The Silicon Valley real esate market is heating up but it’s not heating “evenly”.  Some price points and areas (or school districts) enjoy a hot seller’s market while other segments are lagging.  A big factor in the overall health of the realty market in the San Jose area is the percentage of listings which are distressed properties, meaning short sales and bank owned homes.  Today we’ll see the ratios of these homes to the regular sales using graphs to get a quick visual take on the market trends and statistics.

Today we’ll look at homes listed on the MLS in all of Santa Clara County (including San Jose, Campbell, Los Gatos, Saratoga etc.) by price point. All of the graphs in this post will reference houses and duet homes combinesd(about 99% houses), not condos or townhomes.

Overall, it looks like about 1/3 of all homes for sale in the county are distressed sales. Next let’s look at this data by price point and then we’ll check it by area.  The images below will be smaller but the colors will represent the same elements in each one (green being regular sales, brick being short sales and light orange being REOs).

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Many Silicon Valley home buyers seek a great home with excellent schools and an affordable price – and I have just such a listing to present to you!   Not only that, but additionally it’s located on a very quiet street (no through traffic), it has recently been updated and remodeled, and further, it’s on an over-sized lot!

Just listed this week, the home at 5114 Nerissa Way in San Jose’s Cambrian neighborhood is sure to please!  Here are some of the highlights:

• 3 bedrooms + small office or hobby room
• 2 baths – both recently remodeled
  • hall bath features shower/tub combo & big skylight
  • master bath includes stall shower
• updated kitchen with slab granite countertops, large skylight & breakfast bar
• living room offers cozy, wood burning fireplace
• family room open to dining and kitchen & offers back yard and patio access
• hardwood floors in bedrooms and under carpeting in hallway and living room
• house is appx 1233 square feet and lot is appx 7500 SF
• loads of natural light – sunny house!
• open, flexible floorplan
• 1 car garage, attached
• Room to add on to house, possible to make 2 car garage, and room for pool – many possibilities

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The Camden Community Center is located in the Cambrian Park area of San Jose, close to the intersection of Camden and Union Avenues (SJ 95124).  This may be the most under-appreciated recreation venue in Silicon Valley, so I wanted to give it a plug!

Stop by and you’ll find that it is a fabulous resource whether you want to work out daily, rent a room for a big party, sign up for a class, walk your dog (just cleanup after!)  or attend a community event.  My kids took “hula dancing” there when they were very young, amongst other things, and a year or two ago we visited to catch a travelling exhibit about colons. (There was a giant plastic model of one which you could walk through. Yes, really.)

The sprawling campus sports nice, newer buildings, an indoor pool, a huge grassy field, a playground, attractive landscaping and plenty of parking – it is a pleasant place in which to spend some time.  It’s also home to some funky art – a giant metal sculpture of a hand (and a hand inside another one) as if to wave hello.  (Maybe the same artist decorated the outside of the parking garage at the San Jose Mineta International Airport?).

When & where?

Open daily except Sunday, so stop by and check out the offerings. The center is located at 3369 Union Avenue, just off Camden (and behind the Lucky’s shopping center). Telephone 408 559-8553.  If you’re travelling by bus, you’ll want to use the 37 or 62 lines.  Open Monday through Friday 8:30am to 8pm, Saturdays 9am to 1pm.

Check out all of the offerings at the Camden Community Center’s website.

Close to the Los Gatos border sits one of the more affordable Cambrian neighborhoods in San Jose and the west valley generally.  It enjoys lovely views of the hills, great public schools with high API scores, a neighborhood private school to boot, and convenient access to freeways and stores.  There’s no sign, marker or gateway to the area, so many of its residents are probably unaware that the official name to it is Cambrian Gardens.

This neighborhood provides an incredible “bang for the buck” for home buyers wanting excellent schools and not wanting to pay luxury home pricing.  In many ways, it’s a “sleeper” – meaning that many people don’t know it’s there, but it’s a good deal!

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With our 300 sunny days per year in Silicon Valley (at least most years!), golf is a sport enjoyed year round here in the San Jose area.  Living near a golf course, or having a golf course view, is highly desirable as it provides scenic open space as well as convenience for avid golfers.

Silicon Valley Golf Homes, Silicon Valley Golf Properties

There are beautiful courses throughout the South Bay Area and it’s possible to find small condos with views of them at fairly affordable prices (Sunnyvale’s Sunken Gardens area is one of them).  Today, though, I want to provide a list of homes for sale near golf courses in the foothill areas of Silicon Valley.  Many of these will also be luxury homes. So the MLS list of these houses on the market which you can browse includes these areas:

San Jose areas including Evergreen & Silver Creek, Santa Teresa, Blossom Valley and Almaden; Los Gatos, Monte Sereno, Saratoga, Cupertino, and Los Altos.

