home buying

Another Silicon Valley real estate market bubble? (Image of bubbles in a hot tub.)Hearing the real estate market “war stories” about dozens of offers on Silicon Valley properties and overbids ranging from 20 – 55% had convinced me that we were in a Silicon Valley real estate market bubble back in early 2013. At least, this is what a bubble looks like, sounds like, feels like, and acts like.   At the time I thought, “how much longer could this continue?”  Four years and counting – that is the answer.

I tell my family and friends that we are in “crazyland” as buyers purchase homes with no contingencies of any kind, houses sell in 10 days or less (if everything is right, which seems to be the case 75% of the time), and those same properties are selling at well over list price and with much more than 20% down.

The absorption rate, or months of inventory: it is a Silicon Valley real estate market bubble?

What do the numbers say?  I just logged into MLSListings.com and see that right now, in all of Santa Clara County there are 817 single family homes (houses + duet or attached single family homes).  The pending and contingent homes measure 1074, far more! That ratio alone suggests that the market is in overdrive.  In the last 30 days, 950 single family  homes have sold & closed escrow.  So the months of inventory is 817 divided by 950 = .86 of a month of inventory, so about 3.5 weeks of inventory. (When I originally blogged about the potential bubble, it was 1.8 months of inventory.)

In other words, things are flying off the shelves. And they have been, with only a few minor blips here and there, since early 2012. Does that sound like a Silicon Valley real estate market bubble to you – a crazy strong seller’s market lasting 4.5 years?  I could be wrong, but I think of bubbles as being something fairly swift, not a multi year trend.

Homes are selling faster than new ones are coming onto the market!

It’s one thing to say that one city, town, or school district has a very low months of inventory (or high absorption rate).  It is another altogether to say an entire county is that low.  This is a major trend, not a tiny blip in the statistics.

How soon we forget that after the outrageously deep seller’s market in 2000, we had a steep drop in 2001.  Or that all the crazy buying in the San Jose area (and other places) in 2005-06, combined with bad financial regulations, lead to the crash of 2007-2009. But perhaps that enormous “correction”, in which Santa Clara County lost about 50% of its value on average, had more room to recover than we initially realized. Jobs keep flowing in, and housing starts are not keeping up. Supply and demand – the age old equation. That would seem to refute the idea that this is a Silicon Valley real estate market bubble. Perhaps low inventory and strong demand are what we should be expecting going forward. Continue reading

Often I have clients who are interested in purchasing a 4 bedroom, 2 bath home in a good school district in Silicon Valley, particularly in the South Bay and West Valley areas. Tonight I did a study on the MLS of homes that have sold and closed escrow in the last 4 months with these characteristics:

  • single family home (house)
  • 4 bedrooms
  • 2 bathrooms
  • 1800 to 2200 square feet of living space
  • 6000 to 10,000 sf lot

Disclaimers aside, here are the numbers for select West Valley Communities in the West/South Bay area with good schools. The first number is the average sales price per square foot, the second number is the average sales price:

And a look at the chart from all back in 2015…

And all the way back in 2011. What’s changed? A lot! The order has shifted some, showing where demand has increased or decreased. Most noticeably, the prices are significantly lower in 2011 than they are now. The 2015 chart shows prices somewhere in-between the 2011 and 2017 levels. Palo Alto and Los Altos remain consistently in the top two positions.

The home prices tend to run with the school district API scores.  You can check the 2013, three year average, API scores in Santa Clara County for both the districts and the individual schools online here.         Continue reading

Severe inventory shortage

Why is it so hard to buy a home in Silicon Valley?  Most of it has to do with our ongoing and severe inventory shortage.

I initially wrote the article below on Feb 9, 2012.  I thought it was bad then – and I suppose that relatively speaking, it was. But it’s much worse now!

Today is May 1, 2017, and I ran the numbers of available single family homes in Santa Clara County in a chart comparing since January of 2012.  Have a look, and please note the year over year numbers:

2017-05-01 Santa Clara County Inventory of Single Family Homes

The situation has only intensified since I first wrote this article in early 2012.  There are many reasons for the problem: older people won’t sell for tax reasons (mostly capital gains). move up buyers who elect to stay and add on rather than deal with hugely increased property taxes.  In general, home owners are opting to “buy and hold”.

Is it hard to buy a house in the San Jose area? You bet.  And unfortunately, I don’t see an end in sight anytime soon.

