Cinnabar winery sign (Big Basin Way, Saratoga)

In many communities such as Saratoga, Los Gatos, Los Altos, Willow Glen, Campbell and Palo Alto, there is a high premium placed on homes which are close to the downtown area.  Many real estate agents advertise these as “walk to town” but the idea is simple: it’s nearby, you can stroll, skate, ride or bike, wheel yourself and forget the car.

Downtown Saratoga, also called Saratoga Village, welcomes residents and visitors to a charming, scenic area with fabulous shops, spas, wine tasting venues, restaurants and more.  This part of the city boasts top scoring schools as well as lovely older and historic buildings and a gorgeous park alongside Saratoga Creek. Whether you spend an afternoon or a lifetime in Saratoga, this part of town will call you back again and again!

What do you need to know about buying a house, townhouse or condo in downtown Saratoga?

There are a few points which you are well served to know when purchasing residential real estate in this upscale community. We’ll touch on a few of them here: historic homes, traffic & noise, natural hazards, parking, and special issues with condos, townhouses and PUDs (planned unit developments).

First, this downtown Saratoga Village zone is historic; while not every property is deemed historic, many are and that means that there will be restrictions on remodeling and expansion of single family homes or houses. For instance, original glass in windows may need to remain if you’ve got a Victorian house dating from the 1890s, and expansions may need to be off the back of the home so that the facade keeps its initial look and feel (just examples).  This can be frustrating if you buy a luxury home that “needs work” and you are surprised later. If the house was built before 1950 or so, double check the rules! (more…)

The Campbell, CA, real estate market for condos and townhouses has been a little up & down, but for houses it’s a stronger market.  That does not mean that prices in Campbell are where the owners or sellers would like them to be – just that residential real estate which is appropriately priced is selling pretty well.

Here’s a visual of market conditions (not prices) generally, through June 2011:

What about prices and home values?  Are they holding up?

Campbell houses for sale:  prices appear to be slipping slightly.  Some volatility is to be expected this year and next, so it’s possible to see some up and down (but probably not super dramatic unless you just barely have equity and it’s the difference between being able to sell without bringing money to the closing table or not).  Here are the figures for June – see the whole report on my R E Report site for Campbell CA houses:

The market for houses is good, but pricing is soft, as you can see in the numbers above.

What about for condos?

Condominiums and townhouses in Campbell – see the full real estate report online (updated each month around the 5th – 8th).  Isn’t it interesting that although it’s a cool or cold buyer’s market, prices there are actually inching up pretty noticeably.  That is very good news to condo and townhome owners who want to be doing a “move up”.

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Saratoga, California is a scenic, small city with a fabulous downtown area known as Saratoga Village.  Once a logging town, Saratoga is now a Silicon Valley bedroom community.  It is known for expensive homes & luxury estates, fantastic schools that score highly in the nation, low crime, and scenic vistas.

Find Saratoga, CA, listings and homes for sale

What’s on the market now? Below please find all currently available houses that are listed on our local MLS. (They are in order of price from the luxury real estate listings to the most affordable cottages in town.)

Please note that there is a lot of variety within this community.  One of the big drivers of value is the school district, and here there are three of them!  The part closest to the Village falls under “Saratoga Schools”. The other districts are Moreland and Cupertino schools.  Of these, Saratoga & Cupertino rival each other for most expensive generally and the Moreland area is consistently much less expensive.
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As of today, there are nineteen condominiums and townhomes for sale, and just one pending sale, in the upscale Silicon Valley city of Saratoga, CA.

Homeowners are used to buyers stretching to buy homes their corner of Santa Clara County.  It’s a highly desirable place to live, with great schools, low crime, scenic beauty, character, history, and community involvement.

Right now, though, the hottest segment of the Silicon Valley real estate market is the lower priced single family home market.  Conversely, the coolest part part of the market is the luxury condo market, that is, condominums and townhouses in expensive areas like Los Altos, Cupertino, Saratoga, Los Gatos and Almaden Valley. Put directly, homebuyers with a  four or five hundred thousand dollar budget can purchase a single family home in San Jose for the same amount that a condo would cost in Saratoga.   The selling challenge appears to be even more acute as the price point rises.  It has been several months since a million dollar towhnouse in Saratoga has sold.

