Being an FHA home buyer in Silicon Valley is a challenge right now, especially if you want what everyone else wants: a nicely updated and remodeled home in a good area with no “issues”. (Issues meaning things like high voltage lines, busy roads, flood plains, or being too close to stores or spots not everyone wants to be near.)

The Problem with Condominiums and FHA

I need to start by explaining that things aren’t always the way they look.  We tend to think of condos as looking like apartments, with no yard, for example.  We think of townhomes as a two story or more home with neighbors on the sides but no one above or below.  And we think of houses as freestanding buildings with a yard around it.

That’s really how things look.  But how these different types of homes are owned may be another thing altogether.  For FHA home buyer purposes, this makes a huge difference.

Some townhouses and even some houses are not owned the way they look, but are held in condo ownership.   A good example of this is The Villas of Almaden, a beautiful &  gated community at Meridian and Coleman in San Jose’s Almaden Valley. Structurally, many of the buildings are houses - but they ar “condo ownership” and are stored under the condo label in our local MLS. What makes these buildings be condos? Practically speaking, in addition to their own space for their particular unit, the owners also own a percentage of everything else, such as the pool, grassy areas, tennis courts, private roads, etc. They also have a share of the liabilities of the condo community, too. 

If you are an FHA buyer and you want a San Jose area condo (or any home which is held in condo type ownership), you have to make sure the complex is FHA approved. We had the option of getting individual units spot checked until February 1st, but that has now been eliminated. Getting an entire complex approved takes time, perhaps 60 days, and money - and most buyers don’t want or cannot take on that kind of financial liability (and most sellers don’t want it either). Here is the link for the HUD site which will list for you the condo communities which are FHA approved.   So it is important to know if the townhouse you’re looking at is owned like a townhouse or owned like a condominium.  It can be painfully disappointing to think that a home can be bought with FHA backed financing, only to later discover that it can’t due to the type of ownership and lack of approval of the asociation.

(more…)

No, sorry, there aren’t a lot of distressed homes for sale in the Saratoga and Los Gatos areas.  Would be bargain hunters email me regularly, hoping to find lots and lots of short sales and bank owned (REO - real estate owned by the bank) houses for sale in high end west valley neighborhoods.

There just aren’t many of them!

As of today, in Los Gatos (95030 and 95032 zip codes) and Saratoga (95070) , there are 185 single family homes (houses, perhaps a few “duet homes”) for sale.  Of the 185, a mere 14 of them are distressed properties (6 bank owned, 8 short sale).  That is just 7.5%!  For those who want Los Gatos or Saratoga Schools (not Campbell, Union, or Cupertino), the odds are even worse.  Only two of those homes go to the Los Gatos-Saratoga High School District. (Prices of all distressed properties currently available in these areas range from $699,000 to about $3 million.)

There are some good deals to be found in addition to this very small pool of bank owned properties and short sale listings in Saratoga and Los Gatos.  Often the best deals are found among homes which have been on the market a long time but aren’t selling due to cosmetic issues.  Homes which need changes such as fresh carpet, paint, or “easy” updating and remodeling (like new countertops, light fixtures, etc.) can be the best bargains around, particularly if the seller is truly motivated.  So don’t lose heart - just broaden your strategy a little and you’ll be far more able to locate a suitable home.

Economists are mixed on what will happen in 2010 and beyond, but many think that this year will be better than last, and 2011 will be a “hot” market again as prices are largely undervalued right now.

Yesterday some clients of mine asked me about seniors selling their home and purchasing another residence while keeping the older, lower property tax rate. I did a little digging and thought I’d share what I found.

There are actually two propositions involved.  Prop 60 applies to moves within Santa Clara County, and Prop 90 relates to moves between counties which are participating in this benefit to seniors (only these few, as of the date of this posting: Alameda, Los Angeles, Orange, San Diego, San Mateo, Santa Clara, Ventura).

