Mary Pope-Handy

Silicon Valley Realtor, selling homes in Los Gatos, Saratoga, San Jose, and nearby since 1993. Prolific blogger with a network of site.

View from a high rise in downtown San Jose, looking east - Autumn 2011San Jose is the biggest city in Silicon Valley (and considers itself to be the Capital of Silicon Valley), is the tenth largest city in the United States of America with over 1 million in population, and it has a very large footprint – approximately 180 square miles. Because of the size, it isn’t surprising that many distinct neighborhoods exist within the city. In my blog you can find descriptions and outlines of these districts or neighborhoods. You can also find market analysis dedicated to different regions of San Jose. Because the areas are so different, the market in separate sectors of the city can change dramatically from one area to the next. If you are looking for a home in Silicon Valley, it is best to consider San Jose by its neighborhoods rather than as a whole to understand the market. Nonetheless, looking at the big picture can often give you a general taste for the market. Currently, it’s a steady sellers market.

Below you will find the Altos Research Charts, a live feed of data on the markets in San Jose. You will also find the RE Report, charts with statistics comparing sales in the last month and comparing them month-over-month and year-over-year. These are both the usual tools I use to gauge a market. Directly below are links to the market analysis of specific neighborhoods in San Jose. Some of these, where I work the most, are updated monthly, and others are updated every few months.

Altos Charts for San Jose as a Whole – automatically updated each week – single family homes

First, the basic charts for single family homes or houses. FYI, Altos uses LIST prices. The RE Report further down uses SOLD prices (which is part of the reason why I utilize both).

List prices of single family homes / houses by price quartile:

Real Estate Market Chart by Altos Research www.altosresearch.com

Average days on market of listed homes (houses) by pricing tier:

Real Estate Market Chart by Altos Research www.altosresearch.com

Inventory levels for the last 3 years for houses for sale in San Jose:

Real Estate Market Chart by Altos Research www.altosresearch.com

 

Altos Research charts for the condomium and townhouse market in San Jose – automatically updated each week

Condominium and townhouse LIST prices by quartile: Continue reading

Morgan Hill land along the Uvas RiverHow’s the real estate market in Morgan Hill? This article will include data, trends and statistics for both houses and condominiums / townhouses.

For the single family home segment in this “south county” town, prices are mostly consistent year over year and month over month. The sale price to list price ratio has been hovering between 98% and 100% for months. The cities of Morgan Hill and Gilroy are usually a bit less in demand than parts of Santa Clara County which are either tech magnets or closer to these big businesses. So while most of the Silicon Valley has a sale price to list price ratio of anywhere from 100% to 110%, it’s generally lower here, making the home buying conditions calmer for weary buyers, though still a sellers market. Below is a chart with basic info, but to see more information, you may click on this link to see the Real Estate Report for Morgan Hill.

Continue reading

Hiring a Realtor? Silicon Valley home sellers are very savvy and go at their real estate transactions carefully. However, some may be tempted to try to line all the criteria up in side by side charts and attempt to make a hiring decion that way. Please beware the temptation of focusing on what is “easily measurable” as most important. Sometimes the most easily measurable factors may not be that important at all. Much of what is truly valuable in a Realtor’s suite of services and skills cannot be easily measured in a side-by-side comparison chart.

Silicon Valley home buyers are sometimes confused about the difference between a home inspection and a home appraisal.  Are they one and the same? Not even close!

magnifierA property or home inspection is done to determine if the major components of a house, townhouse, condo, etc. are all working and in satisfactory condition, and to point out defects and problems so that they may be addressed by the current or future owner.  The property inspector will make a visual inspection of things like the foundation (is it cracked, is it bolted?), are there any issues in the crawlspace (moisture, ponding water, cellulose debris), the attic (is there evidence of vermin? are electrical junctions all in boxes? is there enough insulation?) as well as the furnace, water heater, etc.  The inspector may check to see if the water flow is good in the home and at the water main.   These are all things that the appraiser does not do. (There are other possible inspections, too, besides just the home inspection, such as chimney, roof, HVAC, pool, foundation, etc.)

