The Campbell real estate market appears to be “past the bottom”, as is the case with much of the Silicon Valley housing market. In some parts of San Jose, “the bottom” was in February or March of this year.  Campbell may have hit that point sooner – but in any event it is now heading back toward a balanced market (30 is the balance point for this formula). (Images and charts from Altos Research, to which I have a subscription and permission to use these, as well as the RE Report, another subscription service of mine. Altos uses list prices, the RE Report uses sold data as well as list prices.)

Let’s look at the data for October in Campbell – actives, pendings, and closeds (care of the RE Report).

While in many parts of the greater San Jose area the Days on Market (DOM) are lengthening, they are shortening in Campbell! Sales are up, but prices are still declining a bit (in several areas of Santa Clara County, prices are again inching up – this tends to happen in less expensive areas).  Pending sales are up and inventory is down.  So there are some mixed indicators but Campbell appears to be at or near “the bottom”.

The real estate market in Campbell, like in all of Santa Clara County, varies from one price point (and specific location) to the next. Have a look at the recent numbers, broken down into quartile:

Please note in the above image what a big difference there is between the top quartile and the other three price points.  Interestingly, the “hottest” market of the three is the second from the top – a good sized (but not too small) home of about 1800 square feet is the part of the housing market most likely to sell in Campbell right now.  Here are those “days on market” numbers in a graph, blended into rolling averages (7 and 90 days).

Curious that the four quartiles were behaving fairly similarly in terms of the days on market (DOM) until 2009.

What about home values? It looks as though, from the following graph, list prices hit bottom and coasted there for a bit earlier this year prior to having a bit of a rally – and then fell again recently. This could be due to the time of year – or not. We’ll really only know when we get through the winter and look backwards to see where we’ve been. “Hindsight is 20/20″ applies here, too.

Now I’ll insert some “live” charts that will stay current even into the future.

If we look at the median  list price of Campbell, CA, single family homes for sale, with all prices combined (not separated by quartile), it really looks rather bleak:

Separate it out by price quartile, and it’s less alarming (if no less true):

Let’s view them individually, then. First, the most affordable, entry level houses for sales in Campbell, California:

These (above) took a big hit, but then “skated along the bottom” for awhile.

The lower middle quartile has had a less pleasant ride:

The upper middle’s list prices have fallen more constantly – no respite, no plateau, anytime recently:

And the most expensive Campbell homes for sale experienced a good rally in summer before falling again.

A longer view of history, extending back to 2005, shows us that the top tier of homes for sale in Cambpell tends to have the most erratic path – the least predictable, the most tumultuous.

If you are a Campbell homeowner, take heart – many of the indicators point to this being close to the bottom of the market.  If you are a home buyer, interested in purchasing a house in Campbell, now is a fantastic opportunity. Prices have “rolled back” about six years in many segments of this market.

For more information, please visit the Campbell pages on my RE Report for single family homes and also for condos and townhomes.  Or contact me for a confidential, no-obligation consulation on your real estate wants and needs here in Silicon Valley.

The post below was published in November of 2009. For a more current look at the Monte Sereno real estate market, please see:

The Monte Sereno Real Estate Market

The Monte Sereno real estate market is trickier than most Silicon Valley markets to gauge because it’s so tiny.  With just four thousand residents, there simply aren’t that many homes for sale in Monte Sereno at any given time and there are even fewer solds.

Monte Sereno Real Estate Trends at a Glance

The info below is from my Silicon Valley REReport, which comes out monthly. Click on the link to see the full report on October’s home sales activity in Monte Sereno.

Home Values in Monte Sereno

Sellers often want to know, perhaps more than anything, what is happening to home values. “What’s my house worth?” is a perennial question because the answer can change from month to month.  Buyers want to know what any particular property should be worth – and often do not see eye to eye with sellers on this point.  Hence, few homes go into escrow (or under contract) each month. (The months supply of inventory has averaged 19 months in MS this year – more on that below – which indicates that there’s a bit of a standoff between buyers and sellers. Buyers aren’t buying in the vast majority of cases.)

