for the Town of Los Gatos in 2007 (includes 95030
and 95032 zip codes, but not 95033, which is county and not town area and has a different market):
January 3.7
February 3.55
March 3.93
April 3.02
May 4.64
June 3.27
July 3.37
August 3.75
September 5.79
As you can see, September is much worse than the rest of the year. It is true in most of the county that the market
somewhat flipped into a more severe buyer's market in September. Sales were down, listings up. There's downward pressure
on pricing, and we are seeing buyers unwilling to pay the prices of a few months ago.
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That said, 2006 was in fact much worse a market than 2007 has been overall. September's jump with the absorption rate is a
concern. Will this be a blip, or is the market going to behave more like 2006?
Buyers are on hold because interest rates are up. This week a buyer client of mine emailed me that rates are .75% higher
than he was expecting. So he's going to wait until rates come down (or prices come down enough to compensate).
When buyers wait and inventory rises, prices come down.
The sellers who respond quickly will not find themselves chasing the market down. It is difficult to make price reductions
when mentally we've already decided that a home is worth a certain amount. But like the stock market, the real estate
market is always in flux. A fair price in July is an overly high price today in the minds of buyers.
Buyers: buy now, while prices are soft. Refinance later when rates improve. Just make sure you get a good loan that you
can live with if rates go up rather than down.
For more information, data, and opinion on the market, please visit my online Real Estate Report. There you will find the
latest stats on not just Los Gatos, but all the cities within Silicon Valley and the major districts within San
Jose.
Jul. 20, 2007
 When I was growing up in nearby Saratoga, California, my mother was a Realtor and she sold a lot of high-end homes. And we lived in a very nice one on an acre lot (actually a few - she liked to buy and sell and we moved quite a lot). Because my parents were doing it, I figured it was doable. I envisioned myself in a good-sized home on an acre lot in Saratoga, Monte Sereno, or Los Gatos. I loved the hills and wanted to be close to them.
That type of home that I pictured back in the mid-1970's would be worth about $3 - $5 million dollars today, depending on things like school district, how level the land is, etc. It's more than a little out of budget. But I did know that I wanted to be near the coastal foothills - and we have been able to do that. It wasn't fast, but it was and is doable for most folks. Here's how we did it, and below our story are some other ideas for you to work your long term goals into reality.
It wasn't until I was married (22 years ago today!) and then began saving and househunting in the late 1980s that I realized how diffiult it would be to purchase any sort of house. Jim and I initially attempted to buy a place over by the coast (Santa Cruz, Aptos, Rio del Mar). But it was an overheated market and our 5% down offers were just not competitive. My parents offered to lend us some of the downpayment but I (we) staunchly refused, wanting to do this on our own - for a couple of years, while prices skyrocketed much faster than our ability to save a bigger downpayment. During that time, we decided that the coast was too foggy (nice place to visit, but...) and for a lot of reasons, decided to shift our home-buying focus to the Santa Clara Valley. (Lesson learned: time wasted made our ultimate puchase MUCH more expensive.)
We conceded that my parents were right (I was in my late 20s and still learning), borrowed some money from them (repaid within 8 years at 8% interest) and were finally successful at buying our first home in San Jose. I will say, it helped that we had a great Realtor, and it helped that we listened that time around.
As much as we wanted to live in Los Gatos, it was a little out of budget for our first home (mostly because I insisted on a single family home as our first son had just arrived and I thought a yard was crucial). We bought a potentially-cute little ranch home in Cambrian Park of San Jose, on the Los Gatos border for $225,000 in late 1989 (just as prices were beginning to come down a little, at the beginning of a 3 year price decline).
For 10 years we improved our cosmetic fixer, redoing the kitchen and bathrooms, roof, driveway, fences and lots more. In 1999 we sold it for $375,000 and bought another "cosmetic fixer". But this time, the house was in Los Gatos, 1.5 miles away in "Belwood of Los Gatos". The home we bought then needed a lot of changes - it was the darkest brown house I had ever seen on the inside - and by then I'd been a Realtor for 6 years and had seen a LOT of homes (chocolate brown carpet, chocolate brown vinyl in the kitchen - you get the idea).
