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.

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

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

Some of the basics:

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

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

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

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

The 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

San Jose is a hot seller’s market in entry level prices of many neighborhoods (Alum Rock, Evergreen, Blossom Valley, South San Jose, Willow Glen, Cambrian and more), and because of that, we are finding that in many cases, homebuyers are having to compete in multiple offers. (Offer writing generally tends to produce a lot of anxiety for buyers, and there are a lot of questions you may have about the whole real estate purchase offer process. Please also see my Q & A on Making an Offer on my other website.)

This post is part of a series on how to write a competitive offer when bidding in a multiple offer situation in Silicon Valley. We’ve looked at what terms are and why terms matter generally, and then we drilled down to particular financing terms: the deposit (and related issue of liquidated damages & default), loan type, downpayment amount & percentage,  and loan terms.

Today we’ll finish up the section on offer finance terms and will cover a couple of “easier” financing items:

• presenting a pre-approval letter for your loan
• having  a copy of the check when presenting the offer
• providing “proof of funds” with your offer

This will be the last post on financing terms for your Silicon Valley real estate purchase agreement. After these we’ll move into a discussion of other terms in the contract.

The Importance of a Pre-Approval Letter

Why be pre-approved? Why not just be pre-qualified? A “pre-qual” is not very helpful to you in negotiating for the best price with any offer, so even if you are not in a multiple offer situation, I would encourage you to go to the trouble of getting your loan pre-approved.   Getting pre-approved is either no cost or low cost (I know one B of A lender who charges $50 to do a pre-approval, but many will not charge you for this service).  It does take time because you must gather together your financial documentation, but it is in your best interest to do it for a variety of reasons.  You do not want to find the perfect home only to find that you really don’t want to get the only loan that will help you to purchase that property, for instance. Know what your budget is before you shop and you will save yourself time, energy, and disappointment.  And when you are ready to make a bid, you will be far stronger.

Pre-approval letters are not all equal, by the way.  Some mortgage brokers will zip out a pre-approval letter because they feel “confident” that you can get the loan.  That’s not a real pre-approval.  A true pre-approval for a loan means that all your supporting documentation has been turned in, together with the application, and your credit report has been run, etc.  Further, it has been packaged together and submitted to an underwriter.  With an actual pre-approval letter, there should only be three things needed for the lender:  the ratified purchase agreement, the appraisal, and the preliminary title report.

Experienced agents can see that some pre-approval letters are really just gussied up pre-quals.  When receiving an offer from a buyer’s agent, the listing agent may phone your lender (mortgage broker or mortgage banker) and ask a few “hard” questions to test how solid the pre-approval is.   So realize that since the letter is part of your offer package, it too should be rock solid.

If you want to buy a home, eventually you need to do a little work to get a loan approved.  Do it upfront and have a good letter of pre-approval in hand and it will strengthen your positions in multiple offers.  Anything less will hurt you in terms of your competitiveness with other offers.

The Check, Please

Getting ready to buy a Santa Clara County property? Get your money into an accessible account, because you’re going to need it!  If you write an offer and your contract is accepted, your good faith deposit money will go into an escrow account and will be cashed within a very short time.

When your offer paperwork is submitted (the agency disclosure, the offer, certain other advisories and disclosures, pre-approval letter etc.), you should expect to write a check – made out to the escrow company – for that initial deposit (a much longer discussion of the deposit can be found in Part 2 of this series).   Don’t forget to give your agent a check before finishing the appointment!  Your Realtor (or other real estate professional) will photocopy the check and present that with your offer.  It shows the seller and the listing agent that you are ready to go. A missing check is not the end of your chances to get the property, but if put together with other weak spots in an offer it can collectively hurt you.  Since it’s easy to do and doesn’t cost but a penny or two to part with the check, this is something you should plan to do if you hope to be competitive.

Proof of Funds

Since we have been in the middle of a deep recession and incredibly tough financial crisis for well over a year now, the way buyers and agents present themselves as they bid on homes has changed.  Lots of wealth was lost with the housing market decline and stock market crash, and with it went a lot of confidence.  It’s turning around now, of course, but there’s still a sense of being shaken up that prevails. As a result, buyers now want to “show strength” and many agents are not only sending in the regular paperwork, but they are sending in proof of funds too.

It used to be that documentation on cash in the bank was only required with “all cash offers” to buy a home.  But this year I’m finding that about a quarter to a third of all offers are accompanied by bank statements, credit union account statements, and statements from financial planning companies indicating the potential buyer’s holdings in some sort of liquid account (not stocks or mutual funds, but cash, CDs etc.)

Although it strikes me as going a bit far to suggest providing proof of funds in multiple offer situations, I can tell you that if you don’t do it, someone else will and that other offer will be stronger than yours.  As an angle on how to raise the bar, this is one more thing which you can do to make your offer stand out. It is a “term” that does not cost you anything but a little time.

Of course you can “white out” or “black out” account numbers, your home address etc., leaving just your name and the bank balance showing.

This request can be really unnerving to people because we are all so afraid of identity theft, so I am not happy that this has now become a way in which homebuyers in Santa Clara County negotiate.  But things have changed, and any discussion of how to compete when writing multiple offers in Silicon Valley would be incomplete without making you aware of this.

Financing terms in contracts & multiple offer situations: summary

In conclusion, there are a lot of financing terms to weigh when putting your offer together.  If you are bidding against other home buyers, you will improve your position relative to the others if you can strengthen all your terms, with the financing terms being very important.  In some cases, you may not have any control.  For instance, if you only have so much cash to put down, you cannot simply make that number bigger than it can be.  But in others, with a little effort,  you can tilt things more in your favor:  having a real pre-approval letter, providing proof of funds, writing in a realistic loan interest rate, providing a copy of the check, putting 3% down upfront – this is usually doable if you’re putting any money down at all.  Sometimes agents are new or inexperienced, and they may play light of these issues and tell you that they aren’t important.  But if you’re up against 5, 10 or 20 offers, they are all important.