Valuation is difficult to pinpoint if we only look at the closed sales of homes in Monte Sereno because there are not a lot of them.  The number of closed sales per month in 2009 has ranged from one to five, the average is 2.3.  In October there was only one sale. So when preparing a competitive market analysis for potential clients, I would consider a both list prices and sold prices in Monte Sereno as well as broader base of information, including what’s happening in Los Gatos in the part where homes have the same school district (and adjusting up a bit since Monte Sereno homes sell for a little more than Los Gatos homes do).  I might also have a look at the Saratoga market, since there’s a possible overlap there (buyers looking at Saratoga may also consider Monte Sereno). If you just look at the average data for a particular month and in that month just one home sold & closed escrow, your understanding of the market may be seriously off base. More info is needed.

So, too, in terms of understanding the speed with which a home might sell or any other question pertaining to listing and selling a home – it’s a good idea to also see what’s happening in neighboring Los Gatos and Saratoga.

In this post, then, we’ll consider what’s happening in Monte Sereno specifically (with both listed and sold data) but also cast a wider view into Los Gatos (95030) and Saratoga (95070) since these two markets are similar in terms of location, pricing and schools and tend to appeal to the same buyer pool, generally.  A Monte Sereno home for sale is likely competing with homes in the same school district in Los Gatos and possibly also homes in Saratoga.

(1) List prices of Monte Sereno Homes for Sale

Below please see an Altos Chart (used with permission – I have a subscription) displaying the median list price of homes for sale in Monte Sereno, all prices combined. (Altos uses list price data, not sold price.)

It is interesting to see the low point was in May or June.  In less expensive markets like Cambrian Park, that low point was in about February or March of this year.  The high end markets have been slower to feel the impact of the market decline, so the ripples are all a bit after the more affordable areas.

Next, see the median list price broken down by quartile:

It is interesting to note that the higher priced homes seem to be rising which the least expensive homes have fallen in terms of list price.  This is contrary to what is happening in “starter home” neighborhoods.

To get some grounding with a larger pool, here’s the Monte Sereno median list price as compared to the median list price of Los Gatos in the 95030 zip code (which is almost exclusively in the same school district) and also Saratoga (which has several school districts).

The market’s been a lot tougher in Los Gatos than in either Monte Sereno or Saratoga!  Saratoga is beyond the bargain pricing of a few months ago – homebuyers interested in Saratoga have found that out first hand.

(2) What about the data for sold homes in Monte Sereno?

For this I went to our MLS provider, MLSListings.com and ran the statistics myself.  Here’s a summary of the year to date listing and sales information for Monte Sereno, January through October 2009.

As you can see, there ae very few closed sales each month, which is why it’s important to always view both neighboring communities and the activity with list prices.

Of the 25 solds in Monte Sereno so far in 2009, the range has been from $845,000 to $4,250,000, with the majority of homes selling between 1 and 2 million dollars.  Here’s the breakdown:

Under $1 million: 3
Between $1 and $2 million: 14
Between $2 and $3 million: 4
Between $3 and $4 million: 2
Between $4 and $2.25 million: 2

Of the 25 sold and closed homes in Monte Sereno, two were banked owned properties (REOs). None were short sales.

There are three pending sales in Monte Sereno as of right now, with the appx list prices of $1.8 mil, $2.4 mil and $8 mil (the biggest sale in MS in a very long time).

Back to the question of home values: have homes gotten less expensive for buyers in Monte Sereno? Are sellers getting less money for their houses then they did a year ago.

Yes.

On our MLS, I ran the sold houses in Monte Sereno which closed from the first of the year through the 12th of November both for 2008 and 2009 in which the closed sales price was between $1 million and $2 million (since that’s where most of the homes are selling and it is a large group, less susceptible to swings in pricing from an oddly high sale now and then).

In 2008, the average sales price for this range was $1,641 with an average home square footage of c. 2490 (2489.73 if you’re splitting hairs). Price per SF =$659.11

In 2009, the average sales price for this range was $1,625,829.07 with an average SF of c. 2677 (2676.64). Price per SF = $607.41.

