How’s the Saratoga California real estate market?

The Saratoga California housing market continues to be good overall.  The market is driven in large part by school districts and neighborhood schools, so a look at the hyper local level may reveal something different than this broad overview of the 95070 zip code – the entire city.

Here are the real estate sales statistics for closed sales last month among houses in the 95070 zip code (click on link to read the full Saratoga Real Estate Report for houses):

Prices are going up, but not at the insane rate of some places (such as Sunnyvale).
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Silicon Valley features a number of upscale communities that enjoy beautiful estate properties. These luxury homes are not simply large houses, but rather they boast qualities generally not seen in regular residential real estate.

What makes a house a “luxury home”?

A luxury property in Santa Clara County often includes a number of elements that set it apart, such as:

• price tag: these homes usually sell for more than three or five million dollars (and may be $10 or $20 million or more, though in some cases as low as $2 million – that largely depends on location)
• close to an acre or more of land
• house larger than 4000 or 5000 sf
• the inclusion of “out buildings” such as a guest cottage, gatehouse, etc.
• views (valley, hill, acreage) or special features of the land (waterfront, riverfront adjacent), a vineyard, or something else special and uniquely beautiful
• amenities such as a pool, tennis court, racquetball court, gym, sports court or facilities for enjoying other sports & exercise on site
• specialized hobby or relaxation rooms, as in a darkroom, library, workshop, conservatory, wine cellar & tasting room
• entertainment centers not commonly found in private homes, like a ballroom, dedicated home theater room for movie viewing, bowling alley, shooting range, or place to practice a golf swing; pool or billiards and “game room”, and ice cream parlor
• safety tools such as a video surveillance system, electronic gates
• neighborhood: it is very hard for an expensive house to be viewed as a luxury home if the surrounding properties are not also high end homes

The (main) house itself is qualitatively different too.

Kitchens tend to be the most important room for San Jose area home buyers of all price ranges, and this includes homes that cost upwards of ten million dollars. Usually, kitchens in these homes are designed with a very clear purpose in mind and are done beautifully, though recently in Los Gatos I saw a home listed for about ten million with a kitchen that needs to be completely remodeled. This is very unusual, though.

Most luxury homes features kitchens of one extreme or the other. On the one hand, it may be more industrial in nature if those cooking in it are primarily professional chefs, domestic employees or catering services rather than the homeowner. This is not the kitchen of glossy magazines, it’s not meant to impress anyone for all the maple cabinets, stainless steel appliances and granite countertops. This sort of kitchen is functional, not gorgeous, and it may have stainless steel countertops, for instance, alongside the giant gas range. Such a kitchen is usually separate from the living areas and the guests are not expected to visit this part of the home.

Far more commonly found in Silicon Valley is the other end of the spectrum, the kitchen where residents spend most of their time, and it’s meant to impress. Here we see high end materials and appliances in a room viewed as much as art as the meals created in it are. This type of kitchen is often the focal point of today’s upscale or luxury home. The home’s floorplan is “open” to the kitchen – often the kitchen and family room blend together as part of a Great Room. This is a kitchen designed for owners who cook, not those who have servants.
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The luxury homes market often behaves very differently than the rest of the real estate market as a whole.  If interest rates jump around, the impact is often far less since the home buyers of estate properties may not be nearly as dependent upon financing.  Many of these fine homes & estates are paid for “all cash”.  (In some cases they do this but later arrange financing, perhaps funding a “charitable remainder” trust rather than a more typical institutional loan.)

How’s the real estate market for high end homes in Los Gatos, Monte Sereno and the Los Gatos Mountain communities?  Defining “luxury homes” is a bit tricky because what constitutes luxury can vary from area to area (check out these estate homes for sale in the Buffalo NY area). For now let’s use prices of $2 million or greater as we first look at the Months of Inventory or Absorption Rate – though in fairness, the luxury price point is a little lower in the mountains.  (Six months is considered balanced by the National Association of Realtor, less is a sellers market and more is a buyers market.)

