Are home prices rising in Los Gatos? It does appear that way.  What is reported, though, may not be what it seems.

Below are the stats for the closed sales in July - they are still off, year over year, considerably, but they are up from the month before.

Los Gatos Single Family Home Statistics - Closed Sales

Los Gatos Condominium and Townhouse Statistics - Closed Sales

What does it mean?

Clearly, while single family home sold prices are higher than a month ago, this is not the case for condos and townhomes (which have been "beat up" in this market, all over San Jose and also countywide).   This is our first clue that "the Los Gatos Market" is again not one unified block, with everyone benefitting equally.   Rather, there are micro-markets.  Part of the market is advancing strongly - the lower priced homes in the Los Gatos School District - and those homes are selling and appreciating briskly.  Other parts of the market, such as the townhouse and condominium market, the luxury market, and the homes not in the Los Gatos school area, are not faring as well.   In fact, most homes in Los Gatos are not selling at all, and overall, it is still very much a buyer's market, but it IS improving.

Below, please see a chart displaying the "market barometer" for Los Gatos. NB the gap between the number of properties on the market (168) and those sold (28) - divide the former by the latter to get the "months of inventory", which is 6 months right now.  According to the National Association of Realtors, 6 months is a "balanced market" or a "neutral market".

How can this be? How is it possible for it to be a neutral market (or in some segments of Los Gatos, a buyer's market) when prices are rising (and homebuyers are experiencing multiple offers in places)?

It's not happening in every segment of the Los Gatos market, that's how.  The homes that are selling are doing well. But many - most - remain unsold.

Broad sweep - here's a view of inventory by Los Gatos zip code (95030 and 95032):

As you can see, inventory is rising among homes in the 95030 part of Los Gatos, but falling among 95032 (often more affordable).

Here's the 95030 zip code area by price quartile:

And here's the 95032 part of Los Gatos by price quartile:

Unfortunately, I cannot break out the school district differential with this subscription, but anecdotal information indicates that homes "in the schools" are the ones selling with multiple offers if they are priced low (close to or under $1 million). So I went to the MLS and checked a few numbers myself.

Right now in 95030 and 95032, there are 47 single family homes for sale in the Campbell Union High School District (meaning Leigh High & Westmont High), and 4 closed sales of the same in the last month.  That is an 11.75 month supply of inventory.

Right now in 95030 and 95032 there are 159 single family homes for sale in the Los Gatos-Saratoga High School District, with 28 closed sales in the last month, which is a 5.67 month supply of inventory.

Price point aside, the school district is the driving force.

List prices by zip code in Los Gatos:

Prices are rising more in the 95032 part of Los Gatos than in the less-affordable 95030 part of town. Knowing what we do about the months of inventory, what we see are that the most affordable homes with the schools are the "hot" segment of the market. 

What homes are these?  The ones where a buyer can get into a single family home for close to a million dollars or less (up to about 1.3 mil max) and enjoy the Los Gatos Schools.  Even so, houses must be "turnkey" and priced aggressively.

Homes outside of this parameter - which is most of the Los Gatos real estate market - are struggling.

Please contact me for help in buying or selling a home anywhere in Los Gatos.

In addition to doing a post comparing Los Gatos, Monte Sereno, and Saratoga today, I also did one on just the Monte Sereno real estate market in my other blog at ValleyOfHeartsDelight.com. If you are tracking the Monte Sereno housing market, please have a look at this article, which discusses the days on market, inventory level, percentage of homes relisting, and pricing trends.  Find it on the ValleyOfHeartsDelight.com site or click directly on this link:

Monte Sereno: How’s the Market?

The Los Gatos real estate market varies by zip code, school district, neighborhood and price point.

The schools are a huge factor in sales prices and overall desireability, even if the buyers want to have their kids attend private schools. So let's consider that imact too. The 95030 zip code is entirely in the Los Gatos School District, but the 95032 zip code is partly "in the schools" and partly in the Campbell Union High School District. The 95033 zip code reflects the Los Gatos Mountain areas (such as Redwood Estates, Chemeketa Park, etc.), which are not actually part of the town but have a Los Gatos mailing address. The schools in the mountains are quite good and they feed into Los Gatos High School.

I. Overview:  Today we'll first have a broad overview of the major real estate indicators across 95030, 95032, and 95033, then focus in on pricing by zip code in particular.

1.) Here's a snapshot of how the Los Gatos real estate market is faring by zip code and major indicators. First, let's look at the median list price of single family homes in these zip codes:

The median list price is clearly declining across all zip codes.

2.) And here's the inventory situation by zip code in Los Gatos, which as you can see hit a peak a month or two ago but has been declining recently:

3.) Finally, here is a view of the days on market in the same three parts of Los Gatos:

II. Pricing Information by zip code and quartile.

1.) The days on market are rising across all zip codes and the ratio appears fairly similar from one to the next.

