Today we’ll have a look at the Campbell real estate market. Sitting on the western side of Silicon Valley between downtown San Jose and Los Gatos, Campbell has small town charm with big city ammenities.  The schools are good, the crime is fairly low, and there’s a nice sense of community identity & participation. The downtown area is vital, but so are the shopping hubs outside of the historic zone.  The local parks are a big draw too.

Homes range from modest condos to historic properties and large, estate-like homes on big lots. Just about every type of residential architecture can be found here, with of course a preponderance of ranch style homes but also Eichler homes, Victorian houses, Craftsman style homes, Spanish or Mediterranean design, and Contemporary homes.

“How’s the market?” will elicit different answers by neighborhood, home type, school district, and price point.  We’ll separate out the “markets” by pricing quartile in this post.

First, an overview of listing activity among single family homes in Campbell (data from Altos Research, used by permission/subscription):

And now the same but for condominiums and townhomes:

Generally speaking, inventory is somewhere between flat and barely declining. List prices appear to be falling slightly among single family homes and rising slightly among condos (which are more likely to qualify for FHA loans and benefit from some of the first time homebuyer credits).  Nothing dramatic here, but the condo market may have already hit bottom while the market among single family homes is coasting there … almost there….

Visually, the median list price ”looks” like this when viewed over the course of the last year and both the conglomerates of single family homes and condos are shown (rather than broken down by price quartile):

These kinds of graphs and charts can be a little deceiving, though. The perception has a lot to do with which data you’re looking at. Below is JUST the combined “curve” for the median price of single family homes over the last 1 year.
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The real estate market for condominiums and townhomes in the west valley area of Silicon Valley is similar to the rest of Santa Clara County in one main regard: the most expensive homes are having far more trouble selling than entry level homes.

Today we’ll look at the months of inventory for condos and townhomes in four areas of the west valley: Almaden Valley, Cupertino, Los Gatos and Saratoga.  Since this is a fairly small subset of the overall residential real estate market, I’ve also looked at them as a group (upscale areas with good to great schools near the  foothills) and wanted to see the overall trend when the four neighborhoods were viewed together.

As a reminder, under 6 months is a seller’s market, 6 is neutral and 7 or more is a buyer’s market.

Interestingly, the overall trend of these four areas combined shows consistent improvement in the market toward neutral, from 23.5 months in January to 8.6 months in April.  It’s really very dramatic when viewed as a whole!

Cupertino area condos are faring well in the last 30 days with more closed escrows and just 8 months of inventory. Los Gatos is even better now with 6 months of inventory.

The market is much tougher in Saratoga, CA, where almost no condominiums or townhouses are selling.  Those that do go under contract are in the lowest price ranges.  Many properties are “just sitting”.  Buyers are waiting for prices to drop.  Nearly as tough is the condo market in Almaden Valley.

The challenge for luxury condo owners is that buyers now are primarily buying either for shelter or for investment.  Investment buyers seldom purchase a luxury item (it’s safer to buy two small condos than one large one to hedge against vacancy).

For many condo sellers, now may just not be the right time to sell. On the other hand, if you’re moving up, now may be the ideal time since prices in the higher priced homes are fairly soft compared to “normal”.

As of today, there are nineteen condominiums and townhomes for sale, and just one pending sale, in the upscale Silicon Valley city of Saratoga, CA.

Homeowners are used to buyers stretching to buy homes their corner of Santa Clara County.  It’s a highly desirable place to live, with great schools, low crime, scenic beauty, character, history, and community involvement.

Right now, though, the hottest segment of the Silicon Valley real estate market is the lower priced single family home market.  Conversely, the coolest part part of the market is the luxury condo market, that is, condominums and townhouses in expensive areas like Los Altos, Cupertino, Saratoga, Los Gatos and Almaden Valley. Put directly, homebuyers with a  four or five hundred thousand dollar budget can purchase a single family home in San Jose for the same amount that a condo would cost in Saratoga.   The selling challenge appears to be even more acute as the price point rises.  It has been several months since a million dollar towhnouse in Saratoga has sold.

A good tool for understanding  the market condition is the rate of absorption, which factors in current inventory levels with sales. The question being answered is this: if no new homes were to come on the market, how long would it take for the current inventory to be absorbed if sales continue at the current rate?  (It can be viewed as days, weeks, or months of inventory.)  For example,  if there are one hundred homes for sale and twenty of them sell in a month, there’s a five month supply of inventory, or five “months of inventory”.

If there are under six months of inventory, it’s considered a sellers’ market. Six months is neutral. More than six is a buyers’ market. Obviously, the higher that number goes, the more extreme the market gets into the buyers’ favor.

Right now, it’s quite acute.