As of October 19, 2012, here are the numbers for homes over $2,000,000 in the Los Gatos area

Los Gatos, 95030 for sale (active) = 30    Sold in the last month = 1  Months of inventory = 30

Los Gatos, 95032 for sale (active) = 13    Sold in the last month = 3  Months of inventory = 4.33

LG Mtns, 95033 for sale (active) = 8    Sold in the last month =0  Months of inventory = infinite

Monte Sereno   for sale (active) = 9    Sold in the last month = 1  Months of inventory = 9

For some reason, right now it seems to be easier to sell a luxury property in Los Gatos 95032 than in the more downtown area of 95032.  That said, there are so few homes sold that things can fluctuate quite a bit, and also the over $2 million range is huge as some homes are offered at well past $10 million.  For the absolute best information, you’d need someone to do a customized study for just your property, the one you own or the one you’d like to own.

No matter how you look at it, overall it is a buyers market in the luxury home strata in Monte Sereno, Los Gatos and the Los Gatos Mountains. It may be closed to balanced in 95032, or possibly a seller’s market even in that area, but we’d need to tease out things like school district (most of 95032 is in Union or Campbell schools, not Los Gatos schools), exact pricing tier, views, proximity to downtown etc.  In general, though, it is a great time to purchase a high end house or estate in these areas.

Altos charts on the LG area

Next we’ll change gears and use Altos Research and quartiles to evaluate the most expensive listings.  We will look at the top quartile of list prices, the high end listings in Los Gatos (zip codes 95030 and 95032 in town), in the Los Gatos Mountains (unincorporated, 95033) and Monte Sereno (99.9% of which is in 95030 but a tiny sliver has the 95032 zip code).   The charts I’m using are live and will be continuously updated by Altos Research, to which I have a subscription.

List prices of homes for sale in the topmost price quartile in Los Gatos, Monte Sereno and the Los Gatos Mountains

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Today we’re looking at the real estate market for houses in some of the “west valley” communities along the base of the Santa Cruz Mountains – areas where schools are good, crime is low, residents enjoy scenic views of the hills (or of the valley from the hills, depending on the location) and overall, a highly educated population not too far from Highway 85.

Of the four municipalities, three are really very similar to each other in several regards.  Cupertino has the largest population – about 58,000 people – but Los Altos, Los Gatos and Saratoga are all similarly sized, somewhere between 27,000 and 30,000 residents.  The latter three also enjoy a traditional “downtown” area which is popular with pedestrians, bicyclists and motorists alike. (Monte Sereno has 4,000 residents, which is so small that the statistics are very easily thrown from month to month, so it is omitted in this quick study.)  Of the four, Cupertino, then, is the least similar due to size and lack of a central downtown area.

We’ll take a quick look at these areas now in terms of the real estate market trends and statistics for each area, considering just “class 1″ (houses and duet homes).  The charts used below are from Altos Research, to which I have a subscription, and they will be automatically updated each week.

(1) Median List Price (per Altos Research):

Los Altos and Saratoga are neck and neck for most expensive areas in which to purchase a house. Over the last year, though, Los Altos has seen a rise in the median list price. There has been a corresponding rise in demand with the success of several local companies in the region (Apple, Google, Microsoft, LinkedIn, Facebook), some of which have gone public and others of which are on the verge of doing so. Los Altos is more convenient to most of these.

Los Gatos, which is a little more affordable than Saratoga and Los Altos, has seen a very noticeable increase in pricing also, while Cupertino’s prices have declined a little.

(1A) Median list price of the bottom quartile of all four:

(1B) And, very interestingly, same data but for the top quartile – the luxury market:

Here we see Los Altos clearly overtaking Saratoga! And also that Cupertino’s pricing is significantly lower than Los Gatos in this tier, and also that it has lost a lot of ground in the second half of 2011.  (more…)

What should you look for when buying a luxury home in Silicon Valley? Whether it’s a move-up purchase or a first home, there are a few tips which will be helpful for you to know going into it that will make the whole home buying experience smoother and easier.  We’ll hit on 3 areas: first geography & construction, second hyper local factors that impact market value, and finally qualities or features of the property or house itself.

