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The Almaden Valley real estate market is still in a stable sellers market. Winter brought about a steep drop in inventory. There must be either a lot more inventory, or significantly less demand, before we see anything close to a balanced market. The Almaden Valley market is noticing minor softening, with homes selling, on average, a little over list price at 102.6%. That being said, turnover has slowed way down to an average of 85 days on market (or DOM). This kind of major and sudden swing in data is often caused by one or two listings of exception, in this case taking much longer to sell than their counterparts. Almaden Valley is still in a hot sellers market.
Please find the current statistics for single family homes (houses & duet homes) from my Almaden Valley real estate report (click on link for more info):
Almaden Valley San Jose 95120 Real Estate Statistics At A Glance
- Median home prices increased by 5.9% year-over-year to $1,337,500 from $1,262,500.
- The average home sales price rose by 15.9% year-over-year to $1,459,620 from $1,259,290.
- Home sales fell by 0.0% year-over-year to 12 from 12.
- Active listings rose 51.7% year-over-year to 44 from 29.
- Sales price vs. list price ratio rose by 0.3% year-over-year to 102.6% from 102.3%.
- The average days on market rose by 195.6% year-over-year to 85 from 29.
Compared To Last Month
- Median home prices slipped by 1% to $1,337,500 from $1,351,250.
- The average home sales price rose by 2.7% to $1,459,620 from $1,421,750.
- Home sales down by 33.3% to 12 from 18.
- Active listings increased 69.2% to 44 from 26.
- Sales price vs. list price ratio increased by 3.4% to 102.6% from 99.2%.
- The average days on market increased by 259.5% to 85 from 24.
|Trends at a Glance||JAN 2017||PREVIOUS MONTH||YEAR-OVER YEAR|
|Median Home Price||-1.0%||$1,337,500||$1,351,250||+5.9%||$1,262,500|
|Average Sales Price||+2.7%||$1,459,620||$1,421,750||+15.9%||$1,259,290|
|No. of Homes Sold||-33.3%||12||18||0.0%||12|
|Short Sales Sold||N/A||1||0||N/A||0|
|Active Short Sales||N/A||0||0||N/A||0|
|Sales Price vs. List Price||+3.4%||102.6%||99.2%||+0.3%||102.3%|
|Average Days on Market||+259.5%||85||24||+195.6%||29|
And from last month:
|Trends at a Glance||DEC 2016||PREVIOUS MONTH||YEAR-OVER YEAR|
|Median Home Price||-0.7%||$1,351,250||$1,361,000||+3.7%||$1,302,500|
|Average Sales Price||+3.3%||$1,421,750||$1,376,760||+2.5%||$1,386,420|
|No. of Homes Sold||-28.0%||18||25||-25.0%||24|
|Short Sales Sold||N/A||0||0||N/A||0|
|Active Short Sales||N/A||0||0||N/A||0|
|Sales Price vs. List Price||-0.2%||99.2%||99.4%||0.0%||99.2%|
|Average Days on Market||-34.9%||24||36||-51.5%||48|
The data shows a strong sellers market remaining fairly consistent despite increasing inventory. The best homes will still see multiple offers, a response to low inventory and high demand.
Altos Research charts for houses in Almaden (San Jose 95120)
Please note that Altos Research uses list prices of Almaden Valley homes for sale, not sold prices.
You may have heard that the Silicon Valley real estate market is softer now than it was a year ago. That’s true – at least for most of Santa Clara and San Mateo Counties and nearby. In many cases there are now half as many offers as there were then. But it’s still a hot seller’s market, and that means that often there are multiple offers, overbids, and sales with no contingencies.
