Today in my "Valley of Hearts Delight" blog, I did a lengthy, detailed post on The Los Gatos Real Estate Market by Zip Code, School District and Price Point - August 2009.  Although the overall market in town is a buyer's market (with about 7 months of inventory or an absorption rate of 7 months), the subsets of the market range widely, from 3.75 months of inventory (a seller's market) to about triple that much!  Please visit http://www.SanJoseRealEstateLosGatosHomes.com to see the data!

Most consumers don't realize that there are two sets of real estate forms used by Realtors and other real estate professionals in Silicon Valley and nearby areas.  The California Association of Realtors provides the paperwork found throughout most of the state ("CAR forms").  The Peninsula Regional Data Source authors a more regional set ("PRDS forms").

Did you realize that they are a little different, and each provides different protections and "teeth"? 

Here are a couple  of the key differences within the purchase agreement between buyer and seller:

• The CAR purchase agreement is an "as is" form; the PRDS purchase agreement states that the home will have certain basic conditions met (no leaks, all systems functional)
• The CAR purchase agreement allows repairs to be done by a handyman; the PRDS form requires that repairs be done by a licensed contractor
• One has more penalties built in for defaults; one allows the seller to cancel more easily on a buyer who's not performing

The listing agreements vary too - one protects the agents' position better than another.

There are pros and cons to each of these sets.  When you go to list, sell, or purchase a home, be sure to discuss the plusses and minuses of each with your agent. One set is not 100% better for you as a buyer or a seller. There are clauses in each, though, which may protect your interests best. 

One caveat: if you are buying a bank owned home, it is very likely that the bank will require you to use the CAR form.  They cannot get up to speed on regional contracts and they will insist on the "as is" nature of the CAR form (PRDS can also be "as is" if a box for that is selected).  Some banks may use their own forms, or send back an extremely lengthy addendum that may cancel out half the clauses in whichever purchase agreement you use.  Don't be afraid to seek out a good real estate attorney if that is the case.  Realtors and other real estate salespeople are not attorneys and this would be an ideal time to call in professional legal help.

Something else to consider is that you may be able to use some paperwork of each set.  CAR has a myriad of forms for realty transactions, many more than PRDS does. One of the best addenda in use today is the CAR short sale addendum.  It is exceedingly clear about timeframes and responsibilities.  Just because you are working with a PRDS purchase agreement does not make a CAR addendum unusable in most cases. 

Buying and selling real estate in Los Gatos, Monte Sereno, Saratoga, and San Jose does involve a lot of options and decision making.  This is another element to consider because just like all the other choices you face in home buying or selling in Santa Clara County, the choice you make on the forms you'll use may impact your outcome.  Hire a good agent who works with both sets, can explain the pros and cons of each in terms of your position, and is not dependent on just one of them alone. 

Sometimes I get calls from people wanting to get a "steal of a deal" on higher priced Silicon Valley real estate by purchasing short sales and bank owned properties in  areas with great public schools like Cupertino, Saratoga, Monte Sereno, Los Gatos, and Almaden Valley.

Unfortunately for bargain hunting home buyers who are seeking premium school districts in Santa Clara County, there just aren't that many of them. 

It's very easy to find distressed properties for sale in less expensive areas. In fact, for the first quarter of 2009, 95% of all sales in the Alum Rock area of San Jose, which is one of the poorest areas of Silicon Valley, were either short sales or bank owned properties. 

It's a different story in most of the expensive west valley markets, though. We see far fewer of these in places like Palo Alto or Los Altos (or Los Gatos, Monte Sereno and Saratoga).  There's a very direct correlation between the best  public schools, low crime, higher income, and higher education levels of homeowners with lower numbers of foreclosed homes. 

Here are the numbers of available homes for sale, which I've culled from our MLS, without further elaboration:

The real estate market seems to be turning, but primarily in the lower priced areas of Silicon Valley.  The single family homes in the lowest price points seem to be flying off the market.  In some areas, the majority of houses that fit that description are bank owned and short sale properties (such as the Alum Rock district of San Jose, where all but 5% of home sales in the first quarter were distressed property sales).

But what about Los Gatos?

At this point there are 254 homes for sale (single family homes, condos and townhomes), 56 pending sales and 29 which have closed in the last thirty days. That represents an inventory of 8.75 months (listings divided by closed sales).  It's also evident that not everything which sells actually closes since the ratio of pendings to list prices is stronger than the ratio of closeds to list prices.

The lowest priced homes in Los Gatos are faring better than more expensive homes in Los Gatos, which is also the case throughout Santa Clara County.

