Los Gatos Real Estate Market
San 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:
Average days on market of listed homes (houses) by pricing tier:
Inventory levels for the last 3 years for houses for sale in San Jose:
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
Hearing the real estate market “war stories” about dozens of offers on Silicon Valley properties and overbids ranging from 20 – 55% had convinced me that we were in a Silicon Valley real estate market bubble back in early 2013. At least, this is what a bubble looks like, sounds like, feels like, and acts like. At the time I thought, “how much longer could this continue?” Four years and counting – that is the answer.
I tell my family and friends that we are in “crazyland” as buyers purchase homes with no contingencies of any kind, houses sell in 10 days or less (if everything is right, which seems to be the case 75% of the time), and those same properties are selling at well over list price and with much more than 20% down.
The absorption rate, or months of inventory: it is a Silicon Valley real estate market bubble?
What do the numbers say? I just logged into MLSListings.com and see that right now, in all of Santa Clara County there are 817 single family homes (houses + duet or attached single family homes). The pending and contingent homes measure 1074, far more! That ratio alone suggests that the market is in overdrive. In the last 30 days, 950 single family homes have sold & closed escrow. So the months of inventory is 817 divided by 950 = .86 of a month of inventory, so about 3.5 weeks of inventory. (When I originally blogged about the potential bubble, it was 1.8 months of inventory.)
In other words, things are flying off the shelves. And they have been, with only a few minor blips here and there, since early 2012. Does that sound like a Silicon Valley real estate market bubble to you – a crazy strong seller’s market lasting 4.5 years? I could be wrong, but I think of bubbles as being something fairly swift, not a multi year trend.
Homes are selling faster than new ones are coming onto the market!
It’s one thing to say that one city, town, or school district has a very low months of inventory (or high absorption rate). It is another altogether to say an entire county is that low. This is a major trend, not a tiny blip in the statistics.
How soon we forget that after the outrageously deep seller’s market in 2000, we had a steep drop in 2001. Or that all the crazy buying in the San Jose area (and other places) in 2005-06, combined with bad financial regulations, lead to the crash of 2007-2009. But perhaps that enormous “correction”, in which Santa Clara County lost about 50% of its value on average, had more room to recover than we initially realized. Jobs keep flowing in, and housing starts are not keeping up. Supply and demand – the age old equation. That would seem to refute the idea that this is a Silicon Valley real estate market bubble. Perhaps low inventory and strong demand are what we should be expecting going forward. Continue reading
What does it cost to buy a home with really good schools in Silicon Valley? Los Gatos, Saratoga, Cupertino and Palo Alto are all areas with highly regarding public schools. These aren’t the only areas with good schools but they are popular “west valley” areas that people may consider if working for Apple, Google, Microsoft, Facebook or any number of high tech employers.
Los Gatos and Saratoga both have multiple school districts, running from good to very good or excellent. The cost of housing tends to follow the popularity of the district, so for those areas I’m showing the breakdown not just for the whole town of Los Gatos but also by the high school district (Los Gatos-Saratoga or Campbell Union High School District). Same with Saratoga. (The Monte Sereno real estate market is very similar to Los Gatos, but slightly more expensive. Most of Monte Sereno has Los Gatos schools, but a small number of homes are in the Campbell area.)
Here are the average numbers for single family homes sold in the last 60 days ranging from 1500 – 2500 square feet, on a lot between 5000 and 10,000 SF, with 3-5 bedrooms and 2-3 bathrooms to give a sense of what it would cost to purchase a typical house in these areas. Please note that right now it’s a strong seller’s market, so many (if not most or all) homes are selling for more than the list price. DOM stands for days on the market.
If you are new to Santa Clara County, you may be wondering if this is correct. The cost to buy a home in these areas is what?
- Los Gatos: approximately $1,500,000 to $2,150,000 depending on the school district
- Saratoga: approximately $1,700,000 to about $2,500,000 depending on the schools
- Cupertino: approx $2,000,000 (some high schools will bring in higher prices and others lower)
- Palo Alto: approx $2,700,000 – $3,000,000
Remember, these prices do not mean that the houses being sold are perfect. Because it is a strong seller’s market, many properties are being sold which need new roofing, extensive pest work, remodeling, perhaps updating of electrical or plumbing systems or more. Many home buyers will need to spend 1-2% on things like termite fumigation, dry rot or roof repairs, carpets, paint, windows and more, and usually this will be done before they move in. So whatever the budget is, buffer it a little bit for both money and time to make it turnkey.