Typical Cambrian Gardens Floorplan: 3 bed, 2 bath, about 1250 SF (San Jose neighborhood)An appraisal is a formal statement of value by a licensed appraiser.  The appraiser measures the size of the home to establish the square footage.  The appraiser does not check to see if the furnace works! However, if the roof is very old, if the home needs substantial remodeling, that will impact the assigned value.  The appraisal is used by the lender to determine how much the bank should be lending on.  Often, that’s the same amount as the purchase price.  But sometimes not!

What happens if the appraisal is lower than the purchase price of a home?

A buyer with 20% down payment is in contract to purchase a Cambrian house for $1,400,000.   The expectation is that the bank will fund a loan for 80% of purchase price, or $1,120,000.  If the appraiser finds the value to be only $1,350,000, the loan will be 80% of that number – not the purchase price. In that case, the mortgage would be at $1,080,000. Note: most people think that the buyer will be “making up” the full $50,000 shortfall, but that’s not the case.  The amount to make up is $40,000, not $50,000 because it’s the percentage of the gap, not the whole thing.

If you happen to be buying residential real estate “all cash”, you will not be required to have or pay for an appraisal.  You are also never required to have inspections, but unless a seller is providing excellent pre-sale inspections, it would be a huge and possibly costly mistake to skip having them.

Related reading:

Home buying: home inspection (on the popehandy.com site)
Home selling: pre-sale home inspections (also on popehandy.com)

 

 

Sketch of houseIt can be really challenging for people moving to Silicon Valley to get a sense of real estate prices, and perhaps more, to compare housing costs from one town or district to another.

One question I get a lot is this: what does it cost to buy a 4 bedroom, 2 bath house of about 2000 square feet?

So to answer this question, let’s see what houses like this are selling for (4 bed, 2 bath, appx 2000 SF or 185 square meters) and see how the cost looks in one Santa Clara Count y / Silicon Valley area versus another.

Today I compared several areas and cities using this criteria: single family homes of 1800 – 2200 SF, 3-5 bedrooms, 2-3 bathrooms, on lot sizes of 6000 SF to 10,000 SF. Normally I would chart this over the last 2 months, or 60 days, but because of the low inventory causing the sellers market I have expanded the search to the last 4 months, or 120 days, for a better range. As of this writing, Los Altos only had one sale over the last 120 days, so data for that segment spans from 0 to 180 days back, or 6 months, and in that half a year we have merely 3 sold.

Here’s how it shakes out in the “west valley areas” along the Highway 85 corridor, most of which are known to have good to great public schools. What areas are most affordable? One way of analyzing this is the “price per square foot” figure. Whenever I update the chart, I re-arrange the order of the cities from high to low based on the price per square foot, although there’s usually minimal movement.

Below are my results from the same search back in September 18, 2015. By comparisson, you can tell that Santa Clara’s average Price has increased, pushing it above Almaden and Campbell.

How competitive is the market? Have a look at the DOM or “Days on Market” figure. All of these days on market are short, but they range from low to heart-skippingly fast.

In most cases, the priciest and most desirable places have either the best schools or shortest commute location or both (Palo Alto and Cupertino have both). Had I ranked these for school scores, you’d find that Cambrian is fairly high up and a good “bang for the buck” location – though not a super short commute for folks who work in Mountain View (though not so bad for people working in Cupertino).  Almaden, too, offers a good value for the quality of the schools, homes, and neighborhoods, though the commute is longer. None of these is especially close to North San Jose (where a major employer is Cisco).

It should also be noted that in some of the smaller communities with less on the market these numbers may not be as stable as others with more data – for instance, Saratoga only had four homes sold matching this criteria within the 120 days of collected data, and therefore may not be as accurate as others, such as the Blossom Valley area of San Jose with the most data at 35 homes sold. For these smaller communities with less data, it is beneficial to look at them more closely – Saratoga, for instance, has 3 different high school districts which have an impact the real estate prices.  This chart is really just a snapshot to give a general sense of the relative affordability of these markets to one another. Continue reading

Silver Leaf Park in the Santa Teresa area of San Jose - the proximity of parks will impact the Santa Teresa real estate market for that neighborhood

Silver Leaf Park in the Santa Teresa area of San Jose

How’s the market in the scenic Santa Teresa area of San Jose? The part of Silicon Valley is usually a bit “softer” as it’s farther from most work places and the school scores are generally not super strong, either. The Santa Teresa real estate market, like most of Santa Clara County, has been flattening after a multi year surge in values. The average Days on Market are low at a mere 18 days. The sales to list price ratio has risen to 100.8%. This shows that this seller’s market has heated up since last month.