Some of the basics:

• Homeowners 55 and older at the time of sale of the original property.
• Homeowner must be on record both for the home that’s sold and the replacement property.
• The replacement residence must be equal to or lesser in value than the original residence.
• There are special rules for multi-family (duplex, triplex, fourplex) properties and for mobile homes.

In the most typical scenario, a senior homeowner would sell a house (or townhome or condo) and “downsize” to another, less expensive, smaller house or condo.  If the homeowner had been in the first property for a very long time, then the low tax rate would be hard to give up, but Props 60 and 90 enable that homeowner to go to another, less expensive home and carry the old tax rate along - one time, and either in the home county or in one of the participating counties. 

I have known seniors to sell a house in Los Gatos, Saratoga or San Jose and move to The Villages or to gated senior communities out of the area but closer to their grown kids and make use of these two propositions.

For more information and to get all the details, please click on the links above.

The Alta Vista neighborhood, which sits along the border of Los Gatos and the Cambrian Park district of San Jose, is very highly sought after and valued for many, many reasons. Real estate prices vary depending upon the precise location within the neighborhood as well as the size and condition of the home.

Why is this area so popular?  Most of the streets close to Alta Vista School are beautifully tree-lined, and from virtually everywhere in the neighborhood, you are close to Blossom Hill (that’s the name of the hill, not just the name of the road!).  Homes are well kept, streets are wide enough, and except when there’s a school function, there really aren’t too many cars on the street. It is very scenic, pleasant and uncrowded feeling.  Although you’re in the city or town, you feel close to the country there.

Additionally, many homebuyers select this area because the school scores are high and because it’s easy to get to the elementary and middle schools without crossing any major streets: that is a big plus!  It is also a quick drive to highway 85, just a couple of miles to the Los Gatos shopping areas (at Los Gatos Blvd and Blossom Hill Road) or to Vasona Lake County Park.  For many, it’s a way to be close to Los Gatos while paying less expensive San Jose prices.

Prior to being developed for housing, this spot at the base of Blossom Hill was once blanketed in orchards and was scenic enough that it was part of the “blossom tours” that used to take place at the height of the flowering.  Hence, one large section of this neighborhood has street names that begin with “blossom”.

(more…)

CC & Rs are “Covenants, Conditions and Restrictions“  (sometimes “Covenants, Codes & Restrictions).  They are a set of rules drawn up for a neighborhood or subdivision by the builder or by a board comprised of the builder and a few others who want to set the neighborhood standards to keep property values up.

The C, C & Rs  are put in place, usually for a set number of years such as for 30 or 35 years, and most of the homes in Silicon Valley do have CC & Rs and most of them are now expired.   It’s always for a finite period of time, though usually extendable if the neighbors vote it in again (which I have never seen done), but sometimes gauged by something perhaps not so predictible.  The weirdest time line I ever saw referenced something like “until the death of the last living great grandchild of…” and it mentioned one of the Kennedys. Odd, but apparently legit.

What are the CC & Rs about?

Here’s a peek at part of one -

Usually the CC & Rs dictate the minimum size of a home (e.g., the home must be at least “X” number of square feet)  that may be built in the subdivision, the setbacks (homes must be so many feet from the street and property lines), what kind of signage may appear (only for sale and for rent signs, for instance), and normally there’s a restriction on farm animals so that people may not raise goats, sheep, chickens and so on in their backyards or breed animals professionally.

Many years ago, some C, C & Rs also had restrictions on who might buy or live in a neighborhood (racial, religious and other restrictions).  This is illegal today, of course, and so the first page of any C C and R document you see now will have a large disclaimer stating that any fair housing violations are illegal and are null & void. Since the C C & Rs “run with the property”, they supposedly cannot be amended (though I have never been convinced that they couldn’t be - just that the government chooses to require the disclaimer instead).

Do the C C & Rs matter?

For the most part, they are irrelevant because in most of Santa Clara County, they have long since expired.

