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Why is inventory so low, and when will it get better?

Home for sale with sold already sign - why is inventory so low

Why is inventory so low? Part of it is that homes are selling as fast as the come on the market.

Why is inventory so low? As of today, January 24, 2022, there are 426 single family homes for sale in Santa Clara County (population appx 2 million people). A year ago it was about 800 and the end of January. Where have all the listings gone? And when will it get better for home buyers? (You can check Santa Clara County inventory and other real estate stats on this blog.)

We have a supply and demand imbalance, with demand strong but available homes for sale low. One question involves equity. Since home prices have doubled in the last few years, home owners can afford to sell. With so much equity, why is inventory so low? After the downturn from 2008 – 2010, we knew that many sellers could not afford to sell. But now they can. Some homes have appreciated enough in 6 months that there is sufficient equity to sell and at least break even. What gives?

Why is inventory so low?  When will it get better?

First, let’s consider the root causes of the problem, and which ones may not be ongoing.

Reasons for the low supply of homes for sale include these:

  • Tax considerations (ongoing)
    • for long term home owners, there will be a significant capital gains consideration in many cases
    • for property owners under age 55, moving will likely mean an increase of property taxes
    • last year, CA Prop 19 was passed, making it possible for older sellers to transfer their property tax base anywhere in the state, but that has not helped as much as hoped with the inventory crisis
  • Fear of selling and not being able to buy a replacement property keeps many people from selling (ongoing as long as inventory is so restricted)
  • If home owners refinanced at a lower rate, they may be concerned about selling at the low interest rate and then buying with a higher rate tomorrow
  • Covid may be causing temporary slowdowns with homes coming onto the market. Some sellers cannot get their homes ready as planned due to being sick themselves. having workers for sprucing the property up become ill with the coronavirus, or supply chain issues with needed items coming slowly. Some clients just don’t want to sell during the pandemic, period, so that angle may not be more long lasting.

Often we see more listings hit the market in January and even more in February. It’s way down now, and I am suspecting that Covid and its impact has become a bigger issue with the Omicron surge. If that’s the case, as Omicron recedes, we should see that seasonally typical rise in available properties. The usual February increase may end up happening in March (possibly April). We may still be asking in April “why is inventory so low?”, but hopefully it will be much improved over the current numbers by then.

When will it get better? (more…)

Vista del Monte neighborhood in Los Gatos

Vista del Monte MapThe Vista del Monte neighborhood is a gem within the town once known as The Gem City. It enjoys tremendous convenience as it’s close to town, but also is set back far enough that the area is quiet and tranquil. The hills are close in and the roads gently curve, are tree lined, and scenic.

Add to this the highly regarded Los Gatos schools, quick freeway access, and a nearby park and you can quickly see why this area has a big draw!

Many of the homes were built in the 1960s – 1980s. It’s not an historic neighborhood, and the architecture is mostly ranch style. There are a few others, though, such as Colonial, Mediterranean, and others.

Home prices in this corner of town have risen dramatically over the last year and generally are up about 20 – 30% from this time last year. This is all part of the COVID induced buyer frenzy to purchase larger homes with larger lots across the country (and around the world).

 

 

Are you interested in Los Gatos real estate and Los Gatos neighborhoods? Over on my Live in Los Gatos blog, I’ve been reworking articles about the various residential areas of town, digging into the county records for subdivision info, shooting video as I’m driven through various neighborhoods and adding MLS information. Today I completed a whole new article with video on the Vista del Monte neighborhood in east Los Gatos.

Please have a look!

Vista del Monte neighborhood in Los Gatos

Clair and I enjoy getting to know the many neighborhoods here in town. The majority of our posts on the neighborhoods in LG can be found on our Live In Los Gatos Blog, so if you love the town and want more info, that’s the best resource.

Homes for sale & recently sold in the Vista del Monte neighborhood

This will give a sense of pricing, but as of this writing in early 2022, many homes are selling for 10 – 20% ore more over list price.

  • List View
  • Map View
  • Grid View

See all Vista del Monte neighborhood in Los Gatos, California Real Estate.
(all data current as of 1/24/2022)

Listing information deemed reliable but not guaranteed. Read full disclaimer.

