Cambrian Park Plaza SignThe months of inventory for any part of the real estate market can vary, depending on many factors, including age of home, house size, lot size, and school district, whether or not there’s a pool, and many other things. It can be very useful to understand this metric when selling a Silicon Valley home. I’ve done market numbers crunching tied to the specific characteristics of a property (say, small yard with pool or big yard with no pool) to find the impact of those characteristics on the probability that a home will sell – or how fast.

The Cambrian area of San Jose is a very “hot market” overall, but it can be confusing to know how hot it really is, just like the rest of Santa Clara County, because there are multiple school districts – and schools are probably the number one driver of home values in this highly educated valley.

An explanation of “months of inventory”

What does “months of inventory” mean? This figure references how long it would take to sell a property if homes continued to sell and close at the current pace with no new inventory coming on the market. A good analogy is to consider a bathtub which drains. If you add no new water to the tub, how long will it take to empty out?

The months of inventory is sometimes called the absorption rate. The question is simple: how long will it take for the current inventory of homes for sale to get absorbed by the home buyers purchasing them? It doesn’t have to be calculated by months. It could be in days, weeks, or years. But months is probably most common.

The Cambrian area of San Jose’s months of inventory as a whole, and in one price point

Cambrian was once an enormous zone of the Santa Clara Valley. Today we mostly think of it as within San Jose in the 95124 and 95118 zip codes. Some of it it adjacent to Campbell – a very tiny sliver is IN Campbell, and a tinier still area is in San Jose and is under the Campbell School Union District. Most of this area is in one of three elementary school districts: Cambrian, Union, or San Jose Unified.

Here’s the breakdown – first, for ALL of Cambrian (MLS area 14 for my Realtor readers) that’s within the City of San Jose and second, by elementary school district. The area for Campbell Elementary is so small that the numbers are not significant (no offense to the Campbell school residents). It can just jump around too much to be helpful, and often gives us no usable data. Please have a look:

I highlighted the San Jose Unified and Union Elementary School Districts in both charts. Aside from Campbell, which has numbers too small to register a MOI, these are the hottest tickets in the district.

The message I’d like to convey is this: you can read about information for your part of Silicon Valley, or your city or zip code, but it’s not until you drill things down to an area that closely matches your own home will you have a better sense of your own home’s “real estate marker.” It’s never “how is the market?” so much as “how’s the market for YOUR home – or the one you want to buy?”

If you were only tracking Cambrian, you might see 0.2 months of inventory. That’s a lightning fast seller’s market. But it’s not nearly as good if you’re selling in the area with Cambrian Elementary Schools. There, you’re looking at closer to 1 month of inventory for homes around $1 million, while the same price point with Union Schools is a blazing 0.2 of a month, or about 6 days – as opposed to 30!

Years ago, I had a Willow Glen listing where the whole back yard was the pool. I did a study on the months of inventory and learned that pools in properties with that lot size took substantially more time to be absorbed. Likewise, I had a Los Gatos estate property on an acre of land, and the reverse was also true: the months of inventory showed that large lots on $2 million and up homes for sale did not sell nearly as well without a pool.

The math is simple: using the same criteria, divide the number of active listings by those of homes sold in the last 30 days. The criteria can be anything you like – a property’s size, location, number of bathrooms, price, age, etc. Often I include approximately the same home and lot size together with the school district. That usually provides much more accurate info on “how’s the market” as compared to just getting it by zip code alone.

If you are looking to buy or sell a home in Cambrian, or anywhere in San Jose or Santa Clara County, this kind of information is really important. It is not hard to do, but very few real estate agents will provide this information before you list or before you make the final determination on the list price of your home.

Looking for a good Silicon Valley Realtor who will get you that extra data? Please call or email me. I would love to chat to see about possibly working together.

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.

 

2017-1-3 Inventory of Single Family Homes in Santa Clara County

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!