Here are some graphs to help Live in Los Gatos readers to see what's happening in Los Gatos:

As you can see from the graphs, the condos (representing the lowest price points in Los Gatos) seem to be faring better than the single family homes.

Below is a chart of the list prices for single family homes in Los Gatos with 95030 and 95032 zip codes ("in the town") as well as 95033 (county area in the mountains).  In all cases, the market is more favorable in the lowest price points.

Monte Sereno is a lovely, upscale residential community of about 4000 people. It's located adjacent to the town of Los Gatos and the city of Saratoga, California. There are no businesses in Monte Sereno - just homes, the post office, and the city office building along Highway 9. 

Monte Sereno shares some services with Los Gatos, such as police and schools. While Los Gatos has two zip codes, 95030 and 95032, Monte Sereno shares the 95030 zip code with Los Gatos.  Some folks mistakenly think that whatever is happening in Los Gatos with the housing market is also reflective of the Monte Sereno real estate market. They are sometimes quite different. 

We'll now look at a few key indicators to see how the Monte Sereno real estate market is doing, and also how it's doing compared to the same zip code but in Los Gatos. Graphs and stats are from Altos Research, to which I have a subscription (and the right to republish this information), which uses current listing data (list prices, not sold prices, for instance).  About once a month I also publish an update which uses information from the solds, and you may see that interactive report at any time by visiting http:www.popehandy.rereport.com.

I. Inventory of Houses for Sale in Monte Sereno

This first graph displays the trend of inventory among houses for sale in Monte Sereno, 95030. The four different lines are for the four quartiles, or price points. Sometimes they behave differently from one another, but here we can see that for much of the last year, inventory rose dramatically among all price ranges.

Next, a comparative look between Monte Sereno and Los Gatos inventory levels of homes for sale. While it makes sense that Los Gatos has more homes for sale (it has more households!) it is interesting to note that the rise of inventory has been more dramatic in Los Gatos than in Monte Sereno.

A retrospective: how is inventory in Monte Sereno now compared to two years ago? (The chart says only 95030 but this is just from Monte Sereno.)

 II. Average Days on the Market of Homes for Sale in Monte Sereno

Below, please see the breakdown by price point, or quartile, of the days on market for Monte Sereno this year. The lowest priced homes did not experience the same degree of a "dip" in the first half of the year that the higher priced homes did. It is interesting to note that the most expensive homes had the greatest improvement for the DOM (Days on Market) early in 2008.

How does this compare to the same zip code in Los Gatos?

The patterns are pretty similar, but it would seem that for most of the year, it has been easier (faster) to sell a house in Monte Sereno than in Los Gatos.

Compared to two years ago, how do the DOM look in Monte Sereno?

As we had suspected, it was much easier to sell a home in 2006 than it has been in 2008. In fact, it looks from this indicator that it is approximately twice as hard to sell a home now, if not more, then in 2006. This has been especially grue in the last quarter of the year.

III. List Price of Homes for Sale in Monte Sereno

Now we'll turn to the number which home sellers care about the most: price. Below, please see a graph with the median list price by quartile of homes for sale in Monte Sereno this year.

Interestingly, the most exclusive homes have come down the most, while properties in lower price ranges seem to have adjusted downward the least.

How does this compare to what's happening in the town of Los Gatos?

It is commonly known that homes in Monte Sereno are a bit more expensive than those in Los Gatos, so the gap between the two is not surprising. That said, the way each has responded to the market is curious. While Los Gatos home prices (list prices) went down early in the year, they went up in Monte Sereno for the same time frame. In fact, these two graphs are almost completely inverse of each other!

Finally, how does the median list price of homes in Monte Sereno today compare to the list prices of two years ago?

This is another weird graph which almost looks like a symmetrical inverse from 2008 to 2006. List prices today are higher, on average, then they were two years ago. 

In summary, compared to Los Gatos, Monte Sereno is faring better overall. The inventory is lower, days on market are shorter, and list prices remain higher than in Los Gatos.  Compared to two years ago, it's tougher to sell a home (and easier to buy one) in Monte Sereno: inventory is up, days on the market are up - but list prices are up too, an odd twist! In fact it's an anomoly for most of Silicon Valley, but it does not mean that any one house will necessarily sell for more than it did 2 years ago. The median sales price is the point at which half the homes are selling for more, and half for less. So a higher median list price or sales price may simply indicate that more expensive homes are selling. That seems very likely because with the more expensive homes, buyers are less likely to be dependent on a loan.

For analysis of what's happening in your neighborhood, or where you'd like to buy a home, please contact me. I'm happy to meet with you and go over your situation in person and in confidence.

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