 
 

 

Los Gatos Real Estate Market Trends and Statistics

Leo or Leona - the mascot of Los GatosThe Los Gatos real estate market trends are leaning heavily in the sellers’ favor.

  • The median sale price was $3,312,500, up 17.3% from the month before, and up 19.3% from Dec 2020
  • The average sale price climbed to $3,992,230, a rise of 26.6% from November and 38.5% from a year ago
  • The sale to list price ratio cooled to a still hot 106.4% of asking.
  • Days on market are 30, and days of inventory a brisk 12.

This post will include info from both Altos Research, which uses LIST prices, and the RE Report, which uses listing and closed sale data, for the “in town” areas of Los Gatos (95030 and 95032).

Related: Why is inventory so low, and when will it get better?

From ALTOS – a view of LG 95030 (these are updated automatically a few times a month):

Altos Real-Time Market Profile Los Gatos, CA SFH 95030

And 95032:

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The San Jose Real Estate Market Analysis

The San Jose real estate market is intensifying as a deep seller’s market. Some areas are hotter than others, but every area has risen by double digits at a minimum. The Santa Teresa real estate market saw appreciation of over 29% in the last 12 months. Evergreen was closer to 20%. Willow Glen was more like 14% (surprising, given the proximity to the upcoming Google Village). Beyond San Jose’s borders, the Los Altos real estate market has risen about 30% over the last year, too!

This data is from my RE Report. There appears to be either an undercount on RE Report or an overcount on MLS Listings (inventory was 130 on MLS Listings but 80 on RE Report – pretty substantial). I’ll post MLS stats that I have pulled directly myself also.

  • The December 2021 sale price to list price ratio was at 112.3%, which is highly unusual for December.
  • San Jose homes are selling faster than they can come on the market:  available houses were just 199 (on the last day of November), there were 426 homes under contract, and there were 527 closed sales. When you hear that “sales are down”, it is ONLY because inventory is down!
  • The days on market inched up from 14 days in October to 15 in November (the same as a year ago).

The data below in the “trends” chart is from our Real Estate Report for the City of San Jose.

Trends at a Glance from the RE Report

Trends At a Glance Dec 2021 Previous Month Year-over-Year
Median Price $1,480,000 (+0.7%) $1,470,000 $1,227,500 (+20.6%)
Average Price $1,622,930 (+2.5%) $1,583,800 $1,316,240 (+23.3%)
No. of Sales 345 (-20.3%) 433 446 (-22.6%)
Pending 431 (-22.1%) 553 381 (+13.1%)
Active 88 (-36.7%) 139 165 (-46.7%)
Sale vs. List Price 112.3% (+2.0%) 110.0% 104.1% (+7.9%)
Days on Market 14 (-11.9%) 15 16 (-16.3%)
Days of Inventory (-17.8%) 9 11 (-31.1%)

 

Next, the San Jose real estate market info that I pulled from the MLS this afternoon. (The display is 700 pixels, but the actual size is a bit larger, so click to see a slightly bigger view.)

Inventory levels for houses for sale in the city of San Jose. December was less than half of what it was a year ago. I wondered how it’s shaping up halfway through January and have found it to be about half of last year. We should see a little more come on between now and January 31.

San Jose Inventory - single family homes Jan 2012 through part of Jan 2022

More charts to follow – keep reading!
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Mountain View CA real estate market trends and statistics

Mountain View CA real estate market trends and statistics on Mary Pope-Handy's Valley of Heart's Delight blogMountain View’s real estate market is experiencing an astoundingly strong autumn with a prolonged seller’s market that just keeps getting hotter! Here’s a glance at some of what we’re seeing in the single family home market below:

  • Inventory in December 2021 was 8. In December 2020 it was 17.
  • Days on market average just 16
  • The sales to list price ratio averaged an unbelievably hot 115.6% of asking! (13% more than a year ago)

The Mountain View Real Estate Market

How’s the Mountain View CA real estate market? This is one of the hottest areas within Silicon Valley and is home to a myriad of high tech companies and is a stone’s throw from others. With a charming and walk-able downtown, easy access to CalTrain, and a vibrant atmosphere conducive to both work and play, it is no wonder that people relocating to the San Francisco Bay Area or Silicon Valley place Mountain View squarely in their target. (Also popular are adjacent municipalities: Sunnyvale, Cupertino, Los Altos, and Palo Alto.)