*********************************

Original article: Feb 9, 2012

Right now I’m working with a number of very frustrated home buyers.  Silicon Valley real estate inventory is painfully low, and in the lower price ranges especially, that means multiple offers are fairly common.  FHA home buyers, in particular, are getting out bid and out negotiated by all cash buyers, many of whom are investors.

How low is the inventory?  Let’s have a look at January’s inventory for houses & duet homes (“class 1” or single family homes) over the last ten years in Santa Clara County (San Jose, Los Gatos, Campbell, etc.):

2012  1,382
2011  2,007
2010  2,426
2009  4,759
2008  4,872
2007  2,698
2006  2,202
2005  1,285
2004  1,612
2003  3,119

The average January inventory of available houses over the last 10 years is 2,636.  At 1,382, January 2012’s available inventory of houses for sale in the San Jose area was just 52% of normalContinue reading

Home buying in Silicon ValleyFirst time home buyers in Silicon Valley and folks relocating from out of the San Francisco Bay Area often ask me if buying a home in late fall or winter is a good idea, or if it would be  better to wait until spring, when there’s presumably more inventory.  That’s not an easy answer. In the San Jose area, the weather is not so big a factor as it would be in places such as Buffalo, New York, where my friend Colleen Kulikowski sells homes. We sell a good number of homes year-round here, thanks to our sub-tropical climate.  This is true even when we get a whole lot of rain.

The real estate market is a little different each year, but there are some general trends – you just cannot count on them, that’s all!  Here are some “usually” situations, but please know that this may or may not apply the year you want to purchase a property!

  • Usually we see the most inventory in summer (followed by spring)
  • Usually we see the least inventory in winter (especially between about Thanksgiving and the Superbowl)
  • Prices are normally softest in winter
  • Interest rates on mortgages or loans are normally at their lowest during the winter

If you want a better deal, shop in the late fall and winter.  If you want more selection, shop in spring and summer (but it will often cost more!). It is up to you!

What I normally tell my clients is this:  buy the home you want to live in, when you’re ready, regardless of the time of year.

See what’s currently for sale in Santa Clara County on the map below:

  1. 3 beds, 2 baths
    Home size: 1,436 sq ft
    Lot size: 6,708 sqft
  2. 5 beds, 3 baths
    Home size: 2,958 sq ft
    Lot size: 8,799 sqft
  3. 3 beds, 1 bath
    Home size: 1,284 sq ft
    Lot size: 4,621 sqft
  4. 2 beds, 1 bath
    Home size: 1,365 sq ft
    Lot size: 9,178 sqft
  5. 0 beds, 0 bath
    Home size: 1,628 sq ft
    Lot size: 8,023 sqft
  6. 4 beds, 3 baths
    Home size: 1,990 sq ft
    Lot size: 7,949 sqft
  7. 4 beds, 3 baths
    Home size: 2,584 sq ft
    Lot size: 5,793 sqft
  8. 5 beds, 3 baths
    Home size: 2,673 sq ft
    Lot size: 6,899 sqft
  9. 4 beds, 3 baths
    Home size: 2,261 sq ft
    Lot size: 8,036 sqft
  10. 4 beds, 3 baths
    Home size: 2,754 sq ft
    Lot size: 18,295 sqft

See all Real estate in the city of San Jose.
(all data current as of 11/21/2017)

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

CautionThere’s a new danger in Silicon Valley home buying: phishing emails with bad instructions on where to wire in funds for escrow.  Home buyers now usually wire in their initial or good faith deposit and also normally wire in the balance of the downpayment a few days prior to the close of escrow.  Bringing in the funds by a cashier’s check is also an option.

Somehow, the bad guys have at times gotten ahold of sensitive information and have sent fraudulant wiring instructions to home buyers.  Similarly, wire fraud has been attempted and directed at real estate professionals.

Please be very careful with all email, but especially anything involving money.  Do not click on attachments if you are not positive who’s sent it to you.  Sometimes the sender’s email address looks almost right but a closer view will reveal it’s not – mouse over it and double check!   Before wiring funds to title, CALL the branch and ask the escrow officer or assistant for specific wire instructions.  Keep them, as you will need them again at the end of the transaction.

Exercize caution with your paperwork and shred sensitive items when you no longer need them.

When in doubt about the authenticity or safety of something, call the title company (the number on the preliminary title report, not a number in an email) and double check everything.  And remember, you can always get a cashier’s check from your banking institution and walk it in.