 This house needed "de-browning" and lightening up in a big way. We immediately added suntunnels, got rid of the yellow glass in the entry hall (I'm Catholic and kept feeling like I was in confession each time I walked past the front door), swapped the carpet for something light, got rid of the dark brown interior doors and replaced them with white 6 panel doors, removed the flocked wallpaper, textured and painted the walls, and after a couple of years, redid the kitchen. The bathrooms we've updated, but they could stand a real re-do. So we're not done, but we are in Los Gatos in a neighborhood we love and slowly but surely, we're improving and personalizing and updating our Los Gatos home. The hills are close (but not close enough to create water problems for us), so is beautiful Belgatos Park and our area even has a cabana.
So one way you can do this, in crazy Silicon Valley, is to buy "solid but ugly" homes on good streets, put in the sweat equity and work your way up. You may not be able to make your first home in Los Gatos, but it is doable to eventually live in town if you set a course and keep at it.
Another way to eventually own a home in Los Gatos is to be more flexible than I first was and begin by purchasing a condo. What do condos cost in Los Gatos? They're not all inexpensive - but you probably guessed as much. A high-end townhouse or condominium in Los Gatos could run over $1,000,000 but most are considerably less. Since the focus of this blog entry is on affordability, let's look at the other extreme. A small condo in Los Gatos could be found in the low $300,000 range. One studio on Lora Drive (used to be a seniors complex but is now all ages) is sale pending at this time and was listed for $295,000. Don't bank on that - it's a studio besides with 600 sf and you're usually better off getting at least 1 or 2 bedrooms.
What's hard for first time home buyers, in addition to the stress and scariness of it all, is that they can rent a much nicer place than they can buy at first. It's a step down to buy - in the short run. I have occassionally had buyer clients who never bought because this was just too hard for them to make the sacrifice. It's short sighted because in the long run, California homes have a great track record of appreciating (I believe the number I saw was an overall 9% appreciation per year over the last 30 years, "corrections" included). It's not a short term investment, it's a home - but it can also make you money by the time you retire if you make your payments and pay it off.
And finally, a word of caution to keep what you've bought:
The danger? About once every year or two, I have clients who get themselves into trouble because they view their home's equity as money in the bank which they can simply draw from. It doesn't really work that way, because if you take the money "out" of your equity, you have to pay it back. You don't really "get" the equity until you sell and leave your home. For some reason, this confuses some folks. They take a little bit out each year or two. Suddenly the repayment on the equity lines is unbearably high and they have to sell their home just to get the debt off their backs.
It's not supposed to work that way. Leveraging can be good (talk to your financial planner), but the old fashioned idea of a 30 year loan that you just pay off - and where you actually own your home outright when you retire - is really a very good option for many people. So my word of caution with homeownership: be careful about that equity. Don't just draw and draw from it. You can live beyond your means and get in trouble too easily. It is apparently very tempting.
Mary Pope-Handy, Realtor, CRS, ABR, e-PRO, SRES, ASP, RECS, CNHS
Helping Nice Folks to Buy & Sell Homes Since 1993
Co-Author: "Get The Best Deal When Selling Your Home In Silicon Valley"
Intero Real Estate Services, Los Gatos, CA (Silicon Valley)
408 357-5760 (Direct); 408 204-7673 (Cell); 408 715-0201 (eFax)
www.PopeHandy.com www.ValleyOfHeartsDelight.com
emailto: Mary@PopeHandy.com
Blog: www.LiveInLosGatos.com
Jul. 5, 2007
 The numbers for June's real estate closings are in. How does it look?
Overall, things are "OK" in Los Gatos. It is a bit of a buyer's market, but not a strong one. Certainly things are not nearly as difficult as on the east side of the valley for selling(Alum Rock, Berryessa, south San Jose), where sales have almost ground to a halt. Things are selling in Los Gatos. Just not everything, at every price and every condition. So yes, you can sell, but you have to be serious about it and not just "test the waters" to "see if you can get your price". Buyers, it's a pretty decent time to buy. No one is giving away homes in Los Gatos, but serious sellers are willing to negotiate to get their home sold. Don't be afraid - give it a good shot and you will likely be successful!
In our high-tech, data-driven valley, everyone wants to see the numbers. So below, we'll view them.