Buyers are paying an average of $51.70 per SF now as compared a year ago, which is 7-8% less.  Given that some areas are seeing cataclysmic price drops, this is not a huge adjustment, but it is significant.  If you are trying to sell your Monte Sereno home based on last year’s home values, you may be off by 5 – 10% (allowing for a margin of error). To get your home into the small percentage which is selling, it’s important to price correctly (and most Realtors will tell you that the number one problem causing homes to remain unsold is not marketing, but above-market pricing…the best marketing in the world cannot help on overpriced home to sell).

Buyers, find your desired home and make a reasonable offer based on current market conditions.  If the home is owned by must-sell (rather than “will sell if I get my price”) sellers, you may find that your offer is accepted or at least countered into a reasonable range.  Though most homes sell fairly close to list price, they don’t all. And remember, an offer is just an invitation to do business, and you won’t be able to buy if you never write the offer.

(3) Competition, Inventory and Sales of Homes in Monte Sereno

Throughout 2009, there have been anywhere from 22 to 34 Monte Sereno homes for sale (active, available) at any given time – the average for 2009 so far is 28.5. The “months supply of inventory” for Monte Sereno as a whole has varied in 2009 from a low of 5 months to a high of 36, the average being 19 months supply.  But some homes are selling, some of them quickly.  In October, the one home that did close escrow had sold in just 9 days.  The good homes tend to sell quickly, which is a joy for ready sellers but not so good news for slow buyers.  Each home is unique, so don’t assume that your desired home will be on the market for four months due to a misunderstanding of the average days on market data – it may or may not linger while you decide!

Inventory is down in Monte Sereno, as it is in much of Santa Clara County.  Would-be homebuyers lament, “there’s nothing on the market”.

A comparison of Monte Sereno inventory with Los Gatos, 95030 and Saratoga, CA (95070):

Again, Saratoga’s inventory has really fallen compared to the others.  It has risen in Los Gatos, which has the worst market for sellers of the three areas. Monte sereno has stayed relatively constant in terms of inventory.

As of this moment, there are 19 homes listed for sale and actively available in Monte Sereno. These properties vary tremendously in house size, acreage, and quality – ranging from modest ranch homes to equisite estates and luxury properties.  The “averages” of these houses: 251 days on the market, 4198 SF, 1 acre lot, list price $3,060,726.  Viewing just the $1 – $2 million range, there are 6 Monte Sereno homes for sale, and the averages are: 152 DOM, 2882 SF, appx half acre, list price $632.54 SF and list price $1,670,633.  These prices are close to the sold data from earlier this year ($607 per SF sold price was $635/SF list price).  But with 152 days on the market on average, that means that some or most of these homes aren’t keeping current with market trends (or possibly other problems such as too many showing restrictions, not enough photos on the MLS, a discouragingly low commission rate to buyer’s agent or a host of other potential issues – but usually it’s about the price).

(4) Monte Sereno Homes: Days on the Market

Some properties were expired listings and then relisted with other agents, with a new marketing plan and new price, but may still reflect the entire listing history (this is the case with my sold listing on Francesca Court earlier this year – I got it sold in 18 days but the MLS shows it as 244 days since it was on the market with another agent before I was hired).  The official DOM is often not a good indicator for this reason.  When homes are well priced, in good shape and well marketed they often sell within a month in most price ranges and areas within Monte Sereno.

Disclaimers aside, here’s the chart for the average days on market for all quartiles combined in MS:

And broken down by price quartile – as you can see, there’s quite a bit of variation as the market is not a unified block, but is stratified:

The highest priced homes fared badly in summer but are selling amazingly well, while the lower-middle quartile has suffered the worst.

Combined Monte Sereno, Los Gatos 95030 and Saratoga 95070:

Monte Sereno has far longer days on market than the two competitors of these three high end markets.  What gives?  It may be about the schools – Monte Sereno has Los Gatos Schools, which are very good but not as highly rated as Saratoga Schools, but MS sells for more than the same home in Los Gatos with the same schools. There’s a lot of competition for homes in Saratoga with either Saratoga or Cupertino (but not Campbell, so much) schools. Then again, it may be skewed because of the very small amount of data – “statistically insignificant” – unless your home is the one that’s not selling.

