How important is the marketing of homes for sale in Silicon Valley?  First it’s important to understand what we mean by the term marketing: generally, it is the way we attract potential buyers to the homes for sale.  This is more than just the flyer or newspaper ads.  It includes:

• pricing the home
• photographing the property
• describing the home on the MLS (and including good pictures)
• the quality of the flyers
• the print advertising
• the online advertising & exposure
• the networking with other agents
• the direct outreach and appeal to consumers
• the accessibility of the home
• staging the home to sell (appeal, cleanliness, no odors, etc.)

Marketing can be good, bad, or somewhere in between. Bad marketing will likely cost sellers money and good marketing will likely make them money.  

Today we’ll go over the most important elements of marketing because sellers should evaluate them when hiring a Realtor to assist them in the marketing and sale of their home.  While there are many areas of marketing, the most crucial, by far, are these three: pricing, photos, and the description on the MLS.

Pricing:  The biggest marketing mistake which is commonly seen is overpricing.  Sellers sometimes believe that their home is worth more than the buying public do and a home will remain unsold no matter what else is done right.  In fact, you could fly airplanes aroud the home and put full page color ads in every paper around the world but if the home is overpriced, it still won’t sell!  Pricing is the most important part of marketing.   With a too-high price, traffic will be diminished and offers will be low at best (lower than actual market value).

Of course, most homes are worth not just one exact dollar amount but somewhere within a range of prices, depending on terms, the speed of the sale etc.  If the pricing is well done and the rest of the marketing is also quite good, the home ought to sell on the high end of what is possible at that time.

Pricing mistakes are very costly and very easy to make.  Here are some of the ways which sellers can be misled about the probable market value of their home:

• using old comps
• relying upon online home valuations
• basing their home’s sale price on what they “need”
• hiring an agent based on his/her suggesting the highest list price (we call that “buying the listing” when an agent overstates value to secure the listing)
• expecting 100% back from all improvements done to the home
• believing buyers can “always make an offer” (if it’s overpriced, they usually won’t)
• thinking there’s no harm in just reducing the price later (if the market is going down, you will be “chasing the market down”)

The one thing that neither the sellers nor their Realtors control is the real estate market, which is fickle and can change.  In recent years it’s been up and down, depending upon location, price point, school districts and more.  Using six month old comparable sales to establish current market value just isn’t appropriate.  Sometimes even the most recently closed sale is not enough, especially if the market is sliding.  Instead of just relying on the solds, also look at the pendings and the current competition.  The less competition your home has, the better odds you have of selling it – and for more.  But a surge of inventory will cause home values (including yours) to drop.   To understand the probable buyer’s value, all of these must be factored in together.  (The online valuation sites do not do that.)

I should add that it is harder to sell a property that has issues such as high voltage power lines, deferred maintenance, messy tenants who make showings difficult, busy road, junky neighbors, or some other undesirable element.  Many agents will suggest a lower price to compensate for whatever issue is hurting the marketability of the home.

While it’s true that there is no problem that a better price cannot fix, most sellers are trying to maximize their sales price.  For that reason, I’d always suggest asking your real estate agent if there’s anything that can be done to improve the market value aside from that lower price.  Sometimes fresh paint and carpet and a professional house cleaning can do wonders for the home’s saleability.  Or giving tenants a lower rent in exchange for their cooperation during the sale will create an easier time for buyers wanting to see and purchase your home.   A little effort may have a great payoff.  (Some agents focus almost exclusively on price and may not be worried about any other element of marketing.  This is a mistake, so be aware that you may run into an agent with this belief.)
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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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Luxury home sales remain sluggish in the west valley areas of Santa Clara County. Right now in Almaden Valley, Los Gatos, Monte Sereno and Saratoga, there are over 125 homes for sale listed at more than two million dollars, but in the last month only 6 have sold and closed escrow in those same areas and price ranges.

Today we’ll look at these four Silicon Valley communities and their luxury homes market to see what’s selling and where.

Almaden Valley (San Jose, 95120)

Currently in Almaden there are 11 homes for sale which are listed at or over $2,000,000.  In the last month, zero (0) sold.  That makes for an infinite number of “months of inventory”. It is an extraordinarily deep buyer’s market: great for buyers, a nightmare for sellers of high end homes there.

Will it improve? Probably not soon as there are no houses pending sale in that price range either. There are 55 pending sales in Almaden, but none listed at more than 1.6 mil and the average list price of these pending sales is under 1 mil.
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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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Mount Umunhum sits high on the Santa Cruz Mountain range, and from there enjoys spectacular views. Looking inland, you can see San Jose & most of Santa Clara County, on a clear day even as far north as San Francisco from Mt. Umunhum. Turning toward the Pacific Ocean, from Mt. Umunhum’s heights you can see Santa Cruz and Monterey on a fogless day.

This magnificent land is now owned by the public, but there’s no public access yet. For some history and an explanation, take in this video from the Mid Peninsula Open Space Preserve:

Click the “more” link to continue reading…
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How do you choose where you’d like to live in Silicon Valley?  Especially if you’re relocating here from out of the area, this can be a huge question.  Most Santa Clara County home buyers have strong preferences for low crime, good schools, and pleasant looking & quiet neighborhoods.

My clients often ask me to compare for them areas which are somewhat similar, such as Los Gatos & Los Altos.  Off the top of my head, I can give general answers, such as these:   Compared to Los Gatos, Los Altos is a  more expensive (perhaps 20 or 25% more?), has a very slightly smaller population, is a little more spread out,  has slightly milder weather and is overall “quieter” in terms of the downtown night life.  Los Altos is more convenient if you want to go to Palo Alto or San Francisco.  Los Gatos is more convenient if you like to visit Santa Cruz, Monterey and the coast.  Los Gatos is more mixed in terms of housing types (it still has many beautiful historic districts with nicely renovated Victorian homes, but also newer construction). Both are “nice looking” but Los Gatos has more varied terrain as it is nestled into the Santa Cruz Mountains. Both enjoy pleasant neighborhoods, good schools, lower than normal crime and community involvement.

That’s the kind of “ballpark” info I can tell people about various areas of the Santa Clara Valley, whether it’s comparing one part of San Jose to another (Cambrian Park vs Almaden Valley vs Willow Glen) or one city to another (Cupertino vs Saratoga).  I can give general info on schools.

What I can’t do (and most agents can’t) is recite from memory school API scores, median household income, housing density, crime statistics, etc.  For that we have the web!  Here are some very helpful links which can assist you in your search to find the part of Santa Clara County that’s the best fit for you, your wants, needs, and budget:

Want to compare areas in and near San Jose?  A great tool for some basic and broad information by zip code is a website called Zip Skinny.  Input a zip code and get fairly detailed info on it.  One of the best features of this site is you can compare one zip code to other, similar areas to check out the differences in density, education of residents, household income, and more.
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