The Santa Teresa area of San Jose is enjoying a hopping real estate market with the number of pending sales suddenly going through the roof! (Stat below care of Altos Research, to which I have a subscription. List prices are used.)

Homes in this part of south San Jose are often selling over list price as inventory drops. The days on market appears slow, but a lot of homes that have been “just sitting” on the market are now selling.

The great rush in Santa Teresa is, of course, in response to the list prices, which have been falling steadily in most areas – and making for incredible bargains.

Here are the August sales stats for our MLS “area 2″, Santa Teresa (per the REReport, also a subscription, which uses closed sales):

With more pending sales than active ones, you can see that most houses are now selling and the pace is quickening.  A major player in the market conditions of this part of San Jose is the situation with distressed properties: foreclosures, short sales or homes sold under pressure as they’ve got a notice of default on the property.

How big an impact does the REO or short sale label have on a home’s eventual sales price? How much more or less will a home sell for based on the situation as a “regular sale” or “bank owned” or “short sale”?
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It is a strong seller’s market in the Alum Rock area of San Jose right now: inventory is shrinking and prices are rising after hitting bottom a few months ago. Prices are still way off year over year, but for the last 4 months or so, prices have been rising in this part of Silicon Valley, and it’s quite dramatic.

As of a few days ago in this area of San Jose, there were 203 single family homes for sale and there were 114 that sold/closed in the last month. To get the “months of inventory” or absorption rate we just divide the 203 by the 114 and we get about 1.8 months of inventory, which makes it a very strong sellers market. 

(Because it’s so affordable, first time homebuyers are flocking to Alum Rock in droves. Unfortunately, they are sometimes outbid by all-cash investors and left frustrated as homes get multiple offers and prices skyrocket out of reach.)

The absorption rate can be measured in days, weeks, months (or years) of inventory.  Below is a chart reflecting the days of inventory relative to the last 18 months or so.  As you can see, the absorption rate has been shrinking very, very dramatically (as prices have fallen through the floor).

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