Want or need to sell your home? Look hard at the current competition and realize that maybe 10 or 20% of all homes will sell at best this month. What needs to happen to get your home into the pending sales group?  Ask your agent and then be open to the truth. Sometimes clients don’t want to hear something unpleasant.  I once had a potential client tell me, “this is what I want to list the home for, and I want to hear your enthusiasm for my price!”  It was an invitation to lie, which I won’t – and didn’t – do.  Agents don’t control the market.  If there are “better deals” than your home, then those will be the homes that sell.

Sometimes offering great terms can help improve your price. Like what? Terms such as carrying back all or part of the mortgage.  This does entail risk so be very careful here, but given that jumbo financing is hard to come by now, this might be exactly the way to proceed if you do not need cash out of your home immediately.  Also a possibility is a lease-to-own option. Go over these and other “terms” with your Realtor to see what you can do to maximize your net in today’s market.

Interested in buying a Monte Sereno (or nearby) home? Please contact me today!

If you’d like to speak with me about selling your home, I’d be glad to do a no obligation initial consultation, and provide you a copy of my book at the same time, “Get The Best Deal When Selling Your Home In Silicon Valley“.

More information online:

More links on home selling – on popehandy.com
More links on home buying – on popehandy.com

In addition to the financial part of your offer and your contingencies and timeframes, there are other terms that may help you to be more competitive when writing an offer in a multiple offer bidding situation in Silicon Valley.

What other terms could matter, beyond price and contingencies? Lots – they will matter to the seller and they’ll matter to you. 

As Is Offers

Sellers always want to sell “As Is” if possible. They don’t want to have to do repairs, to spend the time or the money to fix what may not be perfect.  This is an extremely important area to research, weigh, and understand prior to drafing your real estate purchase agreement, particularly if you are not the only one trying to buy that real estate.  When it’s a seller’s marker (and with multiple offers, it IS a seller’s market), the seller can request and will usually be able to sell As Is.

Buyers always want every imaginable repair done, if at all possible.  Buyers don’t want to have to do termite, roof, electrical or other work on the home. They want a “red ribbon deal” where the home’s been or will be in very good to excellent shape.  They want a section one clearance from the termite & pest company.  They want a leak free roof warranty. When it’s a buyer’s market, and you’re the only one attempting to buy the house or condo, you can usually request and get the seller to do all the basic repairs.

The important point is to understand which of these two markets you’re dealing with – buyer’s or seller’s - if it’s a seller’s market and you’re behaving as though it’s a buyer’s market, you will hurt your odds of getting the property if you request repairs or if your contract provides a seller’s warantee.

In this series of posts on multiple offers, I keep mentioning the two contracts in use, but this is exactly where the As Is issue comes into play.  The CAR contract is “As Is” unless areas of concern are added.  The PRDS purchase agreement specifically requires that the seller do certain repairs or provide the home at close of escrow in a certain condition: there shall be no leaks (roof, shower enclosures, faucet on sink in garage), there shall be no cracked glass, all systems shall be operative (understand systems to mean furnace, water heater, oven, doorbell, etc.) , no structural issues with the chimney.  You get the idea. In a buyer’s market, these are great clauses to have.  But in a seller’s market, or if you’re slugging it out against a bunch of other offers, this is viewed as a giant negative by the seller and the listing agent. It could kill your odds!

As Is sounds like a horrible situation to buyers. In many cases, though, the sellers provide pre-sale inspections (and sometimes even do some of the work that was noted in the reports) so you can often understand the property’s condition prior to writing your contract to buy the home.

The PRDS contract does have an AS IS provision, if you elect to use it. The CAR form is an “AS IS” agreement unless the buyer requests certain things and the seller agrees, such as a pest clearance or watertight roof.

So should you never use the PRDS contract if there are multiple offers? I would never say never.  First of all, you can make the PRDS an As Is agreement, and then you’ve mostly levelled out the playing field. 