Overview of the city of Mountain View’s residential real estate market for houses:

Inventory is low and demand is high.  We are not seeing the winter cooling of the market that prevails most years.

Trends at a Glance

Trends At a Glance Dec 2021 Previous Month Year-over-Year
Median Price $2,657,000 (+6.3%) $2,500,000 $2,295,000 (+15.8%)
Average Price $2,831,780 (+4.2%) $2,717,260 $2,339,830 (+21.0%)
No. of Sales 18 (-33.3%) 27 36 (-50.0%)
Pending 28 (-22.2%) 36 28 (0.0%)
Active (-20.0%) 10 17 (-52.9%)
Sale vs. List Price 115.6% (+0.7%) 114.8% 102.3% (+13.0%)
Days on Market 16 (+47.5%) 11 22 (-25.2%)
Days of Inventory 13 (+24.1%) 11 14 (-5.9%)

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The real estate market in San Jose’s Blossom Valley area

Pan of Santa Teresa and Blossom Valley

Pan of Santa Teresa and Blossom Valley

Blossom Valley real estate heating up again, and remains a red hot seller’s market. Active inventory is shrinking and the best properties (homes in good shape which are priced aggressively) are selling quickly and regularly above list price in this red hot seller’s market. It can vary based on price point, schools, zip codes, etc., but the entire area is in high demand! This article contains the latest monthly updates for the residential real estate market in San Jose’s Blossom Valley area. A few points from the single family housing market this month include:

  • Sales continued to outstrip available inventory in November with fierce competition compared to last year.
  • The average listing took only 10 days, around a week and a half, to sell.
  • Overbids ran high with sales happening at an average of 111.0% of asking!

About Blossom Valley

The Blossom Valley area of San Jose is on the south end of the city and covers the 95123 and 95136 zip codes. For our MLS, it’s “area 12.” A more affordable section of Silicon Valley, Blossom Valley has much to offer in addition to more reasonable housing prices. Many areas enjoy views of the Santa Teresa Foothills or the Communications Hill knolls or even the coastal foothills in the distance, as with the photo above. One corner of it sits alongside beautiful Almaden Lake, too. Another corner is located at the crossroads of Highways 85 and 87, making it an easy commute destination for those working in downtown San Jose. And there’s an abundance of shopping and dining opportunities.

95123 real estate market trends, automatically updated weekly:

Blossom Valley Real-Time Market Profile by Altos Research

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Berryessa

Once full or orchards and farms, the Berryessa area of San Jose today is largely developed, but a few pockets of trees and agriculture do remain. Most of this district is housing, but there are also a good number of businesses. (The photo below is from a property I sold in this part of North San Jose not so long ago.)

Berryessa boasts very strong commute access, including both light rail and BART as well as major auto routes. Highway 680 runs through it, and 101 and 880 are nearby. Additionally, the major airport for Silicon Valley is in close proximity, too, the Norman Y. Mineta San Jose International Airport. For the South Bay, this is one of the most accessible areas. This and the quality of many of the schools are perhaps the area’s biggest claim to fame.

Berryessa Orchard - property sold by Mary Pope-Handy

Where is Berryessa?

Berryessa is in the northern part of San Jose, set between the city of Milpitas to the north and the Alum Rock District to the south. The boundary on the east side is the East Foothills. The boundary on the west is Coyote Creek, approximately. Some resources may put it closer to Highway 101. (If you check  5 different sites, you may get 5 different answers for the boundaries on the west and south side of this district!)

Zip codes are 95131, 95132, 95133. (The MLS also includes a little of 95127, which is often thought of as Alum Rock Park.)

Another interesting, nearby area in San Jose is Japantown.
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