For my last few listings – which have been in Saratoga, Los Gatos, the Cambrian area of San Jose and the Campbell area of San Jose – there’s been a consistent “spread” of offers. If there were 6 offers, it might look like this:
- Best offer is 5-15% over list price, 25-30% down at least, and has no contingencies for inspection, loan, and most of all, appraisal (the percentage over has to do with whether the home was priced spot on the value or strategically under). These offers come with all disclosures signed, and the buyer’s agent has even done her or his Agent Visual Inspection Disclosure. They include the proof of funds and usually also write a nice letter to the sellers about why they want to purchase that home.
- Next runner up is usually strong on terms (at least 25% down, no contingencies) but perhaps made an offer price a little under the top value. Sometimes the next runner up has a good price and mostly good terms, but seems “shaky”. Maybe they would not include their proof of funds. Perhaps they would not sign the disclosures yet or otherwise submit an incomplete package. They don’t come across as certain about buying this property.
- Middle of the pack is usually a combination of a price where the home should appraise, at least 20% down, and few or no contingencies.
- Bottom offers are barely over list price, have exactly 20% down, and include an appraisal contingency as well as others (one for loan or one for property condition).
If you’ve been writing offers and not succeeding, try to see your own pattern in this spread. Is there one thing, or perhaps are there two or more things, you’re just not ready to do?
Why it is so hard
Home sellers want to know when they agree to your purchase contract that you won’t back out and that you won’t renegotiate the terms later. If they have paid for all the presale inspections, they aren’t going to want you to have 7+ days to decide if the condition is to your liking. They want to know you have read everything and are cool with it. Likewise with the appraisal. In overheated markets like this one, many times there’s an appraisal shortfall. Sellers want to sell to buyers who can absorb any deficit, so you need more than 20% down to do that.
We Realtors generally don’t like the kind of market in which buyers get stuck writing offers with no contingencies in order to win the house, but the truth is, that someone in every pack will do it. And you need to know that if you’re trying to buy a home. (In my recent Belwood of Los Gatos sale I had 11 offers and 7 had no contingencies, as an example.)
A few years ago, I did a series of articles on multiple offers – everything from financing tips to the value of presenting an offer in person, and much more. If you’ve been unsuccessful in buying a home and bid more than 2-3 times, please have a read. It may help you a lot:
By the way, in even the hottest market, there are homes that don’t sell. (Some sellers fall for popular home selling myths that everything sells at every price, but it’s not true.) If you have feelings of aversion to these bidding wars, do yourself a favor and ONLY look at homes that have been on the market 3 weeks or more. Often the main thing wrong is an inflated price. Some sellers won’t do an official price reduction, but may take a lower offer than you may think. Some homes have just been hit with the Ugly Stick. Ugly you can fix. Often the Ugly Home will sell for a lot less because yes, it is not that heart warming and it is a lot of time, money, and effort to fix it up. But guess what – it can be a great price and you won’t have to deal with competing bids in many cases.
Happy home hunting!
It remains a strong seller’s real estate market in Silicon Valley, with many properties selling with multiple offers, but there’s an undercurrent of concern that we are the near the peak of pricing. That has some buyers nervous (though most will quip that Apple and Google and others are still hiring, and the local economy is strong – so they are not too worried). For those who are a little nervous, sometimes it turns into cold feet – and it’s costing them.
What we are seeing in terms of cold feet with Silicon Valley home buying:
This undercurrent is not being widely reported but we are experiencing it in our real estate practices as a few things have been taking place.
First, a larger than usual number of transactions have been falling through. Many of these, though, are not recorded on the multiple listing service, as they take place right after an offer is accepted, so the listing agent and sellers turn to one of the other bidders and put them into contract within hours. Because they aren’t recorded, it’s impossible to track – but the stories are out there of this happening more now than a year or two ago.
In other cases, offers are written and submitted but withdrawn before they could be countered or accepted.
And in others, buyer agents say that they will be submitting an offer, but on the day of offer presentation, the home buyers back out and the offer is never submitted.
In my experience, all of these things are happening “more than normal” right now. A lot of it is not easily measurable.
