How long does it take to buy a home in Silicon Valley?  There are really two questions within that one: first, how much time will be required before you’re ready to choose a home to purchase (or how many homes will you need to see), and then how much time is involved in getting the transaction closed.

Prior to this housing crisis, the national average used to be seeing fewer than 10 homes in order to make a decision.  The number of homes now visited (and the time) has been rising, though.  According to the California Association of Realtors, “On average, home buyers spent 8.4 weeks considering buying a home in 2009, compared with 7.2 weeks in 2008. Buyers spent an average of 10.3 weeks searching for a home with their REALTOR®, compared with 8.7 weeks in 2008.”

Often my clients need to see between 10 and 20 homes before they feel like they know the market and the choices well enough to select a home they want to write an offer on.  Depending on how broad of an area they’re considering, and how much of a hurry they’re in, this varies from couple of weeks or less – or a couple of years!  Clients relocating to the San Jose area often want to settle in.  If they’ve owned homes before, they may have a perfect idea of what will and won’t work for them.  Once I sold a Los Gatos house to a couple before the wife ever saw the property!  They moved every couple of years, the husband knew his wife’s requirements perfectly and they had no trouble being expedient. 
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How many of the Silicon Valley homes for sale are listed as short sales? How many are bank owned properties? This morning I did some time pulling the numbers out for my readers so that you can see the actual real estate figures.

What’s being counted below are homes for sale, including houses, duet homes, condominiums and townhouses (or townhomes) in the various areas of Santa Clara County listed below.

As was the case a year or two ago, most of the short sale activity is taking place in the most affordable price ranges. The higher priced areas are not immune, though – but because there are fewer distressed properties to choose from, they get purchased rather quickly, so we’d see a higher percentage of them among the pending sales rather than the available listings.

Today I did a post on this subject focusing specifically on the Los Gatos real estate market in terms of short sales today vs the last couple of years (and the question of whether or not the trend is to rising numbers of short sales available). To learn more, visit the article on my Live in Los Gatos blog.

For bargain hunting buyers of high end properties, then, it’s slim pickings!  In the entry level areas, there’s much more selection but also lots of competition.  Last week I was involved with some buyers in a bidding frenzy in a terribly underpriced Cambrian short sale: it got 43 offers!  (So please remember that the list price may be completely unrelated to the sales price.)

If you’re looking to buy or sell a home in Silicon Valley, it helps to have the assistance of a Realtor with a pulse on the market.  Please contact me for a confidential & no-obligation meeting today!

With the massive housing correction, we saw a rise in real estate inventory which has now begun to subside, and we saw a wave of short sales and bank owned properties begin to roll through Santa Clara County.  In the “West Valley” communities of Los Gatos, Saratoga, Campbell and Cambrian Park, we have seen the impact of this to varying degrees.

Today I pulled the numbers for these four areas of Silicon Valley to see this history of inventory and pending sales over the last six years to get a year-over-year view of the market.  (Status 1 = homes available, Status 2 = homes under contract with a seller’s contingency, they might be available, Status 3 = sale pending with normal contingencies on the buyer’s side for inspections, financing, and/or appraisal, and Status 4 = all contingencies have been removed.)

What do these numbers reveal to us?
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If you’re interested in buying (or for that matter, selling) a Los Gatos short sale, please visit my Live in Los Gatos blog, where yesterday I wrote about this subset of the real estate market. Topics covered include:

• the current number of short sale listings on the market in Los Gatos
• the current number of pending solds (of short sales)
• the number of short sales which have closed escrow in the last month
• the “absorption rate” or “months of inventory” in the short sale market in LG
• a study of short sales listed between 1-1-09 and 6-30-09: how many of them actually sold & closed in the last year? how many are on the market still? how many are “off market” and off the radar?
• how long does it take to sell a short sale in Los Gatos?
• how long does it take to close escrow on a LG short sale?

Here’s the article & link:
Los Gatos Short Sales: Snapshot of Today’s Activity

Beautiful Willow Glen is one of San Jose’s many districts, but it once was a separate town until less than a hundred years ago, when the need for a better sewage system nudged the townfolk to vote in favor of annexation to San Jose.  It maintains a strong & independent identity.

To speak of “the Willow Glen real estate market” is to try to include divergent neighborhoods, school districts, architecture, price points and locations. Below please find a general overview of the market for Willow Glen houses & duet homes as of March 20, 2010. (Numbers from MLSListings.com, crunched by Mary Pope-Handy. Homes listed as “sold” were closed within the last 30 days – as of today.)

The months of inventory indicates that it is a seller’s market in Willow Glen (less than 6 months is the tipping point) overall.  Please note that there’s some variation, though, from one school district to the next.  You’ll also find variation between price points, whether or not the home is distressed, etc.

Schools:  most of Willow Glen belongs to the San Jose Unified School District.  A small section of Willow Glen is a part of the Campbell Union High School District.  (CUHSD has pretty good schools so this area is often prized for that reason.) And a tiny little sliver actually belongs to the East Side Union High School District – very few homes fall into this section so it’s not addressed specifically.