Here’s quick view of the real estate statistic and trends for just the Santa Teresa area’s single family homes (houses / duet homes):

Santa Teresa real estate market stats & trends

You can read the Santa Teresa area real estate market report at this link if you’d like more details and statistical analysis. This particular page goes to the report for houses, but you can navigate home type to see condos/townhomes or any other area in San Jose, Santa Clara County, San Mateo County, or Santa Cruz County.

 Also, please note that zip codes don’t always relate to the districts. Zip code 95138 is a great example of that as part of it is in Santa Teresa and part in Evergreen (pricey and upscale Silver Creek). Pull up the averages for 95138 and you might think all the homes are selling for around $1.4 million. But if you look in the charming but more affordable Silver Leaf area of the same zip code, you’ll find the cost half as much – or less! So too with 95123 (though less dramatic) as about half of that is in Blossom Valley and part in Santa Teresa.
It’s good to do a lot of research, but beware the “easy answers” of price per square foot or average sales price per zip code. Often your best help will come from a highly experienced real estate professional who’s willing to help you to crunch the numbers for the Santa Teresa real estate market (boring grunt work but not actually difficult).
And don’t forget the condo market! This can be even more difficult to pin down because of the small amount of data and the wide variety of values. Here’s a quick look at the current Santa Teresa condo market from the RE Report data:

As you can see in the chart above, the condo portion of the Santa Teresa real estate market is also doing well. It is no longer hotter than the single family housing market, it has shown some cooling with properties taking just 35 days to sell at 101.7% of list price. In today’s condo market many areas are competing with the housing market and are much hotter than usual.

Disclaimers made, here are some Altos Research numbers for the four Santa Teresa zip codes:

Real Estate Market Chart by Altos Research www.altosresearch.com

You’ll note that one of the four zips is super high – this is 95138, which has a number of homes in The Ranch, a subdivision in Evergreen near Silver Creek. The part of 95138 which is in Santa Teresa is considerably more affordable, well under $1 million in the vast majority of cases. So let’s take that one out so we can get a better feel for the true pricing of Santa Teresa homes.

Real Estate Market Chart by Altos Research www.altosresearch.com

Here two of the zip codes seem to be on track with each other, but 95123 is going at a different pace. Half of that area is Blossom Valley, which tends to be a stronger market. Regardless, it would seem that overall, the median list price of homes for sale in Santa Teresa has gone from the mid 700 thousands to the mid 800 thousands over the last year. And that’s about what I have seen, anecdotally, too.

Santa Teresa homes for sale

Interested in buying a house, townhouse or condominium in the Santa Teresa area? Below, please check out a list of available properties, listed in order of most recently added to the MLS first. Or better yet, call or email me to discuss working together!

 

  1. 4 beds, 2 full, 1 half baths
    Home size: 1,941 sq ft
    Lot size: 6,054 sqft
  2. 3 beds, 2 full baths
    Home size: 1,516 sq ft
    Lot size: 6,011 sqft
  3. 2 beds, 2 full baths
    Home size: 1,257 sq ft
    Lot size: 1,263 sqft
  4. 3 beds, 2 full, 2 half baths
    Home size: 2,112 sq ft
  5. 3 beds, 3 full, 1 half baths
    Home size: 1,531 sq ft

See all Real estate in the Santa Teresa community.
(all data current as of 3/22/2017)

Listing information deemed reliable but not guaranteed. Read full disclaimer.

 

Los Gatos High - Silicon Valley home prices by high school districtBelow, please find the charts indicating Silicon Valley home prices by high school district for transactions closed in December 2016 for condos and townhomes first, and later also for single family homes.  The vast majority of Silicon Valley is found within Santa Clara County and San Mateo County, with small portions also in Santa Cruz County and Alameda County.  Alameda County is not part of the local MLS, so unfortunately I don’t have that data to share.  The data presented here is courtesy of my brokerage, Sereno Group.

