Are there bargain homes to be found in Los Gatos (and Monte Sereno), as in a lot of short sales or bank owned houses, condos & townhomes on the market? These types of properties have been in far shorter supply in the Los Gatos area than in most of Silicon Valley (San Jose, Santa Clara County).  Yesterday I logged onto MLSListings.com and did the research on the "Area 16" or Los Gatos - Monte Sereno real estate market - tedious, but interesting. (Area 16 includes Monte Sereno, consists of the 95030 and 95032 zip codes and a sliver of Campbell and San Jose, Cambrian Park - but is about 95% Los Gatos).  Results below:

If you are a Los Gatos homebuyer, you'll find that there are not very many distressed properties on the market. 

Los Gatos Houses for Sale 

Of the 142 active listings in "area 16" (the Los Gatos area, including Monte Sereno and an exceedingly small sliver of Campbell and San Jose - Cambrian Park), only 10 are distressed homes for sale (short sales and REOs combined).  That's just 7% of the available pool of Los Gatos houses for sale are distressed properties (4% short sale, 3% bank owned).

Los Gatos Condos and Townhomes for Sale

Among the condo market, about 10% is short sales and none is a bank owned property.

Pending & Closed Sales of Homes in Los Gatos

The pendings show a lot more activity among short sales - but will they close escrow?  (Unfortunately a significant percentage of short sales never close.  Buyers get tired of waiting, banks request things that sellers won't do, such as sign a promissory note, or foreclosure happens prior to the short sale being completed - just a few of the reasons why the success rate is lower than with either regular sales or REOs.)  Although about half of all homes in escrow are short sales, a look at the closeds over the last month belies that most won't close - only about 3% of the combined closed sales in the last month are short sales. Fourteen percent are bank owned - still a small fraction of the combined market (12% are distressed properties).

Will the info (and percentages of sale type) be different if we view it "year to date"?

It's pretty similar in that the distressed homes in Los Gatos are a small pert of the market - among the single family homes sold in 2009 in Los Gatos, about 6% are short sales, 11% are bank owned homes (about 17% of the solds are "distressed" sales).  Interestingly, the amount of recently closed houses that are distressed is a lot less than the year-to-date. 

Among the condo and townhome market, year to date about 8% of the sales are short sales and about 5% are bank owned home sales (13% are distressed sales).  For the current month, it's a similar 12%.

The distressed element of the Los Gatos real estate market is significant but a minor part of the available, pending, and sold properties in the Los Gatos area.  The lower prices of short sales and bank owned homes will have a negative effect on home valuations, but not nearly so strong as is seen in most of the San Jose area.  Depending on your price point and location, there may be more or less of an impact on your home's value (or the value of the home you wish to buy). 

For more posts on short sales & bank owned homes in & near Los Gatos, please see:
http://www.realtown.com/LiveInLosGatos/blog/short-sales-and-bank-owned-homes

Today on my Valley of Hearts Delight blog, I posted a long article on the Monte Sereno real estate market.  In places I compared and contrasted it with the Los Gatos & Saratoga markets, so readers of this blog might find that piece interesting as well.

The Monte Sereno Real Estate Market Update, November 2009

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.