If you are purchasing a condominum or townhouse in Silicon Valley, you will need to consider a few things more than if you were buying a house that’s not held in condo ownership*.

Like what?

Most of all, with a condo or townhome (or planned unit development) you are buying a fraction of the entire complex as well as your own living space (condo or townhome). Condominium ownership includes a percentage of the community’s property. You will benefit from it, but you also will be responsible for it.

Additionally, there are a lot of  documents to read and understand when purchasing a condominium or town house. You will need to be able to accept the rules, bylaws, financial statements, meeting minutes, articles of incorporation and more.  You will want to read the newsletter (and minutes) carefully to see if there are any “issues” in the complex.  Plan to invest several hours in reading and digesting the information in the 2-3″ stack of papers.

Naturally another difference is that your neighbors will be in very close proximity.  If you are a non-smoker but the neighbor in the unit next door smokes, you may not be too happy about it later.  A few months ago I showed a Rivermark (Santa Clara) townhouse that was just darling but the next door neighbor came out and smoked on the front porch while we were there.  My buyers didn’t want to purchase the home for that reason – they did not want to deal with the smell later. You may have similar concerns about other odors or noises. 

Perhaps most important are the financial issues and risks:
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How is the Campbell condo and townhouse market?  The answer may well depend on both what part of that market we’re discussing and which data we’re focusing on.

The absorption rate, or months of inventory, indicates that it’s a seller’s market:

The hottest segment is the bank owned or REO part of the Campbell condominium or townhouse realty market, and the slowest segment is the short sale section (which is about 20% of the available inventory). That’s very typical of other nearby areas: the hardest homes to sell are the short sales.  As a side note: there are 39 condos available and 29 which are sale pending. That is a high ratio, which also points to a seller’s market.

How does this compare to a year ago?  It’s completely different!

A year ago, the months of inventory was a whopping 72% higher at 8.8 for May 2009 vs 2.5 for May 2010. Solds are up 42% from 12 months ago.  Pending sales are up 200% from a year ago also.  So from every vantage, it’s much, much better than a year ago.

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Carefree living in a resort-like setting in Silicon Valley can be yours in Saratoga Oaks! This sunny townhome enjoys beautiful views, hardwood floors, custom touches and has been seldom used in the last 25 years so is “gently used”.

Please have a look at the slideshow, photos, and panoramas and phone or email me if you have any questions! Or visit the websites, www.ValleyOfHeartsDelight.com or www.PopeHandy.com.

14654 Placida Ct
Saratoga, 95070

3 bedrooms (+ sitting room in Master), 2.5 baths, appx 2163 SF

Offered at $799,000

The community enjoys tennis courts, two pools and great proximity to downtown Saratoga (“Saratoga Village”), Wildwood Park, and is nestled amoung beautiful oaks and hills. Exceptionally highly regarded Saratoga Schools (including Saratoga High School, among the top 100 high schools in the nation!).

Open Saturday, June 12, 2-4pm. Stop by!

The condominium & townhouse market is improving dramatically now.  It is evident both in looking at the stats countywide and in my recent experiences holding open my townhouse listings in Saratoga and Sunnyvale as well as recently participating in the sale of a townhome in Almaden Valley (representing a buyer) – all different areas and price points but all very active.

Here are the numbers for May sales of condos and townhomes for all of Santa Clara  County:

As you can see, the days on market are shrinking and prices (both median and average) are rising.  A few numbers cut back slightly in May: the sale to list price ratio retreated a little to 99.9% and the pending properties went down a little too.  But the number of sales were up.

The “months of inventory” or absorption rate is a great way to know how much of a buyer’s or seller’s market it is in any given place. Six months is considered balanced, less is a seller’s market and more is a buyer’s market.  Here are the months of inventory for selected communities in the “west valley” area of Silicon Valley – they are all “seller’s markets”, but some are strong and some are approaching balanced:

Of course, this is still painting with a broad brush.  The absorption rate for any of these areas may not be accurate for the various price points or school districts that might be found there.  For instance, a large luxury townhouse in Los Gatos which is downtown might be a really different type of market than a small, entry level one bordering Campbell or Cambrian Park.

What everyone’s wondering is if this seller’s market for condominiums and townhouses will continue despite the end of the federal home buyer credit.  To utilize that credit, homes had to be in contract by April 30th.  Most of those should be closed now, or nearing that date at best.  So we’ll really know more as we move into summer. My sense, though, is that what’s driving this market is much more the affordable prices of homes and of loans. The credits are a bonus, but many in Silicon Valley make too much money to be able to use them.

For information on your particular part of the Silicon Valley condo or townhome market, please give me a call or email me!

The real estate news is so mixed it’s mind boggling, whether it’s a national perspective, one specific to California, the San Francisco Bay Area, the “south Bay”, Silicon Valley or even San Jose in particular.  It is anything but a uniform, monolithic market. Even so, it’s good to look at the big picture along side the hyper local level, and that’s what we’ll do today.

Today’s San Jose Mercury News featured a front page article by Sue McAllister (an excellent reporter) on Santa Clara County housing values.  She shares that Zillow says that we’ve hit bottom here in Santa Clara County.  That is certainly good news to home owners accross Silicon Valley!  And I don’t disagree that countywide, we’re definitely looking up right now.  No guarantees for the future, but Zillow says that the threat of a second or double dip no longer seems likely. Whew!

Unfortunately, there’s another real risk to this recovery and it’s not the “shadow industry”. This time it’s homeowners walking away because they’re underwater (not because they can’t afford to stay, but because they choose not to).  Sixty Minutes did a segment on this phenomena of home owners walking away last night., which you can watch via this link.
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Being an FHA home buyer in Silicon Valley is a challenge right now, especially if you want what everyone else wants: a nicely updated and remodeled home in a good area with no “issues”. (Issues meaning things like high voltage lines, busy roads, flood plains, or being too close to stores or spots not everyone wants to be near.)

The Problem with Condominiums and FHA

I need to start by explaining that things aren’t always the way they look.  We tend to think of condos as looking like apartments, with no yard, for example.  We think of townhomes as a two story or more home with neighbors on the sides but no one above or below.  And we think of houses as freestanding buildings with a yard around it.

That’s really how things look.  But how these different types of homes are owned may be another thing altogether.  For FHA home buyer purposes, this makes a huge difference.

Some townhouses and even some houses are not owned the way they look, but are held in condo ownership.   A good example of this is The Villas of Almaden, a beautiful &  gated community at Meridian and Coleman in San Jose’s Almaden Valley. Structurally, many of the buildings are houses – but they ar “condo ownership” and are stored under the condo label in our local MLS. What makes these buildings be condos? Practically speaking, in addition to their own space for their particular unit, the owners also own a percentage of everything else, such as the pool, grassy areas, tennis courts, private roads, etc. They also have a share of the liabilities of the condo community, too. 

If you are an FHA buyer and you want a San Jose area condo (or any home which is held in condo type ownership), you have to make sure the complex is FHA approved. We had the option of getting individual units spot checked until February 1st, but that has now been eliminated. Getting an entire complex approved takes time, perhaps 60 days, and money – and most buyers don’t want or cannot take on that kind of financial liability (and most sellers don’t want it either). Here is the link for the HUD site which will list for you the condo communities which are FHA approved.   So it is important to know if the townhouse you’re looking at is owned like a townhouse or owned like a condominium.  It can be painfully disappointing to think that a home can be bought with FHA backed financing, only to later discover that it can’t due to the type of ownership and lack of approval of the asociation.

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