Silicon Valley home prices by high school district: a few words of caution

If you only glance at the median sale price, you may be confused about the most expensive Silicon Valley places in which to live for the condominium or townhouse buyer.  For instance, in Santa Clara County, the Los Gatos-Saratoga Joint Union High School District has a median sale price of $1,4 85,000.  At first view, this seems to be the most expensive part of the county.  But please note that the average square footage is 1910.  Now look at Palo Alto Unified, with a median sale price of $1,260,000 – but an average square footage of just 1313.    The price per square foot, though, correctly pegs the pain value of home buying in Silicon Valley as PA Unified comes in at a whopping $1,014 per square foot.  (More disclaimers: large homes sell for much less than smaller ones on a price per sf basis, so this is more helpful when the average square footage is similar.)

Also, please note that the high school district boundaries do not neatly follow those of city, town, zip code, or any other boundary. It’s sloppy at best.  Campbell Union High School District covers not only Campbell, but parts of San Jose, Los Gatos, Saratoga, and Monte Sereno.   The Los Gatos-Saratoga Joint Union High School District encompasses parts of Los Gatos, Saratoga, Monte Sereno, the Los Gatos Mountains and even a sliver of the Almaden Valley in San Jose.

Condos and townhomes – prices by high school district

San Mateo County and Santa Clara County home prices by high school distirct

San Mateo County and Santa Clara County home prices by high school distirct

Santa Cruz County has some Silicon Valley jobs and a strong number of residents who work in tech on the other side of “the hill”. Studying these home values, you can imagine why some locals are willing to commute across the Santa Cruz Mountains. It is much more affordable.

Santa Cruz County home prices by high school district

Santa Cruz County home prices by high school district

Next, the same data but for single family  homes .

Single family homes pricing by high school district in San Mateo County and Santa Clara County

Single family homes pricing by high school district in San Mateo County and Santa Clara County

 Santa Cruz County single family home prices by high school district

Santa Cruz County single family home prices by high school district

Interested in buying or selling anywhere in these counties?  Please call or email me today!

 

Related reading:
Cambrian Months of Inventory (by elementary school district)
Saratoga, CA real estate market update (with info by price point and high school district)
Los Gatos real estate market trends by price point and high school district (on the Live in Los Gatos blog)
Learn more about what homes cost in Silicon Valley on the Move2SiliconValley blog

How's The MarketInterested in buying a rental property?  Perhaps you were thinking that a 20% rental property down payment would do the trick to get you started as a real estate investor?  That may work in some places. In most of the U.S., though, you’ll need 30% down to be “cash flow neutral”, meaning that you aren’t losing money each month.  In pricey Silicon Valley, though, often it takes more than a 40% down payment on an investment property just to break even.

Today a friend and past client asked me exactly this question.  The investment property in mind, a townhouse,  would pull in a monthly rent of about $2600 to $2800 when occupied. (Remember, you have to also factor in at least some vacancy rate.)  The list price for this townhouse is about $650,000. (Side note:  with a condo or townhouse,  insurance coverage is probably going to be a lot less costly than with a single family home.  The estimates below are for a townhome.)

Where do you think the cash flow neutral or break even point would be in terms of the down payment?    That question is today’s case study.  Have a look at the various scenarios of  20% down, 30% down,40% down and 50% down:

Investment property down payment needed to be cash flow neutral

If my calculations are correct, you really need to put about 50% down to buy this particular Santa Clara County townhome and have it support itself.

Is that a good deal?  Not really. At least not if your main focus is cash flow.

There are other places in the country where you can put a lot less down and break even or have a positive cash flow.

Of course, cash flow is one motivator.  Another, though, is appreciation.  Depending on your own goals, you may be far more interested in appreciation than cash flow.  If that’s the case,  Silicon Valley may be exactly what  you’re looking for as an investment buyer.  Those places where the down payment can be smaller may not have the same upside potential with appreciation as we have here in the San Jose area, or the San Francisco Bay Area as a whole.

