Today we’ll look at the ratio & relationship between real estate listings and sales of houses and duet homes in Silicon Valley over the last eighteen months. The goal is to get a sense of the market trends in terms of the overall absorption of homes for sale.  (We’ll give a glance at condo and townhome sales but the focus is on single family homes.) How hard is it to sell a home?  The answer has to do with supply and demand – the number of listings and the number of sales.

In the graphs below, the reddish brown line represents the number of pending sales.  The blue line indicates the number of listings or homes for sale. Put simply, the closer these two lines are together, the hotter the market – that is, the more of a seller’s market it is.  When they are far apart, it’s more cold, more of a buyer’s market.  If the lines cross, it is a wild frenzy (that does happen in one case, as you will see). Below please find the graph for the homes in Santa Clara County overall (all areas).

Santa Clara County listings to sales Jan 2009 to June 2010

 You can see that these two lines pinch together in about December 2009 to January 2010.  Prices had dropped and investors were swooping in! The  market has cooled since then.

Santa Clara County condo & townhome listings to pending sales Jan 2009 to June 2010

 For condos and townhouses, all of Santa Clara County:Here the two lines  – or the market – were close together for about 3-4 months.  Buyers understood that condominiums in Silicon Valley were bargain priced, and they responded by buying.Now let’s look at various areas around the county.  We’ll take these in Alphabetical order, beginning with Almaden Valley.

Almaden Valley listings to pending sales Jan 2009 to June 2010

 As you can see, the market improved but never got as “hot” as in the county generally.  This is because it’s a more expensive area, and most of what was selling in winter consisted of entry level housing.
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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!

How’s the move-up real estate market in the west valley areas of Silicon Valley?  Today we’ll have a glance at the segment of the realty market (for houses for sale, not condos or townhomes) with list prices between $800,000 and $1,200,000 in Almaden, Cambrian, Los Gatos/Monte Sereno, Saratoga, the LG Mountains, Cupertino and Campbell.  (Monte Sereno has very few properties in this price range so it wasn’t helpful to break it out separately.)We will look at a few of the statistics for the area as a whole, but look at the absorption rate or months of inventory area by area.

Recent sales: In all of these areas combined, there were 146 houses or duet homes which have closed escrow (sold & closed) in the last 30 days.  Only 4% total were short sales (2%) or bank owned property sales (another 2%).  Bargain hunters trying to scoop up one of these be aware: it’s slim pickings!

Of the 146 houses sold, ten of them went “all cash”, all but one of the rest were “conventional” (could mean any range of downpayments but a regular loan) and one was listed as “other” so it could have been owner financing. None, of course, were FHA backed financing – the limits are too high for that.

For all areas combined, the average list price to sales price was 99.68%.   Lots of variation from one area to the next, though, just as with the absorption rate or MOI, which is covered below. Cupertino’s ratio was 102.34%, while  in Campbell it was 95%.

Absorption rate or months of inventory: It varies on the school district, price point, home type and home sale type (distressed vs regular sale).  For example, in Almaden Valley right now, overall it is a strong seller’s market – prices are rising, especially in the lower price points, and the months of inventory is a very brisk 1.8 (6 is said to be “balanced”, more than 6 is a buyer’s market and less than 6 is a seller’s market). Short sales are at 2.6 months of inventory overall.  But look at homes selling between 1.2 mil and 2 million and it’s a different story: in that part of the market it’s 5.8 months of inventory – almost “balanced”.

Here’s how they stack up for months of inventory:

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Money Magazine’s 25 Top Earning Towns list (of residents with the highest median incomes) included three of our prized Silicon Valley communities: Saratoga (ranked #4), Los Altos (ranked #6) and Los Gatos (ranked #19). That’s quite a show! Of course, it doesn’t necessarily reflect the highest standard of living, as our real estate is quite pricey here, particularly in those three areas. (Monte Sereno isn’t mentioned, possibly because of its smaller size. If Almaden Valley were its own town, it probably would have made the list too.)

What do these three areas have in common, besides attracting high earners?

All have excellent public schools, scenic beauty, and low crime. Each one has a vibrant downtown area and a sense of community identity with festivals and events happening throughout the year. All of them have a history connected to the orchards, vineyards, and agriculture of days past and even today tend to have a lot of trees and open spaces. You can find wineries in or near each of them too, and farmer’s markets are found in each community also. All are nestled into the western foothills of Silicon Valley.

They are all unique, of course, with pros and cons depending on your own focus for commute, amenities, and even weather (Los Altos is closer to the bay and a little cooler than Los Gatos). If you want to go to San Francisco frequently, Los Altos will be more convenient. If you want to go to Santa Cruz and Monterey more often, Los Gatos will be closer.

Earlier today I updated my series on Silicon Valley short sales at my Live in Los Gatos blog, where I’ve been tracking the number of active listings in select parts of Santa Clara County which are offered for sale as short sales. Below please find the areas and dates I’ve charted:

To read the entire post, please continue on to Silicon Valley Short Sale Snapshot.

What makes a Silicon Valley house a luxury home? How is high end real estate different from the rest of the market? When is a property not just a home with land, but an estate?

In other parts of the U.S., spending $700,000 will fetch a 4000 square foot home, new construction, in an upscale gated community with country club amenities such as a golf course, tennis courts, and more. Here, that same $700,000 will procure an entry to mid-level single family home in many parts of Santa Clara County.

Luxury connotes a combination of qualities, features, and amenities. And it includes pricing (relative to the nearby market), condition, land, design.

Pricing Luxury Homes in Silicon Valley: What Do They Cost?

Expensive Silicon Valley homes are not necessarily luxury homes. Depending on the city or town, the price tag could be higher or lower. For instance, a fabulous house on a large lot in Gilroy’s Eagle Ridge might sell for 1/3 as much as the identical type of home, land and neighborhood found in Saratoga, Monte Sereno, or Los Gatos, if a similar home happened to be available. Generally, though, luxury homes could cost as little as $1,000,000 or so in some parts of Silicon Valley or in neighboring counties, but in most parts of Silicon Valley, a true estate type property will be valued at $2,000,000 or $3,000,000 or more.

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Have you always dreamed of buying a home close to, or in, the western foothills in Santa Clara County, such as Almaden, Los Gatos, Monte Sereno and Saratoga? Some of the prettiest parts of Silicon Valley are snuggled into the base of the Santa Cruz Mountains. With views of downtown San Jose and the southern San Francisco Bay Area on one side, and rolling, grassy and redwood & oak filled hills on the other, its certainly scenic. Additionally, these areas all tend to have very low crime and good schools.

As a saavy foothill-area buyer, you will want to understand some of the unique issues that this geography may present. The most important of these may well be the issue of water control and drainage.

The Santa Clara Valley, and most of the neighboring Silicon Valley areas, is composed of mostly clay soil. This is an extremely strong substance – so much so that settlers used it, mixed only with a little straw and water, to form adobe bricks for building.

The caveat with clay soil is that when it becomes wet, it expands, and when dry, it contracts. In fact, we call this condition ˜expansive. The amazing thing is that the clay is more powerful than concrete. And that is the problem for houses and other buildings if the ground is expanding, contracting, or alternating between the two.

What can a homeowner do? Its imperative to try to control the amount of water near (or under) the home as much as possible.
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