To compare, here’s the same chart, following the same criteria, taken in April 2014. See what’s changed:
For people relocating to Silicon Valley from out of the San Jose or Peninsula area, this real estate market can be daunting. There are other areas with good schools which are a bit further from most employment areas which can be an alternative, too. They include the Cambrian 95124 and Almaden 95120 (especially the southern area with Bret Harte Middle School and Leland High School) areas within San Jose.
Finally, in some cases, it may be more affordable to make use of private schools, which are plentiful in the San Francisco Bay area. In some situations it can be financially more affordable to buy outside of the highly competitive areas with the best schools and utilize the private school system. Some of the private schools are religious, some secular, and some with a language focus (bilingual in French, German, Chinese, etc.).
Interested in purchasing a home in one of these fantastic communities? Please call or email me! 408 204-7673 or mary (at) popehandy.com
$1,188,000 : 20488 Stevens Creek BLVD 2309, CUPERTINO2 beds, 2 baths
$1,250,000 : 20223 Northcove SQ, CUPERTINO2 beds, 2 baths
$1,725,000 : 10109 Ridgeway DR, CUPERTINO4 beds, 3 baths
$1,198,000 : 22330 Homestead RD 213, CUPERTINO2 beds, 2 baths
$1,195,000 : 10910 Lucky Oak ST, CUPERTINO3 beds, 4 baths
$2,298,888 : 10340 Las Ondas WAY, CUPERTINO4 beds, 3 baths
$1,500,000 : 22650 Silver Oak LN, CUPERTINO2 beds, 2 baths
$1,699,950 : 10840 Minette DR, CUPERTINO3 beds, 1 bath
$2,499,888 : 10932 N Leavesley PL, CUPERTINO4 beds, 3 baths
$2,998,000 : 10465 Madrone CT, CUPERTINO5 beds, 4 baths
See all Real estate in the city of Cupertino.
(all data current as of 3/18/2018)
Listing information deemed reliable but not guaranteed. Read full disclaimer.
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 3 months, or 90 days, for a better range. As of this writing, Saratoga only had one sale over the last 90 days, so data for that segment may or may not be a good average.
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.
To compare, here are the numbers from the this past January 26, 2017. There were fewer sales, so the search range was bumped up to 120 days instead of 90 days (and Los Altos was so low, it was individually searched at 180 days). You might notice price per square foot appears lower across the board in January compared to July. This is most likely because the market has heated up over spring and summer, which you can also see in the DOM.
Below are my results from the same search back in September 18, 2015. By comparison, 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, Los Altos only had four homes sold, the second lowest, matching this criteria within the 90 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 38 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
Silicon Valley home prices are sky high. The average price of homes selling in Santa Clara County is about 1.25 million. Cambrian offers good schools, a reasonable commute to places like Apple in Cupertino, and a nice location near Los Gatos and Campbell with lower real estate prices. For that reason, it’s become a magnet for smart home buyers over the last 20 years. If you have the budget for an average Santa Clara County home, how far would it go in Cambrian? Here’s the data, pulled this week from MLSListings, to answer that question.
Homes in 95118 tend to be younger and bigger than those in 95124, but the 95124 area is generally preferred as the schools are usually better (Union or Cambrian Elementary Districts and Campbell Union High School District vs San Jose Unified schools, though some of these are quite good, too) and 95124 is closer to Campbell and Los Gatos. However, if someone is commuting to downtown San Jose, 95118 would be more convenient. The most expensive homes tend to be in 95124 with CUHSD. One caveat to this data is the quantity of results – Cambrian in the SJUSD has far fewer sales than CUHSD, and sometimes can be so low the data is unreliable. The smallest inventory for one of these categories this week was 7 in the SJUSD 95124 area.
