The real estate sales numbers are in for Los Gatos, Saratoga, Monte Sereno, San Jose and all of Silicon Valley for December 2008 and for the year as a whole.

Santa Clara County Real Estate Report for 2008 (annual report - you may also find on this site the annual reports for Los Gatos, the Los Gatos Mountains, Campbell, Saratoga, etc. as well as quarterly reports and monthly reports - monthly report links found at the bottom of this post).

You already know that things have been bad: money's hard to borrow, homes are hard to sell, jobs seem to be threatened.

There was some good news to be found, though.

• Home sales increased in the second half of 2008, and we expect that to continue
• By the end of 2008, the number of sales were up year-over-year from 2007
• Prices are down - in some areas prices have "rolled back" two to three years. In other places, it's closer to four years. This is good news for buyers!
• If your downpayment is strong and credit is great you can get a loan and the news for you is great:  interest rates are very, very attractive now!  FHA loans are reappearing!  Sellers are considering carrying second loans!
• Banks are finally getting it together for handling REOs and short sales. New divisions are appearing to handle the increased workload.. These sales should be smoother in 2009.

How about our local market in the west side of Silicon Valley?

The upscale communities of Los Gatos, Monte Sereno, Saratoga, Almaden Valley, Cupertino and other foothill areas with good schools did not fare as badly as most of Santa Clara County in 2008, but they are not immune from the prevailing winds, either.

Overall, inventory is up and time on the market is up while the list price to sales price ratio is down. 

Please visit my Real Estate Report at www.PopeHandy.ReReport.com for the complete, interactive report for last month, last quarter, or last year - countywide, by city, or by area of San Jose, or click on the following links to see the most recent monthly report for these areas:

Los Gatos Single Family Homes   
Los Gatos Condos/Townhomes

Monte Sereno Single Family Homes  (there are no condos or townhomes in Monte Sereno)

Almaden Valley Single Family Homes  
Almaden Valley Townhomes & Condominiums

Cambrian Park Single Family Homes  
Cambrian Park Condos and Townhouses

Campbell Single Family Homes  
Campbell Townhomes and Condos

Willow Glen Single Family Homes  
Willow Glen Condominiums and Townhouses

(apparently no homes closed escrow in the LG Mountains in December - in Nov there was one and in Oct one)

What's happening with the number of short sales in Silicon Valley? Are they rising or falling? How does this impact the real estate market in various parts of Santa Clara County?

Let's have a look at the numbers over the last few months in selected areas of Silicon Valley. Below, please find the number of active (for sale) short sale listings of single family homes and condominiums or townhomes in Los Gatos, Monte Sereno, Saratoga, and other parts of the San Jose area.

While there's a noticeable rise from late March to late May, the numbers are backing down a bit now.

Can we infer anything from this?  Yes and no.

First of all, we do not see a worsening of the market overall - the doom and gloomers would like us to think that the sky is falling on the local real estate market, but looking through this lens, it doesn't appear to be the case.  If the numbers of short sales were swelling, it would portend lower prices because short sales themselves tend to sell for less, and most short sales eventually turn into foreclosures - and they also sell for far less than homes which are lived in and loved.

On the other hand, we are not done seeing loans reset. That is, a lot of folks took out mortgages a few years ago with adjustable rate loans that would be level for 3, 5, 7, or 10 years. As some of these get reset, there may well be more people in trouble who scramble to sell with a short payoff to the bank or who otherwise cannot make the new, higher payments. So we may be getting new waves of homes in the short sale pool.

Whenever I do a post on foreclosures, short sales, and bank auctioned homes, I get emails and calls about how to buy one of these homes at a steal of a price. So I'm going to quickly recap my input on what to do if you are a bargain hunting buyer:
 

1. The biggest problem with short sales is that although the seller wants to sell, the buyer wants to buy, and the agents want to help their respective clients, the success of the transaction depends on the lending institution approving the sale. In my experience, this is where the problem is - most often, the banks either do not respond (at all, ever), or they take so long to respond that the home's no longer worth what the buyer inititally offered. Worse, some lenders use a servicing company to handle payments, and some of them would rather service a loan through foreclosure than facilitate a short sale.  I spent a lot of time in early 2008 putting short sale transactions together, only to have the bank ignore the offers.  My advice: save yourself time and effort and buy a home that you can actually close on. (I am not working on short sales any more in this market.)
2. When short sales fail to produce a closed transaction, the property continues through the foreclosure process. The next step is the auction by the bank. There is no role for the real estate agent here, so we Realtors can't help you with this stage. With the auction, you'll need a large percentage of cash on hand and you have NO right of recission - no ability to investigate the property and later change your mind. No congingencies - which I think is very, very dangerous.
3. Bank owned properties have gone all the way through the foreclosure process. They are usually vacant (in some cases, the bank allows the former owner to stay on as a tenant so that the house is not vacant and vandalized). The bank wants to sell and will permit you to do inspections and to have a reasonable contingency period. The main risk here is that the house may have been beat up by the former owners on their way out. That doesn't always happen, but it's certainly a possibility. Bank owned homes are usually offered on the MLS, and a Realtor or other real estate licensee can assist you in purchasing one of these. Agents are not afraid of "working these" because they know that the bank needs and wants to close escrow - so there's a chance for a happy ending here (unlike with most short sales).

Whether you want to buy a distressed property in Silicon Valley or just want to know how these sales impact your home buying, home selling, or home value, the data is important for understanding how the real estate market is faring here. I'll continue to keep you updated in the coming weeks and months.

Best regards,

Mary

Mary Pope-Handy, Realtor,  CRS, ABR, e-PRO, SRES, ASP, RECS, CNHS, ACRE
Helping Nice Folks to Buy & Sell Homes Since 1993
Co-Author: "Get The Best Deal When Selling Your Home In Silicon Valley"
877 397-5391 (Direct/Toll-Free/Fax);   408 204-7673 (Cell)
www.DelightHomes.com     (PopeHandy.com)
emailto: Mary@PopeHandy.com
Blog: www.LiveInLosGatos.com & www.ValleyOfHeartsDelight.com

For more posts on short sales and bank owned properties in Los Gatos (and nearby) please see:
http://www.realtown.com/LiveInLosGatos/blog/short-sales-and-bank-owned-homes