 Santa Clara County's critically low housing inventory

Santa Clara County’s critically low housing inventory

 

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.


"Multiple offers" - artwork

“Multiple offers”

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:

  • Both buyer and seller are reasonably motivated (but not under any undue pressure)
  • Both buyer and seller are well informed and acting in their own best interests
  • The home or property has been given enough exposure such that the market has been tested
  • There are no special concessions that would impact the sale price (such as a year long free rent back, including all the furniture or personal property, the seller carrying the mortgage at a very high or very low rate of interest). Likewise, no other special terms that would increase or decrease the sale price.
  • 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):

    Santa Clara County inventory of single family homes as of 12-7-2016

    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:

    http://sanjoserealestatelosgatoshomes.com/summary-of-tips-for-multiple-offer-situations-silicon-valley-real-estate-contracts/

    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 Santa Clara County real estate statistics for Single Family Homes

     Read the full report for houses and duet homes in Santa Clara County here 

    (NEW! You can also access the stats for San Mateo and Santa Cruz Counties from here!)

    Prices are up month over month and year over year after some slight cooling earlier this month. Inventory is up from a year ago but not enough to catch up with the deficit.

     

    Santa Clara County Stats At A Glance for sales closed in November 2016

    Year-Over-Year

    • Median home prices increased by 5.2% year-over-year to $1,010,000 from $960,500.
    • The average home sales price rose by 7.1% year-over-year to $1,297,260 from $1,211,630.
    • Home sales rose by 21.1% year-over-year to 850 from 702.
    • Active listings fell 22.1% year-over-year to 1,531 from 1,965.
    • Sales price vs. list price ratio fell by 0.9% year-over-year to 101.6% from 102.5%.
    • The average days on market rose by 9.2% year-over-year to 31 from 28.

    Compared To Last Month

    • Median home prices slipped by 3.8% to $1,010,000 from $1,050,000.
    • The average home sales price rose by 1.0% to $1,297,260 from $1,283,920.
    • Home sales down by 6.2% to 850 from 906.
    • Active listings dropped 23.1% to 1,531 from 1,991.
    • Sales price vs. list price ratio dropped by 0.2% to 101.6% from 101.8%.
    • The average days on market dropped by 1.4% to 31 from 31.

     

    Continue reading

    If you’ve been trying to sell your home in Los Gatos, Saratoga, Almaden Valley, Cambrian, or anywhere in the greater San Jose area but haven’t received an offer yet, don’t despair!  With our mild winters, you really can sell real estate any time of year.  And inventory is extremely tight right now, increasing your odds of success.

    In late November and December a lot of folks DO pull their property off the market, and the result is a, even further tightening of inventory across Silicon Valley from the months immediately prior. The ratio between listed and sale pending homes improves dramatically. (The “absorption rate” tends to get better with fewer houses, condos and townhouses listed on the MLS.)

    But you’re thinking: it’s a hassle. It’s the holidays. Is this any time to sell Silicon Valley real estate?

    And you’re right about that. So do it differently.
    Continue reading

    The Saratoga holiday season begins this Saturday, November 26, 2016, with the Chamber of Commerce Holiday Wine Stroll followed by Tree Lighting & Celebration of Light.

    Tickets for the Wine Stroll are on sale now online or by phone for $40 and will be available day-of for $45. The Stroll goes from 2pm to 5pm. Visit the website or call 408-867-0753 for more details.