Second, your agent should ask the listing agent if there’s a preference in terms of which form to use.  In most of San Jose, agents are using the CAR form (except in the westside of Silicon Valley such as in Almaden Valley, Cambrian Park, West San Jose etc.).  Many San Jose Realtors use the CAR form exclusively and may be spooked at a PRDS contract.  So have your agent find out. 

Next, find out, as much as possible, how many offers are expected. If it’s only one or two, perhaps having a PRDS contract will not be a liability.

Having an As Is offer does not mean that you are prohibited from inspecting the home.  With an As Is offer, you should still retain a property condition contingency, the right to inspect and research whatever you need.  As Is simply means that the seller is not obligated to do any repairs.

Please Note:  Do be aware that if you are trying to buy a bank owned home  (REO), the bank may have verbiage that limits your rights and alters the way your timeframes and contingencies are handled. If you see bank addenda, DO seek legal advice from a licensed attorney.

Other Terms in Your Real Estate Purchase Offer

In addition to the enormous question of whether or not to write an As Is offer, there are many other terms written into the contract paperwork as well as others that you can insert that may help or hinder your offer’s odds of getting accepted.

A rent back can be very important to homeowners who are not sure where they’ll be moving next. Recently my buyers and I wrote an offer on a lovely Almaden home.  The listing agent did not tell me to offer a rentback but I realized that the sellers might have more peace of mind if we provided them the option to rent back for a few weeks while they try to find a replacement home.  The sellers appreciated that we would close in 3 weeks and offered another 3 week option to rent back and they accepted our contract without a counter offer.  (Rent backs can be free, at the buyer’s daily rate, or another amount.)

Inclusions and Exclusions can be another way to make your offer more appealling or to ease later negotiations. Does the seller want to take a prized rose bush? Keep the stereo speakers?  Remove a dining room light fixture or curtains in a bedroom?  Those are all inclusions that you might exclude (and allow the seller to take them).

Over the summer I was helping some Cambrian Park homebuyers to get into their first house.  We were in escrow and wanted the sellers to do some repairs that they didn’t have to do – but they mattered to us a great deal.  To sweeten the addendum, we made our request with the offer that the sellers could take a few items that should have remained with the house but they probably wanted to keep (and hadn’t countered them out earlier).  We got what we wanted and gave them something that they wanted.

Sometimes with relocating or senior homesellers, one of the biggest challenges is “debris“: clearing out of the home entirely. When there are multiple offers, under “other terms and conditions” I have sometimes suggested that my buyers offer to take on the seller’s extra “stuff”  so that they can be worry free about the items in the garage that they really don’t want, need, or know what to do with.  Offering to take over the job of getting rid of the debris can provide some sellers who may be feeling a little nervous a bit of a breather – one less thing to do.

Once I had a listing in the Vendome area of downtown San Jose (near Japantown, off Taylor).  The sellers were very attached to some ferral cats which they had been feeding, and they worried about what would happen to the cats after they moved.  The buyers offered (again under “other terms and conditions”) to continue to feed the cats.  That’s not enforceable, of course, but it meant a lot to my clients and they had peace of mind knowing that the cats would be cared for.

I would advise that when there are multiples, or even a later negotiation in escrow, that you consider the question of “what would make the sellers happy or make their lives easier?”  If you can anticipate their needs and provide for one or two of them, even unasked, it will make a good impresssion and that alone can be the reason why you’ll be able to edge out the other bidders.

As always, this post is no substitute for your obtaining professional real estate assistance. You should always strive to work with a highly experienced & ethical Realtor, no matter what kind of market you’re in. Consult with your agent and make an informed decision about how to approach a multiple offer situation so that you can win the bid but not feel like you’ve really lost by giving away all your rights.

Single family homes in the more affordable price ranges seem to be flying off the market in the San Jose district of Almaden Valley.  For the last twelve weeks or so, the absorption rate or months of inventory in the 95120 zip code has been hovering around 2 – 3 months. That’s fast!  (6 months is a balanced market, less a sellers market, and more a buyers market.)