  1. 2 beds, 2 baths
    Home size: 1,040 sq ft
  2. 2 beds, 2 baths
    Home size: 1,193 sq ft
    Lot size: 892 sqft
  3. 2 beds, 1 bath
    Home size: 1,000 sq ft
  4. 5 beds, 2 baths
    Home size: 1,852 sq ft
    Lot size: 5,318 sqft
  5. 4 beds, 2 baths
    Home size: 1,528 sq ft
    Lot size: 5,501 sqft
  6. 2 beds, 2 baths
    Home size: 1,094 sq ft
    Lot size: 283 sqft
  7. 2 beds, 2 baths
    Home size: 1,905 sq ft
  8. 2 beds, 2 baths
    Home size: 1,344 sq ft
  9. 3 beds, 2 baths
    Home size: 1,436 sq ft
    Lot size: 6,708 sqft
  10. 5 beds, 3 baths
    Home size: 2,958 sq ft
    Lot size: 8,799 sqft

See all Real estate matching your search.
(all data current as of 11/21/2017)

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

Just starting to think about buying a home? If you’re like most people, you’ll be looking at online listings of homes for sale here in Silicon Valley to see what they cost and how they look. Viewing homes for sale and the list prices is a good thing to incorporate in your first steps to assess the cost of home buying, but there are more data points to be used to create a sense of what it will cost to get the kind of home you want (and where you want it), or, coming from the financial side, how much home your money can actually buy.  Misreading the market, or not understanding the odds of success, can lead to frustration and a slower “learning curve”, and that can be expensive in an appreciating market!   Today I spent a few minutes explaining how to get a better handle on home prices in the video below.  I hope it will be helpful to folks in the San Jose – Los Gatos – Saratoga area who are just getting into the market now.

 

If you are interested in home buying and looking for a seasoned Realtor to assist you, please reach out to me with an email or a phone call.

  1. 2 beds, 2 baths
    Home size: 1,040 sq ft
  2. 2 beds, 2 baths
    Home size: 1,193 sq ft
    Lot size: 892 sqft
  3. 2 beds, 2 baths
    Home size: 1,094 sq ft
    Lot size: 283 sqft
  4. 2 beds, 2 baths
    Home size: 1,905 sq ft
  5. 2 beds, 2 baths
    Home size: 1,344 sq ft
  6. 3 beds, 2 baths
    Home size: 1,436 sq ft
    Lot size: 6,708 sqft
  7. 5 beds, 3 baths
    Home size: 2,958 sq ft
    Lot size: 8,799 sqft
  8. 3 beds, 1 bath
    Home size: 1,284 sq ft
    Lot size: 4,621 sqft
  9. 2 beds, 1 bath
    Home size: 1,365 sq ft
    Lot size: 9,178 sqft
  10. 0 beds, 0 bath
    Home size: 1,628 sq ft
    Lot size: 8,023 sqft

See all Real estate in the city of San Jose.
(all data current as of 11/21/2017)

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

Steps need handrailIf you see a driveway, you may notice that it has cracks.  If you see an air conditioner condenser unit, you may spot some rust and register it as older. There are many items you come across when house hunting in Silicon Valley that you may find to be in good or poor condition.

A little tougher is to notice what’s not there at all.

A good Realtor who’s got plenty of experience will help you find the “hidden costs” in what’s missing in a property.  Many such items may appear in a property inspection report, but wouldn’t it be nice to learn about them while viewing the property, and not while slogging through hundreds of pages?

Backing up, then, ideally you’ll get up to speed by learning, or having your real estate agent, point out to you the un-obvious.  Here are a few things to consider:

  • If there are 3 steps or more, there should be a handrail
  • A water heater in a garage should be on a raised platform
  • If a bathroom or kitchen is remodeled, there should be outlets which are GFCI protected every few feet (telltale sign of remodeling without permits is the lack of outlets)
  • A chimney stack should have a spark arrestor and a rain cap
  • A pool should be fenced (the whole yard can be fenced)
  • Many homes staged to sell have had all window coverings removed.  This makes the living areas sunnier and more appealing, but it also means the new owner will spend hundreds or thousands of dollars to get curtains, blinds, shades, or other window coverings up for needed privacy.
  • If it is a very cold, frosty morning, the roof ought to also have frost! If that is missing, the heat from the home is escaping and warming up the roof to melt it – and insulation needs to be added or improved.