They can be a little helpful, though, as sometimes the setbacks (which may still be enforceable) may be stated more clearly than in the preliminary title report or elsewhere.

Often, too, they hide some historically interesting tidbits. Today I read the C C & Rs for a Leep built home (a very good builder of tract housing in the Santa Clara Valley) in the Cambrian Park area of San Jose.  I know that there’s an area of Campbell (that has a Los Gatos mailing address) with Leep homes;  one street in this area near the Saratoga and Los Gatos border is named Elwood and another Bearden. Today I learned that there were two builders of these homes, Elwood J. Leep and Leonard Bearden, Sr. So that was a fun tidbit - I have sold many “Leep homes” over the years, have known them to be well built but never had the builders’ first names before.

To summarize, in most cases, the C C & Rs won’t provide you with a lot of helpful information, but do try to obtain them anyway when buying a home in Santa Clara County. There may be information that is interesting, if not necessarily useful - and you never know, there may be a tidbit of helpful information buried in there along with the strange admonitions that homes not cost less than $10,000 when sold. That’s the least of our worries today!

Cambrian Park is a very desireable part of San Jose and the greater Silicon Valley due to its great schools, low crime, proximity to Los Gatos and the general “west valley” area of Santa Clara County.  It’s more affordable than the tonier areas right up against the foothills (for the most part, Cambrian is in the flatlands, though one corder is in the hills snuggled between Los Gatos and Almaden Valley). 

This San Jose district is also a fairly good indicator of how the rest of the valley is doing, so even if you aren’t a resident of Cambrian Park or don’t want to own a home there, it’s helpful to keep a pulse on it.

A disclaimer: Cambrian Park has micro markets, just like everywhere else.  The “zone 14″ includes three school districts (Union, Cambrian, and San Jose), two zip codes and a fraction of another (95124, 951118 and a sliver of 95008) and the borders are messy with Willow Glen, Campbell and Los Gatos in places.  So this is an overview of the region and may not exactly reflect what’s been happening in your precise neighborhood.

Pricing is usually the single biggest question that homeowners have - they want to know if they have any equity: “what’s my home worth?”  In the Cambrian area of San Jose, prices have been declining for a couple or three years, but that phase seems to be over (the peak of the market was late 2006 to early 2007 and prices in Cambrian have now “rolled back” to about 2000-2002 levels in many areas, but some only to 2003 levels).  The low point seems to have been in January, with prices rising since then. Currently, the median sold price of single family homes in Cambrian is down 24% from two years ago (but it was even more 6 months ago). Of course, the dead of winter is usually the time with the least inventory but the best prices, so it’s possible that what we are seeing is only seasonal. We will get confirmation one way or the other soon because prices usually begin tapering in late summer. If prices continue to rise (which I suspect they will as I am seeing so many multiple offers), this will be an indicator that the Cambrian Park real estate market is indeed recovering.

Single family homes in Cambrian -

Condos and townhomes in Cambrian - the median sold price is down 45% over the last two years! The worst point was in February this year.

Supply and demand is what it’s all about - the low prices combined with great FHA backed financing and the $8000 first time homebuyer credit and fueling fence-sitting buyers to jump into the market in San Jose’s more affordable areas such as Blossom Valley and Cambrian Park. 

Below is the supply & demand chart for single family homes in Cambrian (zip codes 95124, 95118 and a tiny bit of 95008, which is primarily Campbell). The number of available homes (listed homes) is down 23% and the number of sold properties is down 20% from two years ago. The worst of it was 12 months ago, though. (Last June to this June: The number of for sale properties is down 37% and the number of sold properties is up 7%.)

Fewer homes are selling, but far fewer are listed, too.

Next, supply and demand for condos in the Cambrian Park area of San Jose:

The condo market is taking a beating because buyers are opting for more affordable houses rather than condominiums and townhomes.

(more…)