This comprehensive post will include data from three subscription based  sources.  First a summary of the October 2009 sold data (care of my RE Report ).  Then, with the aid of Clarus Market Metrics (a subscription through my MLS and real estate board), we’ll take a two year view of the Almaden real estate market, its months of inventory and supply & demand ratios.  Then we’ll incorporate data from Altos Research, another subscription service I utilize, to look at the data for listed homes today, broken down by price quartile (since what may be happening in Almaden overall may not be the experience in a subset of this market).

Fewer homes are coming on the market now, so the old inventory is getting absorbed.  Prices often are getting pushed up in multiple offers if the home sells quickly (in 3 – 4 weeks).

Here’s a view of the months of inventory in the Almaden Valley area of San Jose over the last 2 years:

Next let’s have a look at the overall “supply and demand” for this upscale part of Silicon Valley over the last two years.   Sales are rising while inventory is shrinking – and for buyers, that’s exactly how it feels: there’s less to choose from and prices are inching upwards.  If you were waiting for the “bottom of the market”, it may be behind – just depends on your price point.

This is extremely interesting as an overview of the 95120 zip code. But as we know, things can be vastly different between entry level homes and the most expensive luxury estates.  Let’s change gears, then, and make use of Altos Research’s charts and graphs (to which I subscribe and have the right to post).  NB Altos uses list prices. The data above, from our MLS, is using sold prices.

A great thing about Altos is that they separate out the data by price quartile.  I’ll now demonstrate why this matters so much.

First, here’s the median list price for all of Almaden Valley (all price quartiles combined) for the last year:

Now let’s see the data broken down by quartile:

Now perhaps it doesn’t look so bad, unless you are in the most expensive homes. The upper middle quartile appears to be about where it was a year ago – so really not bad.The lower three quartiles all got a bump up in pricing in summer, but the highest priced homes continued to drop.   Let’s look closer at the prices of the luxury homes for sale in Almaden.

These most expensive homes in the 95120 zip code appear to be listed at about 20% less than they were a year ago.

Next is the list price for the upper middle quartile:

This upper middle quartile has held its value amazingly well, with only about a 1% change in pricing.  I wish I knew why.

Next the lower middle quartile:

This quartile looks to be about 9% “off” from a year ago.

And finally, the bottom quartile of houses for sale in Almaden – the most affordable or “entry level” homes for sale:

These least expensive Almaden Valley homes for sale have come down by about 8% from a year ago. That’s quite a big difference from the most expensive homes!

Overall, most of the homes in Almaden have had a fairly consistent drop in pricing over the last year. The upper middle tier did not seem to have such a consistent drop as the rest – not sure why that is.

What about inventory in San Jose’s Almaden Valley area of 95120?

Here’s the chart for all quartiles combined of the active inventory of Almaden Valley homes for sale:

Inventory is crucially important because of the law of supply and demand.  Buyers today are finding less inventory and this is precisely what is causing the surge in sales and the low “months of inventory”.  (I did not show this by quartile because it simply shows four lines following the exact curve pattern.)

Now average days on market for Almaden Valley overall:

Next average days on market by quartile:

This is an interesting tangle of information reflecting the average days on market among Almaden Valley homes for sale, separated by quartile. Inventory is rising, but there was a “dip” in spring to summer, depending on the price point.

Finally, let’s circle back to the absorption rate or “months of inventory”. It’s quite low for Almaden overall – just abeout 3 months of inventory right now. But it may be quite different from one price range to the next.

The top quartile (black line) is lagging the most.  This seems to make sense as those homes appear to have taken the biggest hit with pricing. In all quartiles, though, the absorption rate is up.  If you go to the top of this post to view last month’s closed data, you’ll see that sales are up 200% over a year ago.  That is an enormous improvement!

So what can Silicon Valley home buyers and sellers take away from this post on the Almaden Valley real estate market? It appears to be a mixed message:

prices are down (from 1% to 20% from a year ago)
days on the market are up from a year ago
inventory is down from a year ago
sales are up

I believe that what we are seeing here is the turning of the tide.  With fewer homes to choose from and buyers actively picking up bargains, there’s simply more demand than supply – and it’s pushing prices up.