Areas: Willow Glen has many neighborhoods within it, ranging from Palm Haven and north Willow Glen to the Birdlands and the Willows at another and many others inbetween.  There are some areas more prized than others, of course.  Being close to the downtown area (and away from freeways, for instance) can dramatically increase the sales price and marketability of the home.   Certain neighborhoods have more charming architecture, larger trees along the street, wider roads or other plusses that drive their value up.

Price points and selling conditions:  In addition to these factors, we also must consider the price point of the home as well as whether a home is being sold without undue pressure or if it is a distressed sale, that is, a bank owned or short sale.  Regular sales usually sell for more (and buyers know that normally they will be given both disclosures and presale inspections prior to drafting their purchase offer).

In most of Silicon Valley, the “hottest” segment of the market is the most affordable.  For a closer look at this subset of the San Jose real estate market, I have broken it down into major groups, the first one being homes priced below $729,000 (which is close to the “conforming jumbo” loan cutoff).  Below, please notice that there is a significant difference between the months of inventory from one school district to the next as well as one sale type to the next.  In Willow Glen right now, the sweet spot of the market are homes priced under $729,000 and located in the Campbell Union High School District (not San Jose Unified). 

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No, sorry, there aren’t a lot of distressed homes for sale in the Saratoga and Los Gatos areas.  Would be bargain hunters email me regularly, hoping to find lots and lots of short sales and bank owned (REO – real estate owned by the bank) houses for sale in high end west valley neighborhoods.

There just aren’t many of them!

As of today, in Los Gatos (95030 and 95032 zip codes) and Saratoga (95070) , there are 185 single family homes (houses, perhaps a few “duet homes”) for sale.  Of the 185, a mere 14 of them are distressed properties (6 bank owned, 8 short sale).  That is just 7.5%!  For those who want Los Gatos or Saratoga Schools (not Campbell, Union, or Cupertino), the odds are even worse.  Only two of those homes go to the Los Gatos-Saratoga High School District. (Prices of all distressed properties currently available in these areas range from $699,000 to about $3 million.)

There are some good deals to be found in addition to this very small pool of bank owned properties and short sale listings in Saratoga and Los Gatos.  Often the best deals are found among homes which have been on the market a long time but aren’t selling due to cosmetic issues.  Homes which need changes such as fresh carpet, paint, or “easy” updating and remodeling (like new countertops, light fixtures, etc.) can be the best bargains around, particularly if the seller is truly motivated.  So don’t lose heart – just broaden your strategy a little and you’ll be far more able to locate a suitable home.

In some parts of Santa Clara County, a very significant percentage of homes for sale and homes under contract (pending sale) are “short sale” listings.  This is particularly true in entry level areas like San Jose’s Alum Rock area, the Blossom Valley district, the Santa Teresa area, etc.  These homes can be hard to sell and even harder to close – but why? They are usually well priced so should just fly off the market, but often that isn’t the case.

The trouble with short sales is that there are a lot of people involved, so there are a lot more places for things to go wrong. Unfortunately, they often do go wrong. I believe the national average is that about 20% of short sales that sell (go pending) actually close.   Think of it like hurdles:

• The first hurdle is getting a buyer to write an offer (despite the significant risk that the sale will never close)
• The second hurdle is getting the seller to accept the offer (and the seller’s agent to agree that it is viable)
• The third hurdle is in having the lender or lenders approve the purchase agreement – it is MUCH easier if there’s only one lender, very difficult if there are two lenders and extraordinarily hard if there are three lenders. Sometimes lenders would rather foreclose than work with a short sale, especially if there’s more than one loan.
• The fourth hurdle is the seller approving the lender’s terms, which may or may not be easy to swallow (some lenders require that a seller promise to pay back some of the money over time or upfront).  Sellers reserve the right to refuse the terms.
• The fifth hurdle is the agents (and possibly buyers) approving any concessions the bank requests. Sometimes the bank will require a commission cut. Agents may or may not be willing to accept what the bank requests. (Imagine having your income suddently cut by 1/3 or 1/2. You might say no too.) Buyers may be informed that the bank requires them to pay more costs too.
• The last hurdle is keeping the buyers in escrow during the prolonged period between when the seller accepts the offer and when the seller accepts the bank’s terms.  Sometimes unscrupulous buyers will write offers on several short sales and then wait to see which one is accepted first – and bail on the others. This causes a great deal of harm to the seller, who may have been nudged closer to foreclosure.  On the other hand, though, with only a 20% chance of success, buyers wonder why they shouldn’t take this approach just to hedge their bets.

I’ve seen all of the above happen in my Silicon Valley real estate practice: buyers writing offers on multiple homes, sellers refusing bank approvals, lenders foreclosing when a great offer was on the table, agents refusing commission cuts. 
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