High end homes in Los Gatos are not selling so far this year. In the last month only two homes over $3,000,000 closed escrow. So far this year there have only been four homes over $3,000,000 sold and only ten over $2,000,000. The middle of the local market has been fairly consistent for the past several months with sales from $1,000,000 to $2,000,000 making up the bulk of the sales.

 

Financing is the main culprit in curtailing high end sales as there are very few sources for jumbo loans. Right now you either need to have the cash or a very good relationship with your lender as there is no secondary market for selling jumbo loans. If you can prove to the banks that you really don’t need the money they will make you a loan.

 

It used to be that there were several savings and loans that specialized in high balance loans. They liked them because the interest rate was 1% higher than a conforming loan and they normally got 1 point more in fees so their yield was really 1 1/8^th more. When the lenders went nuts and started doing all of the “stated income” loans they also had higher yields. Unfortunately, those loans are part of what caused the financial crash which took down a lot of the S & L’s who were making our jumbo loans a few years ago.

 

Another factor that hurts the upper end is that there are not a lot of move-up buyers right now. Since many of the people in the middle range of the market are facing a loss in equity few of them are willing to take on a larger property. Most of the high end properties which sell are purchased by folks who put 30-40% down from the sale of another property.

 

The good news is that high end properties are selling up the peninsula. Menlo Park and Palo Alto have both seen recent surges in sales. When that happens, Los Gatos and Saratoga usually follow with an increase in sales a few months later. 

 

We may have another sale of two of high end properties that were not reported. A couple of more expensive properties were canceled from the MLS when they actually were sold because the owners did not want to disclose what the final sales price was. These missing sales skew the market statistics. Local appraisers and agents know of the sales, however, having them off of the MLS lowers both the median and average sales price. That is why the MLS fines agents for not reporting these sales.

 

 

If I can show you how to have an easier, smoother transaction, would you work with me?

 

Chris Morris

Broker Associate

Alain Pinel Realtors

408.357.8783 direct

Brokers License 00780130