A good tool for understanding  the market condition is the rate of absorption, which factors in current inventory levels with sales. The question being answered is this: if no new homes were to come on the market, how long would it take for the current inventory to be absorbed if sales continue at the current rate?  (It can be viewed as days, weeks, or months of inventory.)  For example,  if there are one hundred homes for sale and twenty of them sell in a month, there’s a five month supply of inventory, or five “months of inventory”.

If there are under six months of inventory, it’s considered a sellers’ market. Six months is neutral. More than six is a buyers’ market. Obviously, the higher that number goes, the more extreme the market gets into the buyers’ favor.

Right now, it’s quite acute.

For the last two months in Saratoga, there have been NO closed sales among condos and townhomes. None.  This is almost a total market rejection by consumers – they don’t want what is offered at the prices offered. So the months of inventory would be infinite – if we could graph that. This chart doesn’t do well with intangibles like that, so I’ve plugged in in as if there were one sale in January and February – but there were not. So please envision the last two months as having bars that continue through the top of the chart.  Here’s how the history of the months of inventory in Saratoga look when put into a graph (March 2001 is missing data):

The numbers are from MLSListings, our mls provider. I did the crunching to get the absorption rate. The information for March 2001 was missing on MLSListings.com for some reason – so you’ll see a gap in the chart where that info belongs.

What’s happening with prices? The peak of pricing was about two years ago, and prices have been dropping since then – if slightly at first, it’s more dramatic now. This has been a very deep correction, and prices have “rolled back” in time a number of years.  For some properties, it’s only to about 2005 or 2006. For others, it’s between 2002 and 2004 prices. Since no condos have closed recently in Saratoga, it’s hard to pin the “rollback year” down. It is, however, clear that buyers don’t like the list prices of the homes for sale – if they did, they’d be buying.

When will it recover? It’s hard to say.  This correction has been deep and it may take a few years to see a recovery.  Buyers will need to feel confident in their jobs, particularly in purchasing a luxury condominium.  I would not expect to see peak prices again for another five years or so, possibly more.

The Almaden Valley real estate market is not greatly changed now from a month ago.

List prices of homes, both condominiums and single family houses, continues to decline in Almaden Valley:

The amount of inventory continues to fall. Homeowners tell me, “I don’t want to sell my house at the bottom of the market”. If this continues, it will help give some balance to the market and keep prices from losing value as much in Almaden Valley.

The days on the market, though, are rising very dramatically in Almaden Valley.

Overall, the market is tougher for condos and townhouses than for single family homes. This has been the case for most of the valley for over a year.

(Above 30 is a seller’s market, below 30 is a buyer’s market.)  As you can see from the steeply dropping black line above, the condo market has gone from bad to catastrophic.  My educated guess is that potential buyers who could have purchased a luxury condo in Almaden have decided to buy a single family home in a less expensive area instead, since the costs are now very similar.

Homeowner Associations (HOAs) are created to oversee condominium complexes, townhome communities and planned unit developments on behalf of their members. These are non-profit organizations whose purpose is to manage common areas, enforce neighborhood rules and standards, and often, unofficially, to foster community unity too. In most cases, they collect fees from members and have local authority. In other words, if you do not pay your homeowner association dues, or abide by one of its rules*, the HOA can and usually will fine you or even foreclose on you!

There are loads of HOAs in Silicon Valley. As with all organizations, some are better run than others. Its a little different than owning real estate outside of a homeowners association.

What are the pros and cons?

At their best, Silicon Valley HOAs keep the communities they manage beautifully landscaped and maintained, they hire good providers for needed improvements, and minimize risk to all the members. By having reasonable rules and community buy-in, the neighborhood can look inviting and property values can be better maintained.

At their worst, HOAs can be unresponsive to members needs, erratic, arbitrary and irresponsible. They may, by poor planning, cause huge assessments to be necessary or raise HOA dues so that they are very high – to the point where they make homes hard to sell. Not only are those an unhappy occasion, they can also make it hard to sell a home with a special assessment looming. Fortunately, this is seldom the case in most areas – but if the HOA has a high number of defaults due to owner bankruptcy or inability to keep up with mortgage, property insurance etc. it can cost all of the members eventually.

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