How’s the real estate market in San Jose’s Almaden Valley? Commentary and statistics…..

It’s actuallya lot hotter than the numbers for the Almaden closed sales in February might indicate; the last 2-3 weeks have seen a heat-up the likes of which I have not seen since 2000. Many properties are selling fast, sometimes with multiple offers.  We are experiencing this trend throughout the west valley areas: Los Gatos, Saratoga, Cupertino, Palo Alto and on up the Peninsula.  These multiple offers are pushing prices higher. In many cases, it is much higher.  I’m seeing some overbids of more than $100,000 in some cases as well as offers with no contingencies for loan or home inspection. Listing agents sometimes write in their private MLS comments for other agents “no pre-emptive offers“.

What’s driving it?  There are years of pent up demand in which would-be home buyers sat on the fence, either because they expected further price drops or because, in the case of move-up buyers, they didn’t have enough equity to budge.  With record low interest rates and prices creeping up – combined with an infusion of cash from high tech employees with either great stock prices (Apple) or an IPO (LinkedIn, Facebook, Yelp, and more), there’s the classic case of more demand than supply. 

Almost every offer I’ve been involved with over the last month has been a multiple offer situation, whether in south San Jose, Blossom Valley, Cambrian, Los Gatos, or Saratoga.  Prices from $400,000 to $1,800,000 – all at least 5 offers, sometimes far more.  As Chris Trappani, the CEO and founder of Sereno Group says, “we’re seeing it now – the papers will report on it in a month”.

Stats for the Almaden real estate market for houses in February 2012 (click on link to see more info):

Note that the median sales price is up almost 15% from January and the average price rose 7% month over month. Year over year it’s not so good but from what we are seeing, it’s unlikely to look like this when the March 2012 numbers roll in.  Also note the jump in pending sales and the lower number of actives – less inventory, more absorption.

Coming Soon! On MLS Thursday, Feb 23 and Open House Saturday Feb 25 and Sunday Feb 26, 2012 2 – 4pm

870 Brevins Loop: Beautiful, Elegant Willow Glen Home for Sale!

New Listing, Please Stop By!  Open Sat/Sun, Feb 25-26, 2012 from 2-4pm

In a couple of days I will put this new Willow Glen listing of mine on the MLS and I look forward to holding it open this weekend for the first time. If you are in the area, please swing by and have a look! I always enjoy meeting the readers of my blog & this is a home you will enjoy seeing!

The house & yard are full of amenities that Silicon Valley home buyers will appreciate:
hardwood floors, built-in bookcases and media niches, slab granite, gas cooking, stainless steel appliances, lots of windows & natural light, a luxurious master sweet with 2 walk-in closets and a spacious bathroom with big soaking tub, separate shower and two separate vanities. Central air conditioning.   The lush backyard boasts two trellises, sandstone hardscape & custom lighting. The front yard is easy-care: the HOA takes care of the maintenance!

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A Silicon Valley home seller’s joy and buyer’s nightmare, multiple offers are back and exceedingly common in San Jose and nearby areas right now.  It has been true for many months that the most affordable houses in Santa Clara County, especially those under $450,000, are often selling with several purchase contracts on them (about 25% of which are investors, and many of those are “all cash“).  One Sereno Group real estate agent shared that their client was up against a whopping 37 other offers last week for a house in the entry level pricing tier!

What’s new, then? The price points.  Today we are experiencing the same situation in homes between $1 million and $2 million (though fewer offers) and sometimes higher still.  A few days ago I was involved with bids on a Saratoga house priced a little under $2,000,000 and it ended up getting 5 offers.  This wasn’t a turnkey property with a Section 1 pest clearance, but rather a nice house with “good bones” that needed work.

Why are we seeing so many multiple offers, and in such a broad range of pricing, in Silicon Valley?