See what’s selling in Cambrian now on the map below:
$1,100,000 : 15035 Stratford DR, SAN JOSE3 beds, 1 bath
$1,399,000 : 4934 Bel Escou DR, SAN JOSE3 beds, 2 baths
$1,149,000 : 1562 Tobias DR, SAN JOSE3 beds, 2 baths
$1,088,000 : 111 Shelley AVE E, CAMPBELL3 beds, 3 baths
$1,050,000 : 1555 Glencrest DR, SAN JOSE4 beds, 2 baths
$1,300,000 : 5742 Malpas DR, SAN JOSE0 beds, 0 bath
$1,099,000 : 4823 Basswood CT, SAN JOSE3 beds, 2 baths
$1,325,000 : 1727 Silverwood DR, SAN JOSE3 beds, 2 baths
$1,299,999 : 1506 Ilikai AVE, SAN JOSE3 beds, 2 baths
$1,338,000 : 1191 Montmorency DR, SAN JOSE4 beds, 3 baths
$1,199,000 : 4860 Aspen CT, SAN JOSE3 beds, 2 baths
$1,299,000 : 1728 Ewer DR, SAN JOSE3 beds, 2 baths
$1,085,000 : 15183 Charmeran AVE, SAN JOSE3 beds, 1 bath
$1,199,950 : 4347 Montmorency CT, SAN JOSE3 beds, 2 baths
$1,298,000 : 1712 Silverwood DR, SAN JOSE4 beds, 3 baths
$1,249,000 : 1769 Oakwood AVE, SAN JOSE3 beds, 2 baths
$1,288,000 : 1829 Lencar WAY, SAN JOSE3 beds, 2 baths
$1,195,999 : 1923 Camden AVE, SAN JOSE3 beds, 2 baths
$1,388,000 : 5300 Rimwood DR, SAN JOSE4 beds, 2 baths
See all Real estate in the Cambrian community.
(all data current as of 3/18/2018)
Listing information deemed reliable but not guaranteed. Read full disclaimer.
Often I have clients who are interested in purchasing a 4 bedroom, 2 bath home in a good school district in Silicon Valley, particularly in the South Bay and West Valley areas. Tonight I did a study on the MLS of homes that have sold and closed escrow in the last 4 months with these characteristics:
- single family home (house)
- 4 bedrooms
- 2 bathrooms
- 1800 to 2200 square feet of living space
- 6000 to 10,000 sf lot
Disclaimers aside, here are the numbers for select West Valley Communities in the West/South Bay area with good schools. The first number is the average sales price per square foot, the second number is the average sales price:
And a look at the chart from all back in 2015…
And all the way back in 2011. What’s changed? A lot! The order has shifted some, showing where demand has increased or decreased. Most noticeably, the prices are significantly lower in 2011 than they are now. The 2015 chart shows prices somewhere in-between the 2011 and 2017 levels. Palo Alto and Los Altos remain consistently in the top two positions.
The home prices tend to run with the school district API scores. You can check the 2013, three year average, API scores in Santa Clara County for both the districts and the individual schools online here. Continue reading
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.
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!
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.
Recently I have been in quite a few multiple offer situations with my Silicon Valley home buyers (ranging to as many as 15 contracts on a Los Gatos house). Understandably, home buyers do not want to pay more than a home “is worth”. With several buyers all vying for the same property, though, the price is driven up. That’s a seller’s dream and a buyer’s nightmare. Is it possible to pay fair market value, and not more, with multiple offers?
What is fair market value?
With a little research, you may find a few slightly different definitions of fair market value. Most, though, include these elements:
In other words, fair market value is usually achieved when the buyer and seller have a normal sale, with normal time frames, normal contingencies, normal relationships to one another. Most of the time, this is the result of one offer on the house after a week or two on the open market.
If a seller or buyer is desperate to sell or buy, you probably won’t see fair market value. Similarly, if a parent sells the family home to a son or daughter, there’s a good chance it will never be a matter of exposing it to the pool of buyers, and the price is likely to be soft. Off market sales may be on the low side, though recently we’re seeing buyers in those circumstances paying more just to secure the property. A buyer who writes an offer subject to the sale of her or his home will be at a negotiating disadvantage, but a seller may accept that bid if the home has been on the market awhile, there is no other competition, and if the sale price is higher than it otherwise would be. (They’ll accept more risk for a higher sale price.)
With multiple offers, usually there is undue pressure on the buyer to compete with better terms (few or no contingencies, faster than normal sale, buyer picking up more of the seller’s costs) and better pricing. Nearly always, bidding wars will result in a sale price that is more than fair market value. Frequently there’s a “band of pricing” which is above the list price. Most home buyers will fall into that range, and when a home has been listed a little on the low side, this band may represent fair market value. This can be far exceeded if one super motivated person, an outlier, spikes the price.
In summary, residential real estate sales that take place with multiple offers will usually be with terms that strongly favor the seller and with a price that is above fair market value. It is not usually possible to pay fair market value with multiple offers – most of the time, the property will sell for more than fair market value.