When you begin to house hunt, you will find that every home has some flaws and any home purchase will involve compromises.  Do work with a real estate sales person who can and will educate you every step of the way – there are nuances at every turn.  Some agents will not want to muddy the water by pointing out relatively small items that aren’t quite right.  But learning what they are upfront will help protect you from hidden costs later – so ask to be taught.

  1. 2 beds, 2 baths
    Home size: 1,290 sq ft
    Lot size: 3,367 sqft
  2. 3 beds, 1 bath
    Home size: 1,154 sq ft
    Lot size: 9,374 sqft
  3. 4 beds, 2 baths
    Home size: 1,489 sq ft
    Lot size: 5,301 sqft
  4. 0 beds, 0 bath
    Home size: 3,737 sq ft
    Lot size: 7,501 sqft
  5. 2 beds, 1 bath
    Home size: 971 sq ft
  6. 2 beds, 2 baths
    Home size: 1,062 sq ft
    Lot size: 1,258 sqft
  7. 3 beds, 2 baths
    Home size: 1,466 sq ft
    Lot size: 5,702 sqft
  8. 5 beds, 4 baths
    Home size: 3,226 sq ft
    Lot size: 8,999 sqft
  9. 3 beds, 2 baths
    Home size: 1,434 sq ft
    Lot size: 17,498 sqft
  10. 2 beds, 2 baths
    Home size: 1,148 sq ft
    Lot size: 1,149 sqft

See all Real estate in the city of Santa Clara.
(all data current as of 11/21/2017)

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

Today consumers have a lot of choices as to where to search for properties for sale in Silicon Valley (the South Bay area, Santa Clara County, San Jose, Los Gatos, Almaden etc.).  But not all “find a home” sites are equally accurate.  Some websites display listings that are sale pending, sold & closed or even withdrawn.

The very best, most accurate and most often updated site is the public branch of our agent-supported Multiple Listing Service or MLS, which is MLSListings.com.  You can find it at www.MLSListings.com. (If sending your own agent info a house, it is helpful if you provide both the street address and the MLS #.  By the way, the first few digits of the number imply the year that the listing was put into the system.  811 = 2011.  810 = 2010.)

Why is MLSListings.com the best source for finding Silicon Valley homes for sale?

It is updated constantly.  Within a few minutes of whenever a real estate agent or broker changes the listing status, comments, photos, showing instructions, open house information,etc., the new information is displayed on MLSListings.  While it’s not instantaneous, most changes appear within 5-10 minutes (photos being the slowest to load).

MLSListings is syndicated out to some other sites, but some don’t update often (or at all).  Other sites rely upon the listing agent to go to that one site and update the status.  Realtors and other licensees get busy and this task may slip through the cracks, making you believe that a home is available when it’s not. MLSListings.com is the source.

You don’t have to register. Some of the portals that you might consider visiting to view the MLS info may not include the virtual tour or all pics – or might show them to you only if you register.  You do not need to register to view houses, condos, townhouses, multi units etc. on MLSListings.com. Continue reading

ExpectationsAlthough some properties are not selling within 10 days, many Silicon Valley homes listed for sale do go pending a week to ten days later with multiple offers.  Of those which sell quickly, pending sale prices are often far above the list price; we are seeing 10% overbids often, and sometimes 25% or more, in select cases.

Unfortunately, Bay Area many home buyers’ expectations have not yet caught up to the reality of the overheated market and are shocked that a great “full price offer” may well be the worst of the contracts presented.

What’s causing this to happen?

First, there’s a very dire shortage of homes to buy.  That can create a buying frenzy all by itself in an area where people are well employed and want to put down roots.

Second, the listed prices are placed strategically low to attract multiple offers.  If you were to look at the list price as opposed to the comps’ sale prices, you’d see that homes are not listed where they should sell, but often about 5% below that amount in many cases (sometimes more than 10% lower, though).

It is extremely important to realize that the list price may have little to do with the eventual purchase price.  Study the comps and then assume a trajectory.  If homes are going up at the rate of $10,000 per month for the type of home you like, then when you bid, consider the sale price 30 days out – or more – and then you may hit the target.