It’s hard to assign an exact price tag on what constitutes an estate or luxury property, but in and near Silicon Valley, in most regions it’s the $2,000,000 and up price point (it will be less in Morgan Hill, Coyote and Gilroy – and likely more in Hillsborough).

1. Geography and Bay Area Construction: it’s different here!

The first and most important thing to understand is that real estate and housing construction vary from one region of the country (or the world) to the next.  This is true for all types of homes, actually, but perhaps more obvious in the priciest homes. Luxury real estate in Silicon Valley is a little different from similarly expensive homes in other parts of the country due to our climate, soil conditions, and natural hazards, such as earthquakes. What seems mandatory for a high end home (and might be ideal to have elsewhere) could be a problem here, so it’s helpful to literally understand the lay of the land before you get too far along the home buying path. A couple of quick examples:

• A fabulous home in Boston or anywhere in New England may be built of brick.
• Here, a brick house is seldom seen because of earthquakes – we need our houses to move and bricks are not usually too good at that!

I mention these two upfront because well intentioned friends and relatives may want to stress the importance of this or that in a property – and it may simply not apply here. (Please see article: Qualify The Advice You’ll Accept When Buying or Selling a Home in Silicon Valley)  If you are non-native to the San Francisco Bay Area, you may have assumptions about construction or architecture that may not work here. Please just be aware of that possibility.

2. Understand the importance of hyper local factors on the market value of a property

Schools can be a main driver for home values in the luxury market as all other segments.  Home buyers may not know that the town or city boundaries are usually irrelevant to school district boundaries. Here are a few examples:

• In Saratoga  there are 3 high school districts and 4 elementary school districts.  Before buying anywhere in Saratoga, then, you’ll want to know which district is which and where you’re buying.  If you want to utilize private schools, you may be delighted to find that you can buy more house for your money in one area of this lovely city than another.  Or you may want one school area over another for any number of reasons.
• In Los Gatos there are 2 high school districts and 3 elementary school districts.
• In the Almaden Valley area of San Jose, there are 3 high school districts and 3 elementary school districts

Often the lesser public school districts will have a lower lid on pricing than the very top districts or schools, so it’s important, when analyzing the pricing of an estate home, to factor in the weight of the school. (more…)

Situated on a small knoll in the prestigious Los Altos Country Club neighborhood, the home at 1557 Plateau Drive features many of the most highly regarded elements which make a house a luxury property and a joy to see.

The Los Altos Country Club Neighborhood

Younger, Elegant Mediterranean View Home

The property at 1557 Plateau Avenue is younger, just 18 years old, constructed by a builder who was making it for himself and his family.  As you might imagine, the owner-builder utilized the land to make best use of the view opportunity.  He also created it with many extra features & finishing touches which distinguish a quality, custom home from tract housing.

The floorplan is flexible. There is a 2 car garage at street level, but a third which is accessed from the rear of the property – ideal for RVs, boats, and extra cars or vehicles. The 3rd garage can be used as built, or as a rec room, extra storage, or a number of other options.

Almaden Valley, which primarily consists of the 95120 zip code area of San Jose, is well known for its scenic beauty, great schools and low crime.

For people working in downtown San Jose, it is also fairly convenient – it’s almost a straight shot up either Almaden Expressway or Highway 87 to get into the downtown area, often just a 20 to 30 minute commute.

Within Silicon Valley, Almaden is regarded as a high-end neighborhood and very desirable. In this post we’ll discuss the geography of the valley, the advantages and disadvantages of being in Almaden, the public schools in 95120, the market conditions for the luxury homes there and finally you’ll be able to browse a list of luxury & estate homes for sale in the Amaden area of Silicon Valley. (more…)