    The Tree Lighting Ceremony will begin at 5:30pm. For more information, visit the website at saratoga.ca.us/treelighting

     Tree Lighting Flyer

    1. 3 beds, 2 full, 1 half baths
      Home size: 3,207 sq ft
      Lot size: 12,458 sqft
    2. 4 beds, 2 full, 1 half baths
      Home size: 2,102 sq ft
      Lot size: 10,018 sqft
    3. 5 beds, 4 full baths
      Home size: 2,619 sq ft
      Lot size: 10,628 sqft
    4. 5 beds, 3 full, 1 half baths
      Home size: 4,481 sq ft
      Lot size: 1.17 ac
    5. 5 beds, 3 full, 1 half baths
      Home size: 3,147 sq ft
      Lot size: 12,501 sqft
    6. 3 beds, 2 full baths
      Home size: 1,910 sq ft
      Lot size: 42,863 sqft
    7. 4 beds, 2 full, 1 half baths
      Home size: 2,500 sq ft
      Lot size: 12,893 sqft
    8. 6 beds, 4 full baths
      Home size: 2,989 sq ft
      Lot size: 14,026 sqft
    9. 4 beds, 3 full, 1 half baths
      Home size: 3,497 sq ft
      Lot size: 18,687 sqft
    10. 6 beds, 6 full, 1 half baths
      Home size: 6,427 sq ft
      Lot size: 43,560 sqft

    See all Real estate in the city of Saratoga.
    (all data current as of 3/27/2017)

    Listing information deemed reliable but not guaranteed. Read full disclaimer.

    Thanksgiving is just a few days away, and there are interfaith services going on next week which welcome all.

    In Los Gatos, the ecumenical service is tonight at 7:30pm at Los Gatos United Methodist Church, located at 111 Church Street. For more information, please see a post on my Los Gatos blog, Live in Los Gatos:
    http://liveinlosgatosblog.com/thanksgiving-interfaith-service-in-los-gatos-this-tuesday/

    In Saratoga, the interfaith service is Thursday morning from 10-12 at Congregation Beth David.  Read all the details here:
    http://www.sivicouncil.org/blog/event/51st-annual-saratoga-interfaith-thanksgiving-service/

    Wishing everyone a very Happy Thanksgiving! Hope to see you at one of these events!

     

    1. 3 beds, 2 full, 1 half baths
      Home size: 3,207 sq ft
      Lot size: 12,458 sqft
    2. 4 beds, 2 full, 1 half baths
      Home size: 2,102 sq ft
      Lot size: 10,018 sqft
    3. 5 beds, 4 full baths
      Home size: 2,619 sq ft
      Lot size: 10,628 sqft
    4. 5 beds, 3 full, 1 half baths
      Home size: 4,481 sq ft
      Lot size: 1.17 ac
    5. 5 beds, 3 full, 1 half baths
      Home size: 3,147 sq ft
      Lot size: 12,501 sqft

    See all Real estate in the city of Saratoga.
    (all data current as of 3/27/2017)

    Listing information deemed reliable but not guaranteed. Read full disclaimer.

    When trying to figure out what market value or a fair price is for a property, Silicon Valley consumers will often look at recent sales nearby which they find online, extract an average price per square foot, and then decide that this is likely to be what a house or condo is worth based on those “comps”.

    First factor: the unique real estate itself (how similar are the comps, really?)

    Unfortunately, it’s not that simple to figure out that home’s likely sale price or the probable buyer’s value. Homes are much more nuanced than just the average price per square foot.   Unless the comparable sold property is truly comparable in every way – similar quality of updating or remodeling, similar location, similarly expensive landscaping –  and the timeframe recent, too, you’ll have to try to adjust based on varying factors. (And that’s not easy – it’s an appraiser’s area of expertise. But you may say “those comps had remodeled kitchens, so that may be worth X amount of money”. You would not ignore that big of a difference.) Look at the list of homes below – how much can you tell about remodeling, landscaping, or upgrades from a simple list? Not enough.
    Comps in a Campbell community

    Second factor: speed of sale, number of offers

    The situation surrounding each sale is likewise quite varied.    A property that gets 4 or more offers on day 7 on the market is a different situation than 1 offer on day 43.  If you are writing a real estate contract on a home that is getting multiple offers, it’s not going to help you to compare it to a stale listing that sold with just one offer.  It’s not just comps: it can be the current competition that largely determines the final sale price of that house or condo.
    Continue reading

    21st Annual Rose Garden Homes Tour Oct 15-16 2016

    Each autumn, the St. Martin of Tours School puts on a fabulous tour of lovely homes in San Jose’s Rose Garden neighborhood.  While anyone driving through this central San Jose area can appreciate the diverse and beautiful architecture, often the best  features of these homes are found inside.

