July’s median sale price was $1,572,500, down 10.1% from last month (but up 10.2% from last year). I just spot checked August so far on the mls, and as of this moment, the median sale price in August is lower still at $1,536,000.
July’s average sale price was $1,709,550, down 10.6% from last month (but up 12.4% from last year. So far in August, the average sale price is a drastically lower $1,462,000.
This is likely a great “buying opportunity” for those home buyers who were feeling priced out of the market a few months ago. Whether it is a seasonal blip or the beginning of a correction is impossible to know at this time.
Please note that multiple offers are still the norm, as are overbids – but prices are simply lower than in the past. Homes are still selling on average at 104.9%, so bear that in mind.
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
|Trends At a Glance||Jul 2018||Previous Month||Year-over-Year|
|Median Price||$1,572,500 (-10.1%)||$1,750,000||$1,427,500 (+10.2%)|
|Average Price||$1,709,550 (-10.6%)||$1,911,940||$1,520,940 (+12.4%)|
|No. of Sales||32 (-17.9%)||39||32 (0.0%)|
|Pending||23 (-25.8%)||31||27 (-14.8%)|
|Active||38 (+52.0%)||25||24 (+58.3%)|
|Sale vs. List Price||104.9% (+0.3%)||104.5%||102.6% (+2.3%)|
|Days on Market||14 (-11.8%)||16||18 (-20.3%)|
|Days of Inventory||36 (+91.6%)||19||23 (+58.3%)|
And last month
|Trends At a Glance||Jun 2018||Previous Month||Year-over-Year|
|Median Price||$1,750,000 (+2.6%)||$1,706,000||$1,497,650 (+16.8%)|
|Average Price||$1,911,940 (+10.5%)||$1,730,910||$1,690,230 (+13.1%)|
|No. of Sales||39 (-11.4%)||44||42 (-7.1%)|
|Pending||31 (-13.9%)||36||33 (-6.1%)|
|Active||25 (+4.2%)||24||24 (+4.2%)|
|Sale vs. List Price||104.5% (-2.4%)||107.1%||100.9% (+3.7%)|
|Days on Market||16 (+36.2%)||12||20 (-20.5%)|
|Days of Inventory||19 (+13.6%)||16||17 (+12.2%)|
The data shows a strong sellers market remaining fairly consistent despite lower inventory over the winter. The best homes will 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.
|90-day stats for Single Family properties in|
SAN JOSE, CA 95120 as of August 17, 2018
|Median List Price:||$1,707,514||Average List Price:||$1,954,443|
|Total Inventory:||31||Price per Square Foot:||$691|
|Average Home Size:||2,572||Median Lot Size:||9,264|
|Average # Beds:||4.13||Average # Baths:||3.37|
|Homes Absorbed:||8||Newly Listed:||9|
|Days on Market:||31||Average Age:||40|
When it’s a hot seller’s market, like it is right now in Silicon Valley, it is challenging to be a home buyer. That means it’s also hard to be a buyer’s agent, since it may require writing many, many offers (and a lot of time and energy) before the clients get into contract. Since Realtors are usually only paid when a property closes, that means it’s not too hard to go broke if a real estate professional focuses a lot of time with buyers. In other words, in a market like this, most agents would prefer to work with sellers rather than buyers, because it’s more likely that they’ll make a living.
What can you do to increase the odds of finding a great Realtor who will take you seriously, work with you and for you, and give it a good effort even if it’s an uphill battle? First, let’s understand what a real estate licensee is looking for a client – at least in most cases. Usually, the savvy agent doesn’t want to waste time with people who are not serious, not ready, or who will not be loyal. The smart Realtor knows that without these three things, it’s unlikely that they will be able to sell that person a home, or at least not in a reasonable period of time.
Serious home buyers:
Only about half of all home buyers will likely buy in the year they think they might, so it’s important for real estate professionals to try to make sure that they don’t spend months on someone only to have him or her remain permanent renters. The agent must qualify the client to make sure it’s worth the risk of spending time with him or her.
Clues that the buyer isn’t serious include these:
(1) Comments like “I may have to look at homes for a year or two” or “I may need to write a hundred offers to get the right deal” or “I’m in no rush” indicate that this isn’t a big priority for the buyer (so maybe it shouldn’t be for the agent, either). This buyer is able, ready and probably also loyal – but not serious. Some, though, will clarify with a time frame and this is a game changer. “My lease is up in July, so ideally, I’d like to get into contract in March, close in April and move in May. But if I find the right house sooner, I’ll buy sooner.” That works!
(2) If there are two decision makers, having only one do most of the house hunting and the other showing up at distant intervals often indicates that it’s a priority for one but not both. Sometimes that’s not the case, but it is a red flag. Both need to be serious. Continue reading
You may have heard that the Silicon Valley real estate market is slightly softer now than it was a a few months 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 in February, March, or April. 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 San Jose, 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 frequently the highest price and best terms. It is 10-20% 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.
- The best offer is also someone who’s been SURE that he or she or they wanted the home from the very beginning and looks ROCK SOLID. NO WAVERING, not a “last minute” offer. Any hesitation on your side will cause the seller to not feel good about your odds of closing the sale. Be consistently interested if you want the sale. A shaky looking buyer may 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 and need a few days to see the property again, or show it to their parents, or otherwise confirm the decision to buy. Their agent is not so thorough. If the TDS is not fully signed off, is the buyers’ agent trying to sneak a 3 day right of cancellation into the contract? The best buyer’s offer doesn’t look shaky – it looks dead set on buying the home and has done everything possible to convince the seller of their conviction.