There are golf courses to be found in other parts of Santa Clara County too (Mountain View, Sunnyvale, Santa Clara and more) – let me know if you are interested in these parts and I can send you a link for searching them for similar residential real estate.

A key ingredient in understanding how the Silicon Valley real estate market is faring is the ratio of regular sales to distressed properties on the market (Bank owned or REO listings and short sale listings). Today we’ll study Los Gatos and four areas or districts of San Jose: Almaden Valley, Willow Glen, Cambrian Park, and Blossom Valley.

First, let’s look at the county numbers as a general overview.  In all of Santa Clara County, there are 3537 houses, duet homes, condominiums & townhouses for sale and available (“status 1″ for my Realtor readers) on our multiple listing service. Of those, merely 1964 are “regular sales” (56%), 1105 are short sales (31%) and 375 are bank owned homes or REOs (11%).

Now let’s drill down to a few areas: Los Gatos, Almaden Valley, Willow Glen, Cambrian Park and Blossom Valley.  We’ll check out the ratio of regular sales of houses and condos in each of these areas.  How do these compare to the county average of 56%? Have a look:

This is helpful information for both home buyers & home sellers.  Home sellers need to understand the challenges that come with selling in an area with more short sales or REOs, if they are in one of those parts of the valley.  Or vice versa: if there are few distressed properties on the market, this makes it easier to sell (with less downward pressure on pricing).  Buyers need to appreciate that they will have better luck negotiating in areas where many homes are being sold under some pressure.

A quick disclaimer - if we narrowed this study by school district and even neighborhood school, we might find that these “general numbers” are actually quite different at the hyper-local level.  For example, if you visit a post of mine about the Los Gatos real estate market on my Live in Los Gatos blog, you’d find that when we separated out the various school districts, and even price points, the ratio of distressed properties and their absorption rates change very dramatically.  To see those, scroll down until you see the blue and yellow boxes.

The condo market in San Jose and nearby areas has taken a beating throughout our downturn.  Even so, condos in Los Gatos, Almaden and Willow Glen are faring pretty decently.

Now let’s hone in on each of these five areas and the two main housing types to see the ratio in each of regular sales, short sales, and REOs.
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Lately I am seeing a trend with short sale listings which is anecdotal but, I think, significant.  More and more, I am seeing and hearing about lenders which are requiring an unrealistic sales price in order to approve short sales.  When I say “unrealistic”, I mean more than the market can bear in many cases.

I personally had this experience in recent months: I had a short sale listing in Sunnyvale which was priced at market value last summer.  We got three offers, all within 2-3% of each other.  This is a pretty good indicator of market value. (Had we been underpriced, the contracts would have come in higher.)  The bank wanted about 15% more – an absolutely unjustifiable figure.

What to do?  I ran the comps and submitted them.  No impact.  I then paid an agent to do a BPO (broker price opion).  That number came in about 1.5% more than my sales price.  The lender, in turn, ordered an appraisal (which we appreciated), and that came in another 1.5% higher than the BPO (or about 3% higher than the sales price my seller had accepted).  Common sense would dictate that the lender would accept as authoritative the appraisal price, right?  Not so.  They wanted another 1.5% higher still – higher than their own appraisal value, certainly higher than market value.  Needless to say, the buyer did not want to overpay for the property.  Fast forward a six months and the bank now has taken back that townhouse at foreclosure.  It could have been avoided had the lender been willing to be realistic.

As I speak to my colleagues in the real estate industry here in Silicon Valley, I am finding that my story with this one listing is not so unique. I see homes on the market in various west valley communities (Almaden, Cambrian, Los Gatos, Saratoga, Campbell and nearby San Jose areas) that are listed at a reasonable price and then speak with the Realtor and learn that the banks 10 to 15% more than the list price.  At best, this is at the high end of market value (but in many cases is higher still and completely crazy). The agents know that if the house is listed at the bank’s number, they’ll never even get an offer.

It looks as though many of the banks would rather just take the short sale properties back in foreclosure.  Why? There are incentives for them: they can write off losses, they don’t have to deal with second or third lein holders, and they may even have silent mortgage insurance, which doesn’t help if they accept a short sale – it only helps if there’s a foreclosure. (more…)