    This year is the tour’s 21st Anniversary! The homes tour is a large scale fundraising effort for the school. Tours are self-guided with hosts in each home ready to answer questions and share interesting historical facts and stories about the homes. On display will also be floral designs, artwork, and perhaps some treasures. The garden segment of the tour includes the Tea Garden, a spot to sit and enjoy complementary refreshments or a gourmet lunchbox (available to preorder until October 9th with your tickets). The tour also features a boutique, where 100% of the proceeds will benefit St Martin of Tours School (credit cards accepted!) and a donation drawing.

    Tour dates are Saturday, October 15th and Sunday, October 16th from 10am-4pm both days. No children under 12 are allowed on the tour. Come any time within the tour hours to begin, but note that it is recommended that visitors allot about 2 hours to view every home and the tour ends promptly at 4pm.

    Tickets are available at the door, online, or through families in the school.

    To read about the homes from last year’s tour, and to learn more about this year’s tour, and to purchase tickets visit the official Rose Garden Homes Tour website.

    Get Tickets!Katherine Sullivan is selling tickets (full disclosure: she is a cousin of mine) and she can be reached at katcsullivan@gmail.com

     

    1. 3 beds, 2 full, 1 half baths
      Home size: 1,542 sq ft
      Lot size: 740 sqft
    2. 2 beds, 2 full baths
      Home size: 1,104 sq ft
      Lot size: 1,437 sqft
    3. 2 beds, 1 full, 1 half baths
      Home size: 1,056 sq ft
      Lot size: 566 sqft
    4. 4 beds, 2 full baths
      Home size: 1,652 sq ft
      Lot size: 6,011 sqft
    5. 2 beds, 2 full, 1 half baths
      Home size: 1,291 sq ft
      Lot size: 1,306 sqft
    6. 3 beds, 2 full baths
      Home size: 1,420 sq ft
      Lot size: 6,446 sqft
    7. 3 beds, 2 full baths
      Home size: 1,094 sq ft
      Lot size: 1,089 sqft
    8. 5 beds, 3 full baths
      Home size: 2,654 sq ft
      Lot size: 6,621 sqft
    9. 4 beds, 3 full baths
      Home size: 1,625 sq ft
      Lot size: 6,098 sqft
    10. 2 beds, 1 full bath
      Home size: 903 sq ft
      Lot size: 1,742 sqft

    See all Real estate in the city of San Jose.
    (all data current as of 3/27/2017)

    Listing information deemed reliable but not guaranteed. Read full disclaimer.

    Translation


    by Transposh - translation plugin for wordpress

    Mary Pope-Handy

    Realtor
    ABR, CIPS, CRS, SRES
    Sereno Group Real Estate
    214 Los Gatos-Saratoga Rd
    Los Gatos, CA 95030
    408 204-7673
    Mary (at) PopeHandy.com
    License# 01153805


    Selling homes in
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    San Mateo County, and
    Santa Cruz County.
    :
    Special focus on:
    San Jose, Los Gatos,
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    Almaden Valley,
    Cambrian Park.

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    Use the widget below to browse properties which are for sale, under contract (pending) or sold. Want to view only homes which are available now? Use the "find a home" link on the menu above (next to the "home" button).

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    Mary Pope-Handy's Live in Los Gatos blog won the 2007 Project Blogger contest, sponsored by Inman News and Active Rain

    2007: Mary Pope-Handy and Frances Flynn Thorsen win the Project Blogger Contest for Mary's Live in Los Gatos blog. The contest was sponsored by
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