Symptoms of cold feet to come
Home sellers want to feel confident when they accept a contract that it will stick, both because they don’t want the work or emotional upheaval associated with a transaction that falls through, but also because often the best price is the first price. When a home ‘resells’, most of the time it is for less than the origanlly accepted bid.
For that reason, smart listing agents are looking for the symptoms of cold feet. They’d rather not get their sellers into contract with nervous buyers who will change their mind about buying the house or condo.
Symptoms of nervousness about the property at an open house:
- Dominating the listing agent’s time with incessant and low-level questions – best to give most of your questions to your own buyer’s agent, who will help you with them. It’s good to ask about the home, the reports and so on, but you don’t want to take so much of the Realtor’s time that he or she cannot talk with others there. Think balance both in terms of the time and the nature of the questions. You want to present yourself as reasonable and easy to work with.
- We often say that the longer a buyer stays, the more likely he or she is to write an offer. This is true, up to a point. Buyers who come to an open house and stay for 2 hours, or who make 4 or 5 trips to see the house go from looking interested to appearing unsure.
Symptoms of nervousness about the property (your potentially cold feet) when your offer is submitted:
- Sending in an incomplete offer and supporting documents. If the listing agent requires proof of funds, provide it. If the disclosures are to be signed, do all of them – not just the cover sheet. Aim to be thorough, it will present you as serious. It will also show that you are not a pain to work with, that you and your Realtor can follow directions and that the listing agent won’t have to chase down the paperwork later. Go the extra mile, it helps!
- Submitting an offer package “last minute”, without the buyer’s agent giving advance notice that it’s coming. Related to this is seeing the property and reviewing everything well in advance, but only deciding a few hours before the deadline to actually write, sign, and submit the bid. The serious buyers who are rock solid are the ones who know early on that they want the property and are committed to it early on. Their buyer’s agent will let the listing agent know long before offers are due that these home buyers are going to bid on it. One agent recently told me “my buyers are madly in love with the house” many days before the offer due date. This makes a big impression on sellers and their agents.
- If the buyer’s agent needs to call every few days to see how things are looking, it usually hints that the buyers are not too sure or that they will only write an offer if there’s limited competition. The truly sure buyers plunge ahead despite competing bids or the lack of them.
Want to buy a home? Try not to come across as skiddish to the listing agent! Your cold feet may cost you the home, even if your offer’s got the highest price. Home sellers and their agents want to feel confident that you will close on the sale if your offer is accepted. Present yourself as serious, capable, reliable, and easy to work with and your odds of success will be increased. At the end of the day, it is always “price and terms”, but never underestimate the influence that your behavior and your real estate agent’s behavior play into the overall package, because shaky buyers may not close the sale, but home buyers who are rock solid and madly in love with the house will.
Lastly, in an appreciating market, as we have right now, it should be noted that often the next house or townhouse or condo will be more costly or in worse shape than the one you could not decide to get serious about. Stay nervous too long, and you could ultimately really impact how much home you can buy at all. Worse yet, take too long and you may price yourself out of the market entirely.
Buyers who are getting slammed out of the Silicon Valley real estate market due to low inventory and multiple offers are extremely frustrated. In many cases, they write offer after offer, and each time not only are their bids rejected, but they never even get a counter offer.
You should not depend on getting a 2nd chance, of course. Just because you write a contract on a San Jose area home does not mean that the seller needs to give you a counter offer. Some agents and sellers don’t respond at all – not nice, but if you get dozens of offers, sometimes that does happen. Sometimes they just take the best offer and run. Othertimes they only counter the best offer and forget the rest.
The question arises all the time: why isn’t my 20% down offer just as good as the 50% down or the All Cash offer? Isn’t 20% down good enough? Or for that matter, why wouldn’t a 3.5% FHA backed loan be suitable?