For the last two months in Saratoga, there have been NO closed sales among condos and townhomes. None.  This is almost a total market rejection by consumers - they don’t want what is offered at the prices offered. So the months of inventory would be infinite - if we could graph that. This chart doesn’t do well with intangibles like that, so I’ve plugged in in as if there were one sale in January and February - but there were not. So please envision the last two months as having bars that continue through the top of the chart.  Here’s how the history of the months of inventory in Saratoga look when put into a graph (March 2001 is missing data):

The numbers are from MLSListings, our mls provider. I did the crunching to get the absorption rate. The information for March 2001 was missing on MLSListings.com for some reason - so you’ll see a gap in the chart where that info belongs.

What’s happening with prices? The peak of pricing was about two years ago, and prices have been dropping since then - if slightly at first, it’s more dramatic now. This has been a very deep correction, and prices have “rolled back” in time a number of years.  For some properties, it’s only to about 2005 or 2006. For others, it’s between 2002 and 2004 prices. Since no condos have closed recently in Saratoga, it’s hard to pin the “rollback year” down. It is, however, clear that buyers don’t like the list prices of the homes for sale - if they did, they’d be buying.

When will it recover? It’s hard to say.  This correction has been deep and it may take a few years to see a recovery.  Buyers will need to feel confident in their jobs, particularly in purchasing a luxury condominium.  I would not expect to see peak prices again for another five years or so, possibly more.

The Almaden Valley real estate market is not greatly changed now from a month ago.

List prices of homes, both condominiums and single family houses, continues to decline in Almaden Valley:

The amount of inventory continues to fall. Homeowners tell me, “I don’t want to sell my house at the bottom of the market”. If this continues, it will help give some balance to the market and keep prices from losing value as much in Almaden Valley.

The days on the market, though, are rising very dramatically in Almaden Valley.

Overall, the market is tougher for condos and townhouses than for single family homes. This has been the case for most of the valley for over a year.

(Above 30 is a seller’s market, below 30 is a buyer’s market.)  As you can see from the steeply dropping black line above, the condo market has gone from bad to catastrophic.  My educated guess is that potential buyers who could have purchased a luxury condo in Almaden have decided to buy a single family home in a less expensive area instead, since the costs are now very similar.

How’s the residential real estate market in Campbell, CA?  There are always micro-markets to follow, narrowing what’s viewed to neighborhoods, school districts, and price point. But today we’ll take a brief overview of the “big picture” in Campbell’s housing market by looking at statistics related to currently listed homes among houses and condos or townhomes there. (Charts and data by Altos Research, to which I have a subscription and permission to use here.)

Median Price of condominiums and single family homes:

Inventory of houses and condos and townhouses in Campbell:

Days on the market for homes for sale in Campbell:

Overall it is a mixed bag for home sales in this Silicon Valley city: inventory is declining, but days on market are increasing and list prices are not terribly far from flat (rising for homes, falling for condos).

Will there be an optimistic market improvement with the new Obama administration? Will there be the typical surge of spring buyers after the Superbowl? Perhaps. We’ll have to keep watching. Anecdotally, I can say that I’m seeing a lot more activity in the market; the only question is whether the activity will translate into sales.

The Almaden Valley real estate market is complex - “how it is” very much depends on the price point, school district (there are several in Almaden) and neighborhood.  The broad overview and the micro-view of this San Jose area are both helpful to buyers and sellers. Today we’ll do a little of each. (Graphs courtesy of two subscriptions I have: one is the REReport and the other is Altos Research. Both used by permission.)

First let’s see how Almaden Valley homes for sale fared in recent months, in 2008 and in recent years. Then we’ll have a look at the current situation. Here are a couple of graphs that make clear the condo market in this part of Silicon Valley:

Inventory has been rising in recent months, and sales have been declining fairly steadily in recent years.  If you have friends who sell homes or home loans and work the Almaden or Silicon Valley market, you already know that things have been worsening for quite awhile.

Now let’s look at the single family home market; first is the the days of inventory over the last 18 months or so and then the number of sales in Almaden over the last few years.

The patterns among single family homes in Almaden are even more clear in terms of the numbers of sales: it’s a straight decline.  Time on the market has fluctuated a little but the overall movement has been for longer time to sell a home.

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How is the residential real estate market doing in the Cambrian Park area of San Jose, CA?  We’ll have a look at the 95124 zip code area and the 95118 zip code area of San Jose, which together comprise at least 95% of the Cambrian Park real estate area of Silicon Valley. (A small sliver belongs to the predominently Campbell area of 95008.) The following charts, from Altos Research, represent list prices (not sold prices).

Although the condos in 95124 (green line) have not fared too badly in the last year, the vast majority of Cambrian Park real estate seems to be hurting. The median list price on these homes has been slipping fairly steadily over the last year - often at least 10% of value. This is the broad overview. Next we will view things on more of a micro level.

Next, we’ll view Cambrian in smaller segments, broken down by both zip code and quartile. First, let’s take a look at the 95124 zip code, starting with the single family home real estate market:
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