Let's look at the absorption rate first. This is the number that reflects the "months of inventory" or how long it would take to sell off everything currently listed if nothing new were to come onto the market. If that is not plain, think of it like a bathtub full of water. If we pulled the drain (but did not allow any new water to enter the tub), how long would it take for the water currently there to empty out?
For this absorption rate, I used single family homes in Area 16, which our MLS provider identifies as the Los Gatos area (it's close to accurate - there are some San Jose homes in area 16 but not many, most are Los Gatos addresses and properly within the town of Los Gatos). (This number is derived by dividing the current inventory by the number of closed sales for that period.) Obviously, for sellers, a shorter rate is better:
The absorption rate is better for sellers than a year ago (June 2007 3.3, June 2006, 4). For the National Association of Realtors, anything under 6 months is considered a seller's market. But in our area, that is an unusually long time so we consider other factors, such as the list price to sales price ratio, etc.
Year over year, things are better than this time last year for sellers. They are also improved over a month ago, though not quite as good as the closeds for April (reflecting sales in March, which was the best month of the year to date for selling).
Another factor to consider is the list price to sales price ratio. This, too, improved noticeably and more closely resembled April's closings/March's sales, but didn't quite match it. With this number, we normally view anything over 100% as a seller's market. Right now it's not as good as it was earlier in the year, when the numbers ranged from 98-99%. Compared to many places in the country, this list price to sales price ratio is great. This number indicates that it is not a seller's market. But it is not a super strong buyer's market, either.
June 2007 97.57
May 2007 95.75
April 2007 97.88
March 2007 98.42
February 2007 98.91
January 2007 98.54
December 2006 96.27
November 2006 97.26
October 2006 98.7
September 2006 94.83
August 2006 97.4
July 2006 98.24
June 2006 98.7
For this ratio of list price to sales price, the Los Gatos single family home market has slipped from a year ago. This indicator is a bit different than others we're seeing.
The number of new listings has slowed down, and the total inventory has declined a little bit. Sales are keeping pace. These are keeping Los Gatos from slipping into a true or strong buyer's market.
New Listings Current Inventory
June 2007 58 134
May 2007 69 153
April 2007 73 136
March 2007 62 118
February 2007 45 103
January 2007 54 100
December 2006 11 81
November 2006 29 127
October 2006 46 144
September 2006 85 171
August 2006 81 164
July 2006 67 166
June 2006 87 170
Visually, it looks like this:
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On this front, it is really a much better market for sellers than a year ago as we have about 20% fewer single family homes on the market now as we did then.
How about the simple number of closed sales? The newspaper keeps reporting that the number of sales are off statewide and countywide. But in Los Gatos, sales for the last 3 months have been close to (and quarter over quarter a little higher than) a year ago.
June 2007 41
May 2007 33
April 2007 45
March 2007 30
February 2007 29
January 2007 27
December 2006 24
November 2006 31
October 2006 41
September 2006 19
August 2006 35
July 2006 24
June 2006 42
May 2006 36
April 2006 34
Days on Market (or Continuous Days on Market) is not as strong an indicator as the Absorption Rate, but everyone wants to know about these numbers. Let's look at them next - we will view the CONTINUOUS Days on Market here:
June 2007 37
May 2007 78
April 2007 60
March 2007 65
February 2007 48
January 2007 101
December 2006 82
November 2006 69
October 2006 68
September 2006 80
August 2006 55
July 2006 45
June 2006 46
May 2006 61
April 2006 29
Seems that things are moving around a bit but quarter over quarter, the continuous days on market are longer than a year ago.
In summary, I think Los Gatos is mostly "holding steady". I do not see a deepening buyer's market. Nor do I see a quick turnaround back to a seller's market.
What often happens here in Silicon Valley is that we find ourselves in a ten year pattern in which prices rise (then spike), decline a bit (but not as much as the runup) and then go flat while we catch our breath and wait for it to all begin again. Only in hindsight do we ever really know where we are in the cycle, but it appears to me that we are in the flat, recovery period right now.
The plus to this kind of market is that it is more calm. For people who want to do a move up, this type of market provides enough momentum to sell, but not so much crazy competition that it's difficult to find a replacement home.