Cash is better because there’s less risk
Twenty percent down is “good enough” if there are no other offers. If it’s multiple offers, though, it’s probably not sufficient for most sellers provided that the all cash offers are written with realistic pricing. Right now, 25% of all sales in Santa Clara County are all cash, and sellers would far rather deal with an offer that includes no finance or appraisal contingencies. For sellers, the fewer contingencies the better and no contingencies is ideal. Particularly now, when we are seeing a very sudden and dramatic upswing in pricing, appraisal contingencies can kill an offer’s chances of success. With all cash, there is no appraisal at all – it’s a slam dunk on that front. Continue reading
How did 2015 end as compared to 2014 for the Silicon Valley real estate market? It was perhaps not as much appreciation as some may have perceived – and I may be alone, but I think that’s a good thing as realty trends and statistics go. I’ll explain below.
The Annual Silicon Valley RE Report is in for Santa Clara County (links at the bottom for San Mateo County and Santa Cruz County). Here you can view the year over year statistics and market trends for the San Jose area.
Santa Clara County home sales and prices –
As you can see, home sales (solid area) remain fairly low. There’s plenty of demand, just not much inventory for it, hence the pretty much steady rise in pricing overall in Santa Clara County. This is one of the stronger areas in the nation. (When prices are up, consuemers tend to think that Realtors are always making tons of money. But notice the number of sales! Many agents are writing offers and not getting them accepted – so are having a tough time just as their buyers are having a tough time with multiple bids.)
Santa Clara County – prices up over 2014 by 6-8% appx
- Median home prices increased by 7.9% year-over-year to $917,000 from $849,975.
- The average home sales price rose by 6.4% year-over-year to $1,157,360 from $1,088,090.
- Personal note: appreciation in this range is fairly sustainable, as compared to the appreciation in 2014, which was closer to 20%. Double digit appreciation is usually a little worrisome since it often is not sustainable. My sense is that this is healthier, and probably less susceptible to a “correction” than when prices rise more than 10% per year. Hence, I think it’s GOOD NEWS that the average appreciation is in single digits.
Santa Clara County by city within the county
Sellers can get away with this in a hot market, meaning that buyers have limited power to walk away from such a home because the inventory is scarce. But what happens when things cool down to, say, a balanced market? Suddenly those houses and condos with massive, non-permitted remodeling may lose a lot of their appeal, and home sellers needing to move just then may pay the price in what pickier buyers will pony up for it.
Some home owners meekly claim to believe that they only need permits if they expand the original footprint of the house. That’s just plain wrong, and most likely know better, too.
How can you learn about a home’s remodeling history?
First, then, how do you as a home buyer know the situation with the remodeling? Most of the time, San Jose area home sellers provide upfront disclosures and inspection reports, and the answer may be revealed there.
CAR vs PRDS paperwork
We have 2 sets of contracts, disclosure forms, etc. in use here: the Peninsula Regional Data Service, or PRDS, and the California Association of Realtors, or CAR. Here’s one place where the PRDS forms are far better than the CAR forms. The CAR seller disclosure, the Seller Property Questionairre, simply asks if the seller is aware of any alterations, modifications, remodeling, replacements or material repairs on the property. Many sellers are not careful and just mark “no” to every answer, but this is an extremely important question! So buyers, ask yourselves, does everything in this home look unaltered from the time it was built? Probably not.
The PRDS Supplemental Seller’s Checklist asked for detailed information on what was done, when, and whether permits and finals were obtained. The first set of questions is for the time the current seller has owned the property, but then it’s asked again regarding prior ownership. This is so much more thorough!
Many municipalities (towns, cities, counties) have online permit history. It may not always be accurate, which I why I strongly advise home owners to keep a copy of everything, but more often than not it is correct – so it’s a good place for consumers to check. In San Jose it’s a breeze with SJPermits.org. These are things which buyers and sellers investigate, not real estate agents (nor do real estate licensees check the Megan’s Law Database, but consumers should). Continue reading
Although some properties are not selling within 10 days, many Silicon Valley homes listed for sale do go pending a week to ten days later with multiple offers. Of those which sell quickly, pending sale prices are often far above the list price; we are seeing 10% overbids often, and sometimes 25% or more, in select cases.
