We'll get the exact, hard data for the Los Gatos real estate market in a week or so from MLSListings.com, our MLS provider (formerly known as REInfolink). Meanwhile, though, we can have a look at the closings reported to date and get a feel for how the market is doing.

This month, there were 29 closings, or completed sales, in the town of Los Gatos (zip codes 95030 and 95032) among single family homes and condos/townhomes. Of the 29 Los Gatos homes which sold, 24 were single family homes and 5 were condominiums or townhouses. I was involved in two of those sales - one as the listing agent and one as the selling agent (working with the buyers), both single family homes that were in the $1,000,000 to $2,000,000 price range, and both are in the Los Gatos School District.

How did they homes in Los Gatos do in August?

First, let's look at single family homes. One sold "off" the MLS, so it's hard to know how it might have done on the open market. It was extreme in another way - it sold at $5,400,000 - the most expensive closing of the month. Not your typical Los Gatos price, though not unheard of either.

For single family homes in Los Gatos,  the multiple listing service, the average "days on market" was 50 and average "collective" or "cumulative days on market" was 71. So typically, it's taking 71 days for houses to sell in Los Gatos. (My listing, which was on Magneson Terrace, took 66 days to sell - felt much longer for everyone involved, though!) Some homes sold fast (1-10 days) and a few a very long time (longest was 238 days), but most are in the 2-3 month range.

The average list price was $1,915,500 and the average sales price was $1,847,989 among Los Gatos houses. The lowest home sold for $870,000 and the highest for $5,400,000, as mentioned above. Fifteen sold between $1 million and $2 million, 3 below that range and 6 above it

Only 3 of the 24 sold higher than list price. Just 4 sold "at" list price (but of those, 2 were reduced before they sold at list price, so only 2 sold at the original list price) and the vast majority had one or more price reductions prior to selling.

What about townhouses and condos in Los Gatos? There were only five spread between two zip codes which are so far reported as closed in August. Of those, the average Days on Market is 41 (same number for Collective DOM), the average list price is $687,789 and average sales price $676,000.

So it looks like the condo market is faring better than the single family home market in Los Gatos right now, according to closed sales prices.

While pricing appears to be flat by some indicators in July, we have seen many price reductions in homes that appeared aggressively positioned in the market before offers are procured. Buyers are waiting, generally, and prices do seem to be falling somewhat in the under $2 million price range.

The soft real estate market that has been plaguing much of San Jose and Silicon Valley now appears to be impacting the entry level and mid-level homes in Los Gatos.

What can we expect? With an election year, things are always uncertain. Likewise, the interest rate has threatened to rise a bit and if that happens, it will adversely affect home prices for sellers. Think of it like the scales of justice: one side goes down, the other goes up.

Waiting may or may not be a good idea. Prices may go down and interest rates may go up. Or perhaps not - no one knows. As one of my buyer clients said, recently, "prices may go down, but if I wait, it's like I put my life on hold". (That buyer is now a homeowner.)

The real estate market in Silicon Valley, including Los Gatos, is comrised of many micro-markets. Please call me for specific assistance in the area where you live or would like to live.

 

The Los Gatos real estate market is composed of many micro-markets in housing type, location, price point and condition. A Los Gatos condo in one school district may be in an entirely different type of market than an estate home with a view of the Santa Clara Valley or a golf course, of course.

Overall, though, the market here in Los Gatos is healthier than in many other areas within Silicon Valley. One one of measuring the health of the housing market is to follow the absorption rate. The absorption rate reflects the amount of time it would take for the current inventory of homes for sale to be bought up if no new homes came on the market and sales continued at their current pace. It can be days of inventory, weeks of inventory, or months of inventory tracked.

The National Association of Realtors uses 6 months of inventory as the tipping point between the market favoring buyers vs sellers. Under 6 months' inventory is said to be a sellers' market, and over 6 months is said to be a buyers' market. In the San Jose area, though, we are behind on housing starts and are used to homes selling fairly quickly, so most sellers will not feel as though 4, 5, or nearly 6 months' of inventory is really a market in their favor. They expect to sell in a few weeks, not a few months.

Here's a graph I did of the months of inventory in the Los Gatos real estate market for the first half of 2008 (in green) and also, for comparison's sake, the first half of 2007:

As you can see, the market was worse for buyers (better for sellers) in the same timeframe in 2007 as it is now. Since the months of inventory is a ratio of that month's closed sales to its active inventory, this data really reflects the month or so prior in terms of when purchase agreements were signed and accepted.  So looking at the numbers in April really shows you what was happening appx 30 days earlier (most of our escrows are about 30 days long).  In 2008, then, May and June were much better than the 4 months prior, and they reflect contracts written in April and May. June 2008 wasn't bad compared to earlier in the year, but clearly, the peak of the market was April because May's closings were the best.

Other data supports this too. I have a subscription to the Real Estate Report and the numbers there suggest that the highest median and average sales prices for single family homes peaked in April too (go to the page for Los Gatos and view the graphs).

Much of 2008 has been off in terms of the usual sales patterns but most years, the peak of the market is somewhere around March or April. At that point, prices frequently hit their high point of the year - great for sellers, not so great for buyers. By summer, the market cools down most years and sellers may be frustrated that they are not seeing the prices from a couple of months earlier in the year. For buyers, though, summer can be ideal since inventory is good and sales are a little lower.

No one can predict if the market will go one way or the other, but I would say that buyers are in a good position now if they want to get into a nice Los Gatos home.  The loan situation has calmed down and market conditions are favorable for most segments of the Los Gatos real estate market and there's a nice selection now. My advice to Los Gatos home buyers is simple: don't wait!

What is happening with the residential real estate market in Los Gatos? Are prices flat, rising or declining?

Just as there is no one "Silicon Valley Real Estate Market", there's no single "Los Gatos real estate market" either. It varies from one area to the next, one school district to the next, one price point to the next. It can be neighborhood by neighborhood or even street by street.

This week I received a request for an online market valuation of a home purchased in 2006. It appears to have declined in value about 10% since that time (price point is the $2 mil to $2.5 mil range - but it is in an area where not every home on the street is worth that much). Other homes, in other areas, though seem to be rising in vallue, if slightly. The sweet spot of the market seems to be lower priced homes with Los Gatos Schools - that is, homes between $1 million and $2 million. (I heard recently of a townhome in Cupertino or Saratoga, listed under $1 million, that got 26 offers!)

For an overview of the real estate market in Santa Clara County, view my online Real Estate Report. To see activity related to active sales (asking prices only), have a look at my report from Altos Research.

Condos and Townhomes in Los Gatos 95032

Condos and Townhomes in Los Gatos 95030 - not enough data for a report this week

Single Family Homes in Los Gatos 95032

Single Family Homes in Los Gatos 95030

Please contact me for personalized information on your home and neighborhood.

Best regards,
Mary