Interested in becoming a real estate investor? Have a good down payment saved?  Please call or email me and we can chat.  If Silicon Valley isn’t the right place for you to make your real estate investment, I can introduce you to wonderful Realtors in other areas where the numbers may be more favorable.

 

See also: Buy a Los Gatos home or real estate investment property

Cambrian Park Plaza SignThe months of inventory for any part of the real estate market can vary, depending on many factors, including age of home, house size, lot size, and school district, whether or not there’s a pool, and many other things. It can be very useful to understand this metric when selling a Silicon Valley home. I’ve done market numbers crunching tied to the specific characteristics of a property (say, small yard with pool or big yard with no pool) to find the impact of those characteristics on the probability that a home will sell – or how fast.

The Cambrian area of San Jose is a very “hot market” overall, but it can be confusing to know how hot it really is, just like the rest of Santa Clara County, because there are multiple school districts – and schools are probably the number one driver of home values in this highly educated valley.

An explanation of “months of inventory”

What does “months of inventory” mean? This figure references how long it would take to sell a property if homes continued to sell and close at the current pace with no new inventory coming on the market. A good analogy is to consider a bathtub which drains. If you add no new water to the tub, how long will it take to empty out?

The months of inventory is sometimes called the absorption rate. The question is simple: how long will it take for the current inventory of homes for sale to get absorbed by the home buyers purchasing them? It doesn’t have to be calculated by months. It could be in days, weeks, or years. But months is probably most common.

The Cambrian area of San Jose’s months of inventory as a whole, and in one price point

Cambrian was once an enormous zone of the Santa Clara Valley. Today we mostly think of it as within San Jose in the 95124 and 95118 zip codes. Some of it it adjacent to Campbell – a very tiny sliver is IN Campbell, and a tinier still area is in San Jose and is under the Campbell School Union District. Most of this area is in one of three elementary school districts: Cambrian, Union, or San Jose Unified.

Here’s the breakdown – first, for ALL of Cambrian (MLS area 14 for my Realtor readers) that’s within the City of San Jose and second, by elementary school district. The area for Campbell Elementary is so small that the numbers are not significant (no offense to the Campbell school residents). It can just jump around too much to be helpful, and often gives us no usable data. Please have a look:

I highlighted the San Jose Unified and Union Elementary School Districts in both charts. Aside from Campbell, which has numbers too small to register a MOI, these are the hottest tickets in the district.

The message I’d like to convey is this: you can read about information for your part of Silicon Valley, or your city or zip code, but it’s not until you drill things down to an area that closely matches your own home will you have a better sense of your own home’s “real estate marker.” It’s never “how is the market?” so much as “how’s the market for YOUR home – or the one you want to buy?”

If you were only tracking Cambrian, you might see 0.2 months of inventory. That’s a lightning fast seller’s market. But it’s not nearly as good if you’re selling in the area with Cambrian Elementary Schools. There, you’re looking at closer to 1 month of inventory for homes around $1 million, while the same price point with Union Schools is a blazing 0.2 of a month, or about 6 days – as opposed to 30!

Years ago, I had a Willow Glen listing where the whole back yard was the pool. I did a study on the months of inventory and learned that pools in properties with that lot size took substantially more time to be absorbed. Likewise, I had a Los Gatos estate property on an acre of land, and the reverse was also true: the months of inventory showed that large lots on $2 million and up homes for sale did not sell nearly as well without a pool.

The math is simple: using the same criteria, divide the number of active listings by those of homes sold in the last 30 days. The criteria can be anything you like – a property’s size, location, number of bathrooms, price, age, etc. Often I include approximately the same home and lot size together with the school district. That usually provides much more accurate info on “how’s the market” as compared to just getting it by zip code alone.

If you are looking to buy or sell a home in Cambrian, or anywhere in San Jose or Santa Clara County, this kind of information is really important. It is not hard to do, but very few real estate agents will provide this information before you list or before you make the final determination on the list price of your home.

Looking for a good Silicon Valley Realtor who will get you that extra data? Please call or email me. I would love to chat to see about possibly working together.