Unfortunately, Bay Area many home buyers’ expectations have not yet caught up to the reality of the overheated market and are shocked that a great “full price offer” may well be the worst of the contracts presented.
What’s causing this to happen?
First, there’s a very dire shortage of homes to buy. That can create a buying frenzy all by itself in an area where people are well employed and want to put down roots.
Second, the listed prices are placed strategically low to attract multiple offers. If you were to look at the list price as opposed to the comps’ sale prices, you’d see that homes are not listed where they should sell, but often about 5% below that amount in many cases (sometimes more than 10% lower, though).
It is extremely important to realize that the list price may have little to do with the eventual purchase price. Study the comps and then assume a trajectory. If homes are going up at the rate of $10,000 per month for the type of home you like, then when you bid, consider the sale price 30 days out – or more – and then you may hit the target.
$937,000 : 6263 Vegas DR, SAN JOSE3 beds, 2 full baths
$1,898,000 : 1123 Carla DR, SAN JOSE4 beds, 3 full, 1 half baths
$1,450,000 : 7043 Bret Harte DR, SAN JOSE5 beds, 3 full baths
$1,750,000 : 6661 Leyland Park DR, SAN JOSE4 beds, 2 full baths
$1,288,000 : 1583 Puerto Vallarta DR, SAN JOSE5 beds, 2 full, 1 half baths
$1,299,000 : 1143 Lansdale CT, SAN JOSE4 beds, 2 full, 1 half baths
$925,000 : 1063 Wallace DR, SAN JOSE3 beds, 2 full baths
$1,399,000 : 5943 Kyburz PL, SAN JOSE3 beds, 2 full, 1 half baths
$1,500,000 : 1093 Seth CT, SAN JOSE4 beds, 2 full baths
$1,460,000 : 6858 Shearwater DR, SAN JOSE4 beds, 2 full, 1 half baths
See all Real estate in the Almaden Valley community.
(all data current as of 2/21/2017)
Listing information deemed reliable but not guaranteed. Read full disclaimer.
For a long time, Silicon Valley real estate agents have expected home buyers to be preapproved, not just prequalified, for a mortgage or loan when they submit an offer to buy a property. So the offer package would consist of an agency disclosure, the contract (PRDS or CAR), and a preapproval letter from the home buyer’s lender. (Some listing agents require the buyer to be preapproved with the listing agent’s lender. This is especially true with REOs.)
Over time, a few disclosures got signed to go with the submission, too – such as one on the dangers of writing non-contingent offers, another on brokers potentially submitting offers for competing buyers, etc.
When the market gets overheated, as it is now, listing agents begin to require even more things upfront, with the offer – not after it’s been accepted. In many cases, listing agents want all disclosures signed upfront, plus the covers of any inspections. This often means initialing and signing 60+ pages.
Cash offers traditionally come with “proof of funds”. That means bank statements or eTrade or other statements proving that you’ve got the money. Sometimes it’s a portfolio showing how much stock one owns. (Last week I got 22 offers on a listing and one agent, who”s been in the business for decades, showed me his preapproval letter when I asked for the proof of funds. He didn’t understand.) Naturally, we black out or white out or otherwise obfuscate the account numbers for safety’s sake. In recent years, though, the strongest offers come with proof of funds no matter the size of the down payment. Many Realtors in the San Jose, Los Gatos, and Saratoga areas expect it.
Buyer’s agent: do your visual inspection upfront, too….
Silicon Valley is mired in an extraordinarily deep seller’s market, and has been for a couple of years now. Want to buy a home? No one who understands the market at all will tell you that it’s going to be easy. If you are serious about becoming a home owner rather than a shopper, it’s time to get serious about what it will take for that to happen.
In a deep seller’s market, it’s very helpful to have a game plan or strategy for purchasing a home. The best place to begin is with an understanding of your competition and the inherent risks of buying in this climate.
