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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How many of the Silicon Valley homes for sale are listed as short sales? How many are bank owned properties? This morning I did some time pulling the numbers out for my readers so that you can see the actual real estate figures.

What’s being counted below are homes for sale, including houses, duet homes, condominiums and townhouses (or townhomes) in the various areas of Santa Clara County listed below.

As was the case a year or two ago, most of the short sale activity is taking place in the most affordable price ranges. The higher priced areas are not immune, though – but because there are fewer distressed properties to choose from, they get purchased rather quickly, so we’d see a higher percentage of them among the pending sales rather than the available listings.

Today I did a post on this subject focusing specifically on the Los Gatos real estate market in terms of short sales today vs the last couple of years (and the question of whether or not the trend is to rising numbers of short sales available). To learn more, visit the article on my Live in Los Gatos blog.

For bargain hunting buyers of high end properties, then, it’s slim pickings!  In the entry level areas, there’s much more selection but also lots of competition.  Last week I was involved with some buyers in a bidding frenzy in a terribly underpriced Cambrian short sale: it got 43 offers!  (So please remember that the list price may be completely unrelated to the sales price.)

If you’re looking to buy or sell a home in Silicon Valley, it helps to have the assistance of a Realtor with a pulse on the market.  Please contact me for a confidential & no-obligation meeting today!

Silicon Valley features a number of upscale communities that enjoy beautiful estate properties. These luxury homes are not simply large houses, but rather they boast qualities generally not seen in regular residential real estate.

What makes a house a “luxury home”?

A luxury property in Santa Clara County often includes a number of elements that set it apart, such as:

• price tag: these homes usually sell for more than three or five million dollars (and may be $10 or $20 million or more)
• more than an acre or two of land
• house larger than 4000 or 5000 sf
• the inclusion of “out buildings” such as a guest cottage, gatehouse, etc.
• views (valley, hill, acreage) or special features of the land (waterfront, riverfront adjacent), a vineyard, or something else special and uniquely beautiful
• amenities such as a pool, tennis court, racquetball court, gym, sports court or facilities for enjoying other sports & exercise on site
• specialized hobby or relaxation rooms, as in a darkroom, library, workshop, conservatory
• entertainment centers not commonly found in private homes, like a ballroom, dedicated home theater room for movie viewing, pool or billiards and “game room”, and ice cream parlor
• safety tools such as a video survelliance system, electronic gates

The (main) house itself is qualitatively different too.

Kitchens tend to be the most important room for San Jose area home buyers of all price ranges, and this includes homes that cost upwards of ten million dollars. Usually, kitchens in these homes are designed with a very clear purpose in mind and are done beautifully, though recently in Los Gatos I saw a home listed for about ten million with a kitchen that needs to be completely remodeled. This is very unusual, though.

Most luxury homes features kitchens of one extreme or the other. On the one hand, it may be more industrial in nature if those cooking in it are primarily professional chefs, domestic employees or catering services rather than the homeowner. This is not the kitchen of glossy magazines, it’s not meant to impress anyone for all the maple cabinets, stainless steel appliances and granite countertops. This sort of kitchen is functional, not gorgeous, and it may have stainless steel countertops, for instance, alongside the giant gas range. Such a kitchen is usually separate from the living areas and the guests are not expected to visit this part of the home.

Far more commonly found in Silicon Valley is the other end of the spectrum, the kitchen where residents spend most of their time, and it’s meant to impress. Here we see high end materials and appliances in a room viewed as much as art as the meals created in it are. This type of kitchen is often the focal point of today’s upscale or luxury home. The home’s floorplan is “open” to the kitchen – often the kitchen and family room blend together as part of a Great Room. This is a kitchen designed for owners who cook, not those who have servants.
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The tide is turning for Silicon Valley real estate: fewer listings are coming onto the market and more homes are being purchased by homebuyers anxious to get into a house before interest rates rise and the $8000 first time homebuyer’s credit expires.

The shift is most visible in areas with the most affordability, but even is more upscale, higher priced areas, it’s still a noticeable change.

Today I’ll share with you a series of graphs, by area, of single family homes in terms of new listings, current inventory, and pending sales (sales under contract).  These were created using our mls system (information deemed reliable but not guaranteed).

Here’s the “key” (since if I put it alongside each image it would not fit without making all of it unreadable):

Description of each graph is ABOVE the image.

Almaden Valley (95120 area of San Jose) - this is a more expensive part of Santa Clara County, but the market improvement is very clear. Cool market.

Blossom Valley (95123 and 95136 zip codes, an area of San Jose) – this is a very affordable part of Silicon Valley and has taken a huge hit on the “price rollback”.  But it’s getting better now – note the rise in sales, low number of new homes coming on the market and overall lessening of inventory. Number of pendings is almost the same as the total inventory. Hot market.

Cambrian Park (95124 & 95118 area of San Jose) – trends among listings, inventory, and sales for single family homes. The trend of less inventory and more sales is quite evident. Warm market overall – very hot under $500,000, cool in higher price ranges. (But hot only if prices are deeply reduced.)

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The following post was written in May 2009. For a more current update, please see the June 2010 post, 
The Condo and Townhouse Market Update in the West Valley for June 2010

March 11, 2009

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”.