Silicon Valley buyer and seller advice
Fiscally conservative home buyers in Silicon Valley will find this a very frustrating and discouraging situation as they write offers for “fair” prices and find them too low each time – and to see prices rising! When that happens, the more offers they write and the longer they take to buy, the more expensive it becomes to purchase anything at all. Today we have the double whammy of rising interest rates, too. My best advice is to find a property in a good location with fixable defects (such as an ugly kitchen, not a location problem, which you cannot change) which has been on the market more than 3 weeks. In that case you will probably have no other competition and can pay what is fair market value rather than an inflated price to due multiple bids.
Conservative home sellers are sometimes afraid to slightly underprice their property to attract multiple offers. That is understandable, so I would suggest never putting a price on the home that you wouldn’t actually accept. There are many things you can do to get your home to sell fast (within 2 weeks) and which will attract a few buyers. Those aren’t so risky but they do involve some work. If your property looks like “the best deal”, you can be sure that the home buying public will notice. Just don’t undermine yourself by being present at showings, making it too hard for buyers to see your property, or not making the home attractive and risk free to home buyers. I have written many articles on how to attract buyers who will pay top dollar – you can google “pope-handy home seller tips” or start with this piece: How to make people line up and beg to buy your home.
For more reading:
On this site: All comps are not equal
On popehandy.com: How much is your home really worth? (Discussion on fair market value vs appraisal value in addition to other factors)
Santa Clara County is experiencing critically low inventory of homes for sale and it’s at the level of a true inventory crisis. It’s not unusual to see listings decrease in December, but this is more than the normal dip of properties on the market in Silicon Valley. It’s worse.
This afternoon I ran the statistics on MLSListings, and here’s what I see for available listings of single family homes in Santa Clara County (the greater San Jose area):
Usually the data is taken from the last day of the month, and obviously doing this on the 7th may skew it a little for this month (or maybe not: perhaps it will be lower still!). But check out the year over year figures – what do you see as typical for November or December going back as far as 2002?
Buyers are jumping on the best properties. I’m finding multiple offers on a wide variety of houses and in all kinds of price ranges and locations, including Morgan Hill, which is often much more sluggish than parts north. (This is not the story of every house on the market, of course. Many are badly photographed, overpriced, hard to see, not clean, or have other issues which make them undesirable to Silicon Valley home buyers. When real estate has an attractive price, is clean and shows well, is nicely marketed, staged, accessible, etc., it will get a crowd of interested buyers. Or at least one!)
Interest rates and the inventory crisis
No doubt, interest rates are a huge factor in the low inventory crisis, as they impact buying power.
If a home buyer could afford a monthly payment of $4000, here’s what happens with different interest rates (assuming a 30 year fixed mortgage):
$4000 at last winter’s rate of 3.5% = loan amount of $1,002,127
$4000 payment at today’s rate of 4.125% = loan amount of $928,506
$4000 payment at a rate of 5% (within a few years?) = loan amount of $838,267
Rising interest rates may stunt price appreciation somewhat, but you cannot count on it – it does not always happen. Or there may be a pressure downward on pricing, but perhaps not proportional (not enough help for the stretched home buyer).
Scarcity and multiple offers
Houses priced aggressively (lower than what the sellers and listing agent think it’s truly worth) to attract multiple offers are getting huge results and overbids. Not every property is selling fast, but on average, homes are going for more than 100% of list price in this area. With multiple offer situations, buyers who succeed in winning are those with larger down payments (more than 20%), few or no contingencies, a high price, and of course offer an As Is sale.
If you are a home buyer trying to compete in this challenging real estate market, please take a look at this summary article and the six related posts:
If you are a home owner thinking of selling, now is a great time! The lower the inventory the better your odds are of selling. If you tried selling your property without success this year, please read this article on why some houses or condos don’t sell:
http://sanjoserealestatelosgatoshomes.com/why-didnt-my-san-jose-home-sell/. Another article on that same topic is on my popehandy.com site: Things which will make a home buyer RUN from purchasing your home
And back to the first question about inventory: when will it rise? As you study the chart, above, you’ll notice that inventory normally rises in spring and peaks in the summer most years. So, buyers, continue looking and hang on. There will be some new offerings in the new year, and by March we should see a significant uptick. If not, look out – prices will go up even faster. So if you find a home you love now, don’t wait.
