The Monte Sereno real estate market tends to be a good indicator of the high end market throughout Siicon Valley or Santa Clara County. While it may not be exactly the same in Los Altos, Los Altos Hills, Almaden or Saratoga/Los Gatos, it’s often very similar.

Homes at the high end of the price range have taken a beating in the downturn, as would-be buyers - mostly “move up” home buyers - haven’t got enough equity to purchase the next home.  Many are running into problems getting financing too. So without a large amount of money to put down, it’s very difficult for even willing buyers to make the purchase.

Prices have been dropping in Monte Sereno, as they have been dropping everywhere in the San Jose area.  Although we aren’t seeing the deep discounting here that we see in Alum Rock (where most of the houses bought are distressed properties, either short sales or bank owned homes), the rollback in pricing is still painful for home sellers, especially if they were counting on that money for retirement.

Let’s first look at the recent historical data on list prices in Monte Sereno (graphs courtesy of Altos Research, with which I have a subscription). First here’s a view of the median list price of all houses offered for sale in Monte Sereno in recent years:

Now, the asking prices in Monte Sereno in recent years broken out by quartile (each segment is 25% of the inventory):

The highest priced homes have shown the most volatility, as you can see by the swings in the top line.  That could be a statistical abberation since each quartile represents very, very few homes.
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In Santa Clara County, as in much of California, we have adobe clay soil and it’s expansive.  That is, when the dirt gets wet, it expands, and when it dries out, it contracts. Hence it’s sometimes referred to as “shrink-swell” soils.  (Every state in the union has areas with this problem - a color-coded map on geology.com shows areas with more and less expansive soils.)

Why is this an issue for homeowners and would-be homeowners in Silicon Valley? 

The trouble is that the expanding and contracting soil is far stronger than concrete and the foundations upon which a home sits. A well written and illustrated six page paper can be found online explaining the mechanics involved for those interested in more detail on the hows and whys of expansive soils. (It states that the ground can life as much as 5,500 pounds per square inch!)

What I’d like to focus on here is mitigating the risks and preventing the problems associated with expansive soils. 

The trouble is not so much that the soil is wet or dry.  The problem is in the back and forth, the movement. When the soil is kept at an even amount of moisture, it does not expand and contract.

Obviously, rain is seasonal and we cannot control all moisture on or near the house. We can, though, work to move water away from the house and away from the foundation.

Winter storms can bring an enormous amount of water onto a home’s roof, and when it channels down gutters and downspouts, there can be a large amount of water exiting in just a few places.  Where does that water go?

In 95% of the homes I see in San Jose, Los Gatos and Saratoga, the water simply dumps out at the base of the downspout - right up against the home.  This is typical, but is unwise, as it causes the soils to become excessively damp in one spot.

Ideally, you want to move the water away from the house and foundation, at least by 6 feet or so.   Solutions can be expensive (underground and run all the way to the street) or can be very inexpensive (a plastic extender added to the end of the extra long downspout) as in the photo below.

Another main culprit is grading. Too often, a walk around the house in question reveals that the land is sloped toward the house rather than away from it.  When it rains, or when sprinklers run, the water in the yard will come careening toward the house - exactly what you do not want to happen.

Sometimes, it’s inevitable, as in the case with hillside construction. What to do? Specialists find a way to grade the soil closest to the home away from it and to intercept the hill-driven water before it gets close to the home.  Imagine making a tiny valley between the home and the hill, and the small culvert catching the water so it can be diverted. That’s essentially how it works.

High water table areas will require the help of specialists too, as these can cause water to bubble up under or near the home and again create havoc on the home’s stability.

If you’re a current homeowner or home seller in the Bay Area, have a walk around your property and see what’s happening with your downspouts.  In some (few) cases, the downspout may empty onto concrete that is sloped away from the structure, and it may be OK as is.  In many cases, though, that downspout just termitates at the base of the home and empties into soil or landscaping that’s waiting to absorb the moisture and expand.  A home inspector will “call” this.  Are your floors inside out of level? Are the hardwood floors cupped? These may be the result of water not being diverted away from the home - you’ll want to address this immediately, before it worsens.  Having this work done will also give homebuyers confidence that your property has been well maintained when and if you do go to sell it.

If you’re a current homebuyer in the area, watch for this detail. Does the home have downspouts and gutters? If not, you’ll want to add them and then the extenders. If the downspouts are like most I’ve seen and stop at the base of the home, pay particular attention to the concrete nearby, any exposed foundation (watching for cracks), floors inside (looking for “out of level” and if hardwood, any cupping).  Hopefully the floors are level and undamaged.  If undulating, though, you may need to speak with a structural engineer about solutions.

Today we’ll have a look at the Campbell real estate market. Sitting on the western side of Silicon Valley between downtown San Jose and Los Gatos, Campbell has small town charm with big city ammenities.  The schools are good, the crime is fairly low, and there’s a nice sense of community identity & participation. The downtown area is vital, but so are the shopping hubs outside of the historic zone.  The local parks are a big draw too.

Homes range from modest condos to historic properties and large, estate-like homes on big lots. Just about every type of residential architecture can be found here, with of course a preponderance of ranch style homes but also Eichler homes, Victorian houses, Craftsman style homes, Spanish or Mediterranean design, and Contemporary homes.

“How’s the market?” will elicit different answers by neighborhood, home type, school district, and price point.  We’ll separate out the “markets” by pricing quartile in this post.