- The second best or next runner up is usually strong on terms (at least 25% down, few or 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 something is not quite as solid. If the offers are tied but one buyer has no contingencies and the other has any, that will be the tie-breaker.
- Middle of the pack is usually a combination of a price where the home should appraise, a solid down payment, and few or no contingencies. It may be a price that seems “reasonable”. Buyers may feel that it is “a fair offer” or a win-win. Often the fair offers aren’t good enough to take the prize in multiple offers. If you can project what most buyers think a home will be worth, maybe you might want to consider getting ahead of that pack and seeing where the pricing trajectory will take you.
- Bottom offers are under, at, or barely over list price, and include an appraisal contingency as well as others (one for loan or one for property condition). If there’s a rent back, they want their PITI covered.
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
Hearing the real estate market “war stories” about dozens of offers on Silicon Valley properties and overbids ranging from 20 – 55% had convinced me that we were in a Silicon Valley real estate market bubble back in early 2013. At least, this is what a bubble looks like, sounds like, feels like, and acts like. At the time I thought, “how much longer could this continue?” Four years and counting – that is the answer.
I tell my family and friends that we are in “crazyland” as buyers purchase homes with no contingencies of any kind, houses sell in 10 days or less (if everything is right, which seems to be the case 75% of the time), and those same properties are selling at well over list price and with much more than 20% down.
The absorption rate, or months of inventory: it is a Silicon Valley real estate market bubble?
What do the numbers say? I just logged into MLSListings.com and see that right now, in all of Santa Clara County there are 817 single family homes (houses + duet or attached single family homes). The pending and contingent homes measure 1074, far more! That ratio alone suggests that the market is in overdrive. In the last 30 days, 950 single family homes have sold & closed escrow. So the months of inventory is 817 divided by 950 = .86 of a month of inventory, so about 3.5 weeks of inventory. (When I originally blogged about the potential bubble, it was 1.8 months of inventory.)
In other words, things are flying off the shelves. And they have been, with only a few minor blips here and there, since early 2012. Does that sound like a Silicon Valley real estate market bubble to you – a crazy strong seller’s market lasting 4.5 years? I could be wrong, but I think of bubbles as being something fairly swift, not a multi year trend.
Homes are selling faster than new ones are coming onto the market!
It’s one thing to say that one city, town, or school district has a very low months of inventory (or high absorption rate). It is another altogether to say an entire county is that low. This is a major trend, not a tiny blip in the statistics.
How soon we forget that after the outrageously deep seller’s market in 2000, we had a steep drop in 2001. Or that all the crazy buying in the San Jose area (and other places) in 2005-06, combined with bad financial regulations, lead to the crash of 2007-2009. But perhaps that enormous “correction”, in which Santa Clara County lost about 50% of its value on average, had more room to recover than we initially realized. Jobs keep flowing in, and housing starts are not keeping up. Supply and demand – the age old equation. That would seem to refute the idea that this is a Silicon Valley real estate market bubble. Perhaps low inventory and strong demand are what we should be expecting going forward. Continue reading
Why is it so hard to buy a home in Silicon Valley? Most of it has to do with our ongoing and severe inventory shortage.
I initially wrote the article below on Feb 9, 2012. I thought it was bad then – and I suppose that relatively speaking, it was. But it’s much worse now!
Today is May 1, 2017, and I ran the numbers of available single family homes in Santa Clara County in a chart comparing since January of 2012. Have a look, and please note the year over year numbers:
The situation has only intensified since I first wrote this article in early 2012. There are many reasons for the problem: older people won’t sell for tax reasons (mostly capital gains). move up buyers who elect to stay and add on rather than deal with hugely increased property taxes. In general, home owners are opting to “buy and hold”.
Is it hard to buy a house in the San Jose area? You bet. And unfortunately, I don’t see an end in sight anytime soon.
Original article: Feb 9, 2012
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.):
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. Continue reading
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.
$899,000 : 6639 Bunker Hill CT, SAN JOSE2 beds, 2 baths
$1,550,000 : 6001 Rocco CT, SAN JOSE4 beds, 3 baths
$2,450,000 : 6949 Elwood RD, SAN JOSE5 beds, 4 baths
$1,248,888 : 6552 Camden AVE, SAN JOSE3 beds, 2 baths
$1,520,000 : 1267 Oakglen Way, SAN JOSE5 beds, 3 baths
$1,198,000 : 5934 DRYTOWN PL, SAN JOSE3 beds, 3 baths
$1,440,000 : 1153 Silver Canyon DR, SAN JOSE4 beds, 3 baths
$899,950 : 6609 Folklore CT, SAN JOSE2 beds, 2 baths
$1,388,000 : 1352 Via De Los Reyes, SAN JOSE4 beds, 2 baths
$1,190,000 : 1080 Big Sur DR, SAN JOSE3 beds, 3 baths
See all Real estate in the Almaden Valley community.
(all data current as of 8/19/2018)
Listing information deemed reliable but not guaranteed. Read full disclaimer.