- Approximately 30% of all sales in this area are “all cash”. Not all cash buyers are savvy and may make mistakes (such as vastly overestimating the value of a cash offer – sometimes the lowest price comes from a buyer without financing). All cash buyers need to be educated, too.
- When homes sell in under 2 weeks and with multiple offers, there’s a very good chance that the winning bid came in with no contingencies for inspection, loan, or appraisal. Sometimes it’s all cash and non-contingent on the normal items.
- Most home buyers will have done a lot of research on how to compete in multiple offer situations. A few years ago I wrote a series of tips and they are still good today. Major hint: it’s not always only about price or even primarily about price. The terms matter, and so do a few things which are harder to measure (and can include all sorts of things – even whom you hire to work with you on the purchase). http://sanjoserealestatelosgatoshomes.com/summary-of-tips-for-multiple-offer-situations-silicon-valley-real-estate-contracts/
- If you dawdle, you risk being priced out of the market. Sometimes when beginning to shop, home buyers who are new to the game feel that they have power and can “wait until the market improves”. The problem is when there is deep scarcity of inventory and a ton of amply able buyers, the prices are going to go up steeply. If you take a year to buy, most of the time – unless you are extraordinarily lucky – it will cost you dearly. I have seen buyers wait so long that they basically used up their entire down payment. Since 2 years ago, prices are up about 25% to 30% in most of Santa Clara County and the San Jose area. If you have been looking for 2 years, your down payment has been spent. This is a real case of time versus money.
- The greatest fear that buyers have when purchasing in a raging seller’s market is that there will be a correction or crash, and they’ll be left with an over-investment in real estate. Put another way, they don’t want to overpay and they really do not want to be upside down in their home. No one wants to overpay. But right now, many homes that sell will not appraise (many do, but quite a few don’t).
So that’s the starting point – steep competition, a lot of “all cash” and a lot of “no contingencies” – when it comes to homes newly listed and gleaning multiple offers right away. Continue reading
First, let’s explain what it is. A bidding war is when multiple home buyers overbid a property that’s on the market and make increasingly stronger offers (improving price and terms) until one of them is accepted by the home owner and the bidding is over. Sometimes home buyers get a counter offer, but return their response with even more than the seller requested. At other times, they may not even wait for a counter offer – but up their contract’s purchase price or adjust the terms to make it more desirable to the seller.
Why does this happen? It is a supply and demand issue. When there’s not enough supply for the demand, buyers feel desperate – especially if they have offered on many homes and been rejected each time. With multiple offers, prices get pushed up – and sometimes up and up while the sellers are still reviewing the contracts in front of them. The process is accelerated (or exacerbated) when multiple offers also become bidding wars.
Digging deeper with bidding wars
When a lot of home buyers want the same property and write purchase offers for it, we have multiple offers. In some markets, multiple offers come in at or under list price (I have seen this in cooler markets, though not for many years). But when the realty market is an overheated seller’s market, inventory is too low for the demand, prices rise with those multiple bids. Additionally, the terms get so aggressive that buyers often have few, if any, rights. Remember, it’s always price AND terms – so things like cash versus a loan, larger downpayments, shorter or no contingencies, and things like free rent backs will also impact the outcome. It is not only price! When the offer process escalates, we have bidding wars.
How do bidding wars come about?
This can happen intentionally, as when home sellers knowingly under price the property to attract multiple buyers with the hope of bidding wars and the listing agent reveals to each one what has been offered so far to elicit higher & better offers, or it can happen unintentionally, when the owner and agent priced the home in line with the comps and the market, but there’s an unexpected avalanche of interest. (The latter has happened to me when I priced a listing to be exactly in line with the market, but got 20 offers and a lot of overbidding.) Either way, the result is similar. Buyers up their price and sweeten their terms to win the deal, and they keep trying until the home is under contract. Continue reading