First, an overview of listing activity among single family homes in Campbell (data from Altos Research, used by permission/subscription):

And now the same but for condominiums and townhomes:

Generally speaking, inventory is somewhere between flat and barely declining. List prices appear to be falling slightly among single family homes and rising slightly among condos (which are more likely to qualify for FHA loans and benefit from some of the first time homebuyer credits).  Nothing dramatic here, but the condo market may have already hit bottom while the market among single family homes is coasting there … almost there….

Visually, the median list price ”looks” like this when viewed over the course of the last year and both the conglomerates of single family homes and condos are shown (rather than broken down by price quartile):

These kinds of graphs and charts can be a little deceiving, though. The perception has a lot to do with which data you’re looking at. Below is JUST the combined “curve” for the median price of single family homes over the last 1 year.
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A newer “mixed use” neighborhood in San Jose, Santana Row is popular with people of all ages and interests.  It is not just a “shopping center”, but is really a community, one which offers a wide variety of dining, shopping and entertainment, suitable for all kinds of budgets too. Best of all, it’s right in the heart of Silicon Valley.

Dining at Santana Row varies from very formal and expensive to casual and snack-like, and the type of food available ranges widely too.  A fairly new addition is Pinkberry, which seems to be growing quickly in popularity.  There are about thirty cafes, bistros and restaurants and to date I’ve probably visited about one-third of them - all experiences positive.

Entertainment at SR goes beyond window shopping and includes live music and, of course, films at the movie theater. Many chose to simply peoplewatch, take in a good book or catch a game of chess with a friend while enjoying a beverage.  A Farmer’s Market features produce, flowers and other goods each week (and there’s a Safeway just a block or two away also) and is a good excuse to browse the offerings. Or maybe splurge a little and enjoy some pampering at a spa or salon: Santana Row’s got that, too.

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The tide is turning for Silicon Valley real estate: fewer listings are coming onto the market and more homes are being purchased by homebuyers anxious to get into a house before interest rates rise and the $8000 first time homebuyer’s credit expires.

The shift is most visible in areas with the most affordability, but even is more upscale, higher priced areas, it’s still a noticeable change.

Today I’ll share with you a series of graphs, by area, of single family homes in terms of new listings, current inventory, and pending sales (sales under contract).  These were created using our mls system (information deemed reliable but not guaranteed).

Here’s the “key” (since if I put it alongside each image it would not fit without making all of it unreadable):

Description of each graph is ABOVE the image.

Almaden Valley (95120 area of San Jose) - this is a more expensive part of Santa Clara County, but the market improvement is very clear. Cool market.

Blossom Valley (95123 and 95136 zip codes, an area of San Jose) - this is a very affordable part of Silicon Valley and has taken a huge hit on the “price rollback”.  But it’s getting better now - note the rise in sales, low number of new homes coming on the market and overall lessening of inventory. Number of pendings is almost the same as the total inventory. Hot market.

Cambrian Park (95124 & 95118 area of San Jose) - trends among listings, inventory, and sales for single family homes. The trend of less inventory and more sales is quite evident. Warm market overall - very hot under $500,000, cool in higher price ranges. (But hot only if prices are deeply reduced.)

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If you’re a Silicon Valley homeowner, you will sometimes need to replace elements of your home, such as the roof or water heater, or do repairs or remodeling to keep the home functional, comfortable, and efficient. Kitchens and bathrooms need to be updated from time to time, and sometimes remodeled. These repairs and remodeling projects often (if not always) require permits and finals.

Will you apply and pay for the required permits and finals?

What difference does it make if you do or do not get them?

Will it matter when you sell your home?

If you’re a Silicon Valley homebuyer, the whole idea of buying a home without all the necessary permits is a bit spooky.  My buyer clients often hear or read something like “garage conversion done - permits unknown” or “kitchen remodel done by contractor but without permits”.  They worry about the consequences of buying homes with non-permitted work, so let’s talk about the issues involved.
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If you are a first time homebuyer looking to purchase a house in the Cambrian Park area of San Jose, I encourage you to consider moving on this plan sooner rather than later.  Home prices have stopped sinking and appear to be moving within a range of about 10%, which can easily be attributed to precise location, condition, or situation of the home sale. Meanwhile, interest rates are inching up, making homes less affordable than they were a few weeks ago.

Some of the bank owned homes in this part of San Jose are priced at fire sale prices.  Because of the affordability, they are getting a lot of attention from buyers, and I’m hearing more stories of multiple offers with the prices getting bid up from the list price.  This is not just happening in Cambrian, but all over San Jose where the prices are amazingly affordable for first-time homebuyers.  The availability of FHA backed financing and the $8,000 tax credit are incentivizing people to buy San Jose real estate priced at under $729,000. Investors are also getting in on the cleanup of low-priced homes and “all cash offers” are not unheard of.

Here are the basic real esate sales statistics (and trends) in Cambrian Park:

The lowest median price in recent months was in February, which of course reflects sales that happened in January.  This may well be a “seasonal fluctuation”. Homes are often cheapest in the dead of winter, and interest rates are often lowest then too, but selection is extremely limited.

For more information on Cambrian Park real estate sales and market trends, please see my online Real Estate Report for Cambrian.  You may view the last five years’ worth of closed data, or see it quarterly or annually. Or plug in your own address or that of a home that interests you in the “property analysis” tab and check out the recent listings, current homes for sale, pendings and solds in the immediate area.