  1. 5 beds, 3 baths
    Home size: 2,673 sq ft
    Lot size: 6,899 sqft
  2. 3 beds, 2 baths
    Home size: 1,710 sq ft
    Lot size: 8,681 sqft
  3. 4 beds, 3 baths
    Home size: 3,053 sq ft
    Lot size: 11,094 sqft
  4. 4 beds, 2 baths
    Home size: 1,885 sq ft
    Lot size: 9,744 sqft
  5. 4 beds, 3 baths
    Home size: 2,281 sq ft
    Lot size: 5,998 sqft
  6. 3 beds, 3 baths
    Home size: 2,164 sq ft
    Lot size: 1.95 ac
  7. 2 beds, 1 bath
    Home size: 1,058 sq ft
    Lot size: 6.92 ac
  8. 4 beds, 7 baths
    Home size: 6,203 sq ft
    Lot size: 2.45 ac
  9. 4 beds, 3 baths
    Home size: 3,202 sq ft
    Lot size: 15,733 sqft
  10. 4 beds, 3 baths
    Home size: 2,414 sq ft
    Lot size: 11,155 sqft

See all Real estate in the Almaden Valley community.
(all data current as of 11/21/2017)

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

 

Sometimes part time or out of area agents have no clue what’s happening in the local Silicon Valley real estate marketplace where they are submitting offers, and it really harms their clients!  Here are a couple of things to be aware of:

  1. Your agent needs to SEE the property. It’s really not good enough if the buyer sees the home and the agent swoops in to write the offer.  The buyer and buyer’s agent are a team, and if only one of you has seen the home, you the buyer are at a disadvantage because you don’t look serious or knowledgeable!  If your agent is out of the area, get him or her to the home if you want to buy it.  No excuses.
  2. Know what is customary for the county or area where the offer is being written.  In some areas, it’s normal for the sellers or the buyers to pay certain costs. Get that wrong and the listing agent (and then the seller) will wonder what else you don’t know.  It could be the amount of the initial deposit, the contingency days, or who pays what.    I usually only work in Santa Clara County, but sometimes do find myself in another neighboring county and one of the first things I do is learn the local ropes. (Title companies can tell you what is customary and many have a form online to lay out who usually pays what.)
  3. Make sure your agent TALKS with the listing agent!  Don’t be secretive.  Ask good questions like these: “what is the seller looking for?” “what is included or not included?” and drill down to specifics.  Does the seller want a rent back? If so, find out what terms might work and write them in.  Leaving a blank or not having that rent back addendum is like saying “I didn’t care enough to find out”.

Communication is key, from start to finish.  If you want the house, be consistent.  Don’t be flaky or up and down. Send the consistent message that you wand the home and be unwavering. If the seller’s agent thinks you are up and down, it will make your odds of success diminish.

Additionally – if you or your relatives go through the open house, BE NICE to the listing agent or open house host. Be polite, it actually does count. This is part of the courtship, and if you or your people are not nice, it will not help you to get your home.   Recently I  had an open house where the family members of one of the buyers came through and were downright rude. You can be sure that this did not help, and with all the multiple offers we are seeing, those little things can really add up.

Be the driver and set expectations – make sure that if you want the home that you have a good presentation, both in person and in your paperwork. In this market, a buyer cannot be too careful!

  1. 4 beds, 4 baths
    Home size: 2,440 sq ft
    Lot size: 2,378 sqft
  2. 4 beds, 3 baths
    Home size: 2,845 sq ft
    Lot size: 7,000 sqft
  3. 4 beds, 3 baths
    Home size: 2,499 sq ft
    Lot size: 5,244 sqft
  4. 2 beds, 1 bath
    Home size: 938 sq ft
    Lot size: 840 sqft
  5. 4 beds, 3 baths
    Home size: 2,431 sq ft
    Lot size: 5,201 sqft
  6. 6 beds, 4 baths
    Home size: 3,902 sq ft
    Lot size: 20,399 sqft
  7. 4 beds, 4 baths
    Home size: 2,960 sq ft
    Lot size: 6,912 sqft
  8. 3 beds, 3 baths
    Home size: 2,359 sq ft
    Lot size: 3,715 sqft
  9. 1 bed, 3 baths
    Home size: 1,985 sq ft
    Lot size: 3,545 sqft
  10. 3 beds, 2 baths
    Home size: 1,296 sq ft

See all Real estate in the city of Morgan Hill.
(all data current as of 11/21/2017)

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

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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
Silicon Valley:
Santa Clara County,
San Mateo County, and
Santa Cruz County.
:
Special focus on:
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Saratoga, Campbell,
Almaden Valley,
Cambrian Park.
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