The annual market report is out at popehandy.REReport.com and we can now learn how 2011 compared to 2010. The median sales price for houses in Santa Clara County was off 5.3% overall. But from one part of the valley to the next it varied wildly with 6 cities or areas finding themselves in positive territory while others were off by double digits.
What is it that makes Gilroy, Los Altos Hills, Los Gatos, Mountain View and Palo Alto “in the black”?
Most of these cities/towns are upscale, west valley communities. But so are Saratoga, Cupertino, and Monte Sereno.
Gilroy was especially hard-hit with the housing downturn so perhaps in that case, it’s just coming back into more of a balance. (Then again, so was Morgan Hill and it’s still off by 12%.)
The LinkedIn IPO and others in the Palo Alto area drove prices up for some parts of the housing market nearby and it’s likely that this explains the positive growth for Palo Alto, Mountain View, and Los Altos Hills. That said, it would seem that Los Altos, and perhaps even Sunnyvale would have seen stronger numbers on the same account. Perhaps school scores are the key driver here.
Los Gatos, Saratoga and Monte Sereno often behave somewhat similarly as they are adjacent to one another and often attract similar home buyers who want good schools, a nice downtown area nearby and scenic beauty with the hills. The annual numbers show Monte Sereno down 6.7%, Saratoga down 2% but Los Gatos up 6.4%. With Monte Sereno, there are very few sales each month and each year (only about 4,000 residents), so there can be a wider swing without it necessarily being accurate. Saratoga and Los Gatos each have about 30,000 people who call these areas home, though, so the data is much more helpful. Saratoga and Los Gatos both have multiple school districts, views, homes with better proximity to “downtown” and more variables – I think we’d have to dig a lot deeper to learn why these two neighboring markets are so diverse. We might also have to look at multiple years of data to see if Saratoga spiked while LG slumped to explain the difference.
Coming in at last place: the Santa Cruz Mountains or Los Gatos Mountains area (zip code 95033), where the median list price of houses sold slipped 17% from the year before. This beautifully scenic region covers a lot of territory and several quite different neighborhoods, some more convenient and others more remote. It often takes much longer to sell a home in the mountains than on the valley floor but it can be a great “bang for your buck” for great schools, clean area, less crowding, etc. The remoteness of some homes, the increased rain and other challenges generally make this part of the valley a more challenging real estate market most of the time, and in a down market that’s even more true.
Palo Alto, Mountain View and Los Altos each have regions which can be tracked in addition to the cities as a whole. If you’d like to see these numbers, please visit http://popehandy.rereport.com and then click on Yearly, then select the city, then the neighborhood and you can see how Baron Park or other areas are faring in particular (also for their monthly or quartly reports).
Areas within San Jose, like PA, MV and LA, can be tracked. Since I am very active in several of them (Almaden Valley, Cambrian Park, Willow Glen, Blossom Valley and others on the west side), I want to share those next.
The median sales price of houses which sold & closed in 2011 in the City of San Jose was down 5.9%, lower than the county as a whole. Most of San Jose was worse off than the prior year – all except Alviso!
Alviso, which was a separate town until not so long ago, sold with a double digit increase in the median sales price – a whopping 10.6% higher than in 2010. Affordability and investor activity are most likely the cause – more demand and less inventory than the year before. (I suspect either fewer distressed properties or that they were gobbled up quickly. Knowing would require more research.)
Downtown or central San Jose took a beating with the median sales price down 9.6%. Why did it fall from grace? Not everything in this area is affordable – consider that it includes Naglee Park, The Rosegarden, and a few other tony areas. I suspect it’s the number of foreclosures (REOs) and short sales but I don’t have that information at hand. It would require a much closer look that our brief survey here to uncover what’s happening. (We know that there are many unsold, new condos in downtown San Jose but those should not be impacting the sales of single family homes.)
In future articles or posts I hope to look at a few of these areas more carefully to see what is causing the great diversity between the areas showing improvement over 2010 such as Alviso, Palo Alto, Gilroy, Los Altos Hills, Los Gatos and Mountain View versus those which are really hurting: downtown San Jose, the Los Gatos Mountains, Evergreen, Morgan Hill, Milpitas. Very likely it’s a combination of the distressed market activity in some areas, school scores, the pricing tier (i.e., homes between 1 and 2 million near Palo Alto) and more factors. With real estate, it’s always local – and that’s just the starting point.