Buying a home in Silicon Valley is seldom easy, but right now, it’s nearly impossible with Santa Clara County’s critically low housing inventory.  With rising interest rates getting folks off the fence and strong job growth in the San Jose area, there are many more home buyers than home sellers.   While this isn’t unusual, the severity of the problem certainly is extreme.    How bad is it?  Here’s a visual cue dating from January 2003 to December 2016 which indicates that last month’s inventory of single family homes for sale in Santa Clara County is the lowest we’ve had since January 2003 (that’s how far back MLSListings.com shows them).  Perhaps much longer.

 

2017-1-3 Inventory of Single Family Homes in Santa Clara County

It’s all about supply and demand.  Look at the shortage of supply!   Below is an alternate presentation of the same information but as a spread sheet format. I like this better because you can skim all of any particular month, such as December, and see how the most recent one compares to the same month in prior years.  December 2016 had just 515 houses and duet homes on the market.  The year before it was 834, which is historically low, but not nearly as dire as the current numbers. Santa Clara County’s critically low housing inventory is at historic lows!

 Santa Clara County's critically low housing inventory

Santa Clara County’s critically low housing inventory

 

This is precisely why it is so hard to buy a home in San Jose, Los Gatos, Campbell, Saratoga, or anywhere in Silicon Valley today.  Has it improved since the inventory was measured by the MLS?  No, it hasn’t.  It was 452 as of January 1st and 450 today, on the 3rd!!  This is sort of like “inventory limbo” – how low can you go?

How does this impact you?

Many long time residents may recall that we have had a shortage for a few years here.  In January 2012, I wrote about it here: Why is it so hard to buy Silicon Valley real estate right now?  Compared to the recession that had just ended, inventory was low – I can look back now and think “wow, we had no right to complain!  We had a lot more inventory then as we do now!”  What also happened is that with the restricted inventory, home prices rose.  A lot.

If you are a renter and want to be a home buyer, you  now have two things going against you: rising interest rates and rising home prices (due to strong demand and critically low supply of homes to buy).  If you wait a year, there’s a good chance that you will lose quite a lot of buying power as interest rates continue to go up and home prices do, too.   Please check out my article on rates: How will rising interest rates impact your home buying power?  Super low inventories tend to cause rapid price appreciation, and if you aren’t careful you could be priced out of the market (either because of home prices or because of those rising interest rates).

Take heart, home buyers, often the supply of homes for sale does go lower in January before rising again in either late January or early February.  So buyers, hang on!

If you are a seller, this is great news for you as it’s very likely that your equity will be increasing with the tight inventory.  Buyer demand is good and interest rates are still very tolerable.  Don’t wait until interest rates rise to the point where it impacts home prices due to affordability.   At some point, we will hit that tipping point, and that’s when the all cash buyers really win.

Translation

by Transposh - translation plugin for wordpress
Mary Pope-Handy
Realtor
ABR, CIPS, CRS, SRES
Sereno Group Real Estate
214 Los Gatos-Saratoga Rd
Los Gatos, CA 95030
408 204-7673
Mary (at) PopeHandy.com
License# 01153805


Selling homes in
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Santa Clara County,
San Mateo County, and
Santa Cruz County.
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Special focus on:
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Saratoga, Campbell,
Almaden Valley,
Cambrian Park.
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Valley Of Hearts Delight
Santa Clara County Real Estate,
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Move2SiliconValley.com
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Silicon Valley Real Estate Report
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2016: Personal Income's list of top 25 real estate blogs.


Best Realtor blog award
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The 2009 Sellsius list of top 12 women real estate bloggers
2009: Sellsius list of top
12 women real estate bloggers


Mary Pope-Handy's Live in Los Gatos blog won the 2007 Project Blogger contest, sponsored by Inman News and Active Rain

2007: Mary Pope-Handy and Frances Flynn Thorsen win the Project Blogger Contest for Mary's Live in Los Gatos blog. The contest was sponsored by
Active Rain and Inman News.


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Best real estate agent in Silicon Valley from the San Jose Mercury News poll of readers in 2011
"Best real estate agent
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San Jose Mercury News

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