2.) Next, the same data for 95032:

3.) And lastly the same information for the mountain areas of 95033:

Generally speaking

-the inventory is not as high as a few months ago and appears to be enjoying a downward trend.

-days on the market are climbing overall

-median list price has been falling - in some areas and price points, it's not terribly dire, but in others the situation is more extreme.

Overall, the market continues to deteriorate for sellers and improve for buyers. Any particular home may or may not fit neatly into the patterns shared above, so please contact me for more information on your home or your dream home!

Thinking of selling your home? One of the first questions a potential home seller has is this: "what's my home worth?"

Real estate professionals will establish the probable buyer value (do a market analysis) by comparing your home to others like it which have sold recently and perhaps also those which are currently under contract (sale pending). These similar homes are called comps (for comparable sale). They factor in market conditions as well (buyers market, sellers market, inventory shortage or excess).

What is an ideal "comp"? It is a sold home that is:

• recent (within at least 6 months, but preferably 3, similar market conditions)
• nearby (same zip code/town, within a mile is best, within same complex or subdivision is ideal)
• similar type of location (interior lots vs one backing to a freeway, school, high voltage lines)
• like condition (similar amount of updating/remodeling)
  
  In a tract subdivision or condo complex with many recent sales, this can be easy. If the subject property is very similar to several recently closed sales except for either the level of improvements or the lack of them, an adjustment would be made only for the condition. In my experience, the same tract house may have a range of 10% - 15% of value between completely original and not well maintained to thoroughly remodeled with high quality appliances and upgrades. (Most homes are somewhat updated. Few are either enitrely or original, or even more rare, completely run down.)
  
  Let's do an example of a tract home in which there are several sales nearby of the same floorplan in recent months. And let's say that a typical home there, somewhat updated, sells for $1,000,000 just to use a round number. The numbers could break down along these lines:
  
• typical sale, moderately updated $1,000,000
• same floorplan, mostly original condition $900,000 - $950,000 "depending" (very original to run down could go lower, depending on market conditions)
• same floorplan, thoroughly remodeled, turnkey $1,050,000 - $1,100,000 "depending" ("stunning remodel" could go higher depending on market conditions)
  
  The range of values is often 10% on the same street, but it could be as much as 15% or more if you have a difference of more than just condition (lot size, precise location, a change in market conditions between one sale and the other). As an example, if all the comparable properties were "all original" and your home is "somewhat updated", it's likely that your home will sell for 5% more than the others did because of your updates. The range between "all original" and "stunning remodel" is not usually more than 15%.
  
  It is much, much more difficult to establish market value for a home when there are no good comps. Sometimes the property being evaluated is extremely different from those sold recently & nearby.
  
  To establish a probable market value, it again will be a matter of adjustments, but when there are no good comps, a lot of adjustments must be made. Real estate professionals will adjust up and down for condition, location, the market's behavior etc.
  
  The most important factor is always location. If a home is overbuilt for the neighborhood (too improved or too big for the area), the nearby homes will pull that home's value down. If a home is modest for the neighborhood (on the small size compared to others or not as improved), the nearby homes will pull that home's value up. If the comps are in a better school district than the subject home, it will be necessary to adjust downward for the schools. If the subject's lot is the largest in the neighborhood, adjust up for the neighborhood.
  
  On these hard-to-comp homes, often it is important to arrive at probable market value from several approaches. One approach might be "what does the neighborhood carry?" another might be "what would this home in another neighborhood sell for" (and then adjust for area), or "what would this home have sold for last year" (and then adjust for what the market has done since then). By trying to establish the value from several angles, it can become clear that the home is likely to sell within a particular price range.
  
  Finally, homes are seldom worth just one price, because when a property sells it's about both price and terms. By terms, I mean other factors that can influence how much a buyer will pay and how much a seller will take.
  
  For example, these terms might sway a seller to take less money:
• an all cash offer
• an as-is offer
• a quick close of escrow or a long close, depending on what the seller wants or needs
• a free rentback for the seller
  
  And these terms might cause the seller to get more money for the property:
• the seller carrying the financing
• the seller accepting a contingent offer
• the seller offering a lease-option to buy
• the seller including personal property with the sale
• the seller providing some other incentive (e.g. paying for closing costs)
  
  In one multiple offer situation, a seller client of mine opted to take the offer at the lowest price because it was an all-cash deal and a 5 day escrow. It was a "sure thing" and my seller wanted the house closed more than the seller wanted top dollar. That is not usually the case! Things like that can "throw" a comp a bit, so when factoring in a probable market value of a home, it is important to consider any conditions impacting the sale price, such as these terms. If one comp looks radically different than other similar sales, it's probably a result of the terms of the sale and not really market value per se.
  
  If you would like to know the likely market value of your Los Gatos or Silicon Valley home, please contact me. I'd be happy to run the numbers for you. Send me an email with your address and contact information or fill out my online market analysis request form. It would be my pleasure to assist you.