The cooling Silicon Valley real estate market is less of a question and more of an acknowledged fact (we wondered about it in June, we are sure now). If so, how can you tell? We need to begin by talking about “the market”.
First, Silicon Valley doesn’t have ONE market. The real estate market in Palo Alto or Cupertino is going to be very different from the realty market in Los Gatos, or the various parts of San Jose, such as Almaden, Willow Glen, Cambrian, or Blossom Valley. Ditto that with price points. It’s a very different “market” for entry level houses than for luxury homes.
But if we’re going to speak in broad, sweeping terms about cooling trends, what do we SEE? What do we HEAR? What’s happening with offers and open houses? These are the ways we measure the real estate climate. Often we in the industry hear the anecdotal evidence long before it’s reported in the paper. If we hear one Realtor friend after the next report quiet open houses, or few or no offers, we know there’s a climate change afoot.
I will tell you that I am hearing these things, which hint to a softer market for home buyers:
- Houses taking longer to sell in much of Silicon Valley / Santa Clara County
- Homes selling with fewer offers than 6 or 12 months ago
- Contingencies for loan, appraisal and inspection becoming more common
- More price reductions being necessary for than a few months ago
- Fewer ALL CASH offers
- Sale price to list price coming down a little
All of these suggest a mellowing of the housing market. Do the numbers line up?
The cooling Silicon Valley real estate market: seasonal fluctuations…
Historically, we do know that the busiest time for home sales is usually February – April. Some years it’s shorter or longer. (One particularly bad year, we had exactly 3 good weeks for selling in March and nothing more.) But what do the numbers tell us?
If we view the sale price to list price ratio, we expect there to be “seasonal fluctuations”. We don’t expect a hot seller’s market in December. Therefore, what’s often most helpful is comparing the same statistics year over year. Let’s do that. The image below provides the sale price to list price ratio for houses sold in Santa Clara County from Jan 1 2012 through Aug 24, 2016 (the day I grabbed this data). This was taken from the MLSListings.com site for agents (the private MLS).
I love this kind of presentation because it’s so easy to see both month over month and year over year statistics. Take a look at August (so far) for this year compared to the prior months in 2016. At 101.5% that seems like a fantastic ratio (they would go nuts for this in most of the U.S.). Now compare it to the prior months this year and you can see it’s been coming down since March. OK, now consider prior years…it’s mostly a very similar pattern. That tells us that “spring is hotter”. We already knew that, but seeing it for most of the last few years pretty much drives the point home.
But let’s compare August 2016 to August 2012- Aug 2015. That’s a better “apples to apples” comparison. And here it’s very clear that the real estate market in Silicon Valley really IS COOLER than it was in prior years for the same month. Any doubts? Check the same info for July – yes, all hotter until you get to July 2012. Now June – same as for July. May? Yes, again, hotter for that month in 2013, 2014, and 2015 but not 2012. In retrospect, we now know that 2012 was the year the market ratcheted up for a big, long run.
Before anyone begins screaming that the sky is falling, let me stop and remind you that we are talking about a sale price to list price ratio for the entire county that is at more than 101%. This is not a buyer’s market – at least not as a county. There are hotter and cooler pockets, yes, for sure.
What we are experiencing is a return to normalcy, a flattening out, less appreciation. We are not seeing price drops at this time.
And you know what? We’ve been expecting it.
You cannot sustain double digit appreciation forever.
The reality of the cooling Silicon Valley real estate market has implications for home buyers and home sellers:
Buyers, GET OFF THE FENCE. Interest rates are good. Buying conditions are reasonable again. Yes, inventory is low, but if you know what you want, you should be able to find it in 2-3 months tops. If you can’t, then you are not being realistic with what you think you can buy for your budget.
Sellers, it’s time to be more aggressive on pricing and adjust your expectations. Yes, your neighbor got 15 offers in February, but it’s not February any more. If you get 1-3 offers, that means you did a great job of staging, pricing, and getting your home marketed. Position your home to sell, and then get it done.
Where will we be in 6 or 9 months? I don’t know. It could be better or worse after the election. My advise is to get on with your life and not try to time it too carefully, because things can happen which none of us could anticipate. If you want or need to buy or sell, make it happen.There will always be political things going on, world events taking place. There is never a perfect time to buy or sell – but there is the time you want to do it. Go ahead.
And please let me know how I can help.