Every home, neighborhood and price range is unique. For specific information on your particular home and needs, please contact me.
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Mary Pope-Handy, Realtor, CRS, ABR, e-PRO, SRES, ASP, RECS, CNHS
Helping Nice Folks to Buy & Sell Homes Since 1993
Co-Author: "Get The Best Deal When Selling Your Home In Silicon Valley"
Intero Real Estate Services, Los Gatos, CA (Silicon Valley)
408 357-5760 (Direct); 408 204-7673 (Cell); 408 715-0201 (eFax)
www.PopeHandy.com' www.ValleyOfHeartsDelight.com
www.Move2SiliconValley.com www.SiliconValleySeniorsGuide.com
emailto: Mary@PopeHandy.com
May. 22, 2007
 Behind large ranch-style gates that apparently never close, there lies an unpretentious neighborhood of mostly single story homes on sprawling half acre lots.
Once a horse ranch, the area just off Kennedy Road harkens to a more rustic time.
Welcome to Surrey Farms.
This is not a neighborhood that screams "new money", though it is so highly desireable that most homes cost in the range of $2,000,000 or more - if one happens to be available when you're house-hunting.
What is the mystique of this much sought-after area?
Part of it may be that there is just one entrance to the neighborhood., So there is no "through traffic". The streets are fairly quiet and it's an easy place to let kids ride bikes and walk dogs, or to push strollers and talk with neighbors while walking.
 Another element is the modest nature of it. Whereas many neighborhoods in California seem to cram large homes on small lots, this area is more full of trees and yard than structure.
It seems to be a less hurried pace.
Additionally, Surrey Farms is "close to town", has the prized Los Gatos Schools, but feels more countrified. It feels away without being away.
Besides the price, is there anything a potential buyer should worry about when purchasing a home in Surrey Farms? In some parts of the neighborhood, there may be a little Kennedy Road noise. Overall, though, it's not bad. In others, there can be sounds floating over from Hillbrook School (a private school located at the end of Marchmont Drive). Hillbrook has lots of acreage for students and horses, though, so this is not much of an issue.
The one issue I would advise folks to pay attention to, though, is water.
 Because this delightful spot is located next to hills, water rushing down off of them can be an issue, just as it can in Almaden Valley, Saratoga, Los Altos, etc. Water plus our clay soil makes for a pretty bad combination. It's very important to keep the water away from the house. It is especially important for it to remain dry under the house. (Water near the foundation can lead to the soil expanding and cracking the concrete in the foundation. That, in turn, can cause the house to move out of level. And persistant moisture under the house could lead to mold or mildew issues, to name just a few reasons why you don't want water in your crawl space.)
Grading is often a culprit with water issues, and so is the way water is handled when it comes through the downspout. Those are both usually easy fixes. Often they are inexpensive too.
To complicate things, though, there are places in Surrey Farms where there are some naturally occuring underground springs.
But it can be dealt with, so don't despair. Springs can be capped and water diverted. But you need to know about it, and you need to act on it if your inspector recommends that you talk to a soils, foundation, or drainage expert.
 So when buying a home in Surrey Farms, or anywhere near the hills, be aware that water issues can exist. Some sellers will have been proactive and done improved grading, added drains around the outside, or perhaps even have added sump pumps or fans. They are to be commended!!
Attend your home inspection so that you can learn how to make your home be both healthy and lasting. Ask lots of questions. And make sure, if the inspector tells you to improve the grading, extend the downspouts or do whatever about the water, that you heed the advice. In the long run, you'll be very glad you did.
Mary Pope-Handy, Realtor, CRS, ABR, e-PRO, SRES, ASP, RECS, CNHS
Helping Nice Folks to Buy & Sell Homes Since 1993
Co-Author: "Get The Best Deal When Selling Your Home In Silicon Valley"
Intero Real Estate Services, Los Gatos, CA (Silicon Valley)
408 357-5760 (Direct); 408 204-7673 (Cell); 408 715-0201 (eFax)
www.PopeHandy.com www.ValleyOfHeartsDelight.com
emailto: Mary@PopeHandy.com
Blog: www.LiveInLosGatos.com (http://LiveInLosGatos.RealTownBlogs.com)
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