Feeding the frenzy are the low, rock bottom interest rates (for most real estate consumers in lower or mid range pricing), lower home prices than a year ago – resulting in increased demand – combined with a dire shortage of inventory, or lack of supply. (Some sellers are waiting until later this year, when they think that they can make more from the sale of their home, too.)  If that weren’t enough, we have money pouring into the valley due to the initial public offerings of companies like Zynga in Los Gatos and LinkedIn and Google in Mountain View plus Facebook in Menlo Park.  And don’t forget Apple, in Cupertino, which is now trading at over $500 per share!  Even for companies which are either not yet public or there’s a waiting period for selling stock, there are means of cashing out some value via private exchanges or borrowing on options.  Some tell me that this has been the case for a year! (more…)

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 normal.  (more…)

Cambrian Park, or more broadly, Cambrian, is a west San Jose neighborhood or district and is one of the more affordable, high-value areas in Silicon Valley. The schools are good, the crime is low, and the commute is not too bad. For people relocating to Santa Clara County, this is a place to know about since quality education and affordability are often high priorities!

What’s the compromise for the more reasonable prices of homes for sale? Well, Cambrian doesn’t have an interesting, upscale downtown area like Campbell, Los Gatos, Saratoga, or Willow Glen.

But it does have tons of shopping & restaurants and even a Farmer’s Market. It also enjoys a top notch hospital (Good Samaritan) and plenty of parks as well as a fantastic rec center with a large park adjacent to it, the Camden Community Center, which has tons of programs (including an after school program for youth), classes, and a fabulous pool.  (My family and I lived in Cambrian in the “Cambrian Gardens” neighborhood for 10 years and loved it – our kids made great use of the community center too.)

Altogether, there are about 75,000 to 80,000 residents in Cambrian, spread throughout the three zip codes of 95124, 95118 and a little tiny bit of 95008.

If there is a “central Cambrian Park”, it would have to be near the original Cambrian Park Shopping Center, which was the first actual mall in San Jose! That area is sometimes known as Cambrian Village.  People sometimes use the three names interchangeably: Cambrian, Cambrian Park, Cambrian Village.:

Where is Cambrian Park? Map of approximate Cambrian Boundaries:

View Cambrian Area of San Jose in a larger map

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Median List price for San Jose 95129

The annual market report is out at popehandy.REReport.com and we can now learn how 2011 compared to 2010.  The median sales price for houses in Santa Clara County was off 5.3% overall.  But from one part of the valley to the next it varied wildly with 6 cities or areas finding themselves in positive territory while others were off by double digits.

In the image to the left, I’ve put into bold the cities where the median sales price of houses which sold and closed escrow in 2011 were ahead of 2010′s pricing.

What is it that makes Gilroy, Los Altos Hills, Los Gatos, Mountain View and Palo Alto “in the black”?

Most of these cities/towns are upscale, west valley communities.  But so are Saratoga, Cupertino, and Monte Sereno.

Gilroy was especially hard-hit with the housing downturn so perhaps in that case, it’s just coming back into more of a balance. (Then again, so was Morgan Hill and it’s still off by 12%.)

The LinkedIn IPO and others in the Palo Alto area drove prices up for some parts of the housing market nearby and it’s likely that this explains the positive growth for Palo Alto, Mountain View, and Los Altos Hills.  That said, it would seem that Los Altos, and perhaps even Sunnyvale would have seen stronger numbers on the same account.  Perhaps school scores are the key driver here.

Los Gatos, Saratoga and Monte Sereno often behave somewhat similarly as they are adjacent to one another and often attract similar home buyers who want good schools, a nice downtown area nearby and scenic beauty with the hills.  The annual numbers show Monte Sereno down 6.7%, Saratoga down 2% but Los Gatos up 6.4%.  With Monte Sereno, there are very few sales each month and each year (only about 4,000 residents), so there can be a wider swing without it necessarily being accurate. Saratoga and Los Gatos each have about 30,000 people who call these areas home, though, so the data is much more helpful.  Saratoga and Los Gatos both have multiple school districts, views, homes with better proximity to “downtown” and more variables – I think we’d have to dig a lot deeper to learn why these two neighboring markets are so diverse.  We might also have to look at multiple years of data to see if Saratoga spiked while LG slumped to explain the difference. (more…)