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Want to Buy a Home? Save, Save, Save as a Permanent Way of Life

Are you interested in being a first time home buyer? A first priority will be learning to save, both for buying the home, and then for keeping it in good shape. There’s more to it, but that is usually the hardest part.

credit cardsWhere do you begin?

  • Having a budget will enable you to figure out where you can save more and spend less
  • Clean up any errors on your credit
  • Create a home buying plan

Save with a Budget

Creating a budget can be tedious, and admittedly it’s not fun, but it is immensely helpful if you want to get control over your finances (rather than have your spending control you). There are many free, online programs from financial gurus who can help you sort out what you need to factor in and where you may be able to cut costs, save for that house or condo (or retirement), and what is essential versus discretionary. Investopedia has a list of good sources. (I’ve used the Every Dollar one, it’s easy!)

Something to keep in mind is that having a budget and a plan to save is not something temporary, like a diet before a vacation that will be abandoned in the near future. Budgeting so that there’s money set aside for the most important things you want is a way of life. We intuitively know that if we spend all of our hard earned income on meals out, expensive cars, and luxury vacations, we may not be able to retire as early or as comfortably as we’d like. But unless we create the financial life we truly desire, it won’t happen. That’s as true for buying a home as it is for the retirement scenario. (more…)

The Cambrian Park Real Estate Market Update

Cambrian Park Real Estate Market graphicThe Cambrian or Cambrian Park district is a popular residential market with good “bang for your buck.” It remains a strong seller’s market with clear spring warming. This article provides a detailed look at the residential real estate markets of Cambrian with live and monthly updates. Here are some points of note from the latest monthly update for Cambrian Park single family homes:

  • The sales to list price ratio keeps rising, now at 115% of asking (113% in April)
  • Days on market have accelerated from 10 in April to a mere 7 in May
  • Days of inventory have likely moved up from 16 in April to 12 in May

The Cambrian Park Real Estate Market

The days of lockdown, PEAD forms,  appointment only showings and other restrictions on home buyer activity seems to be coming to an end as a growing percentage of the population is vaccinated and the new cases of the coronavirus are falling.

Despite the softening pandemic, home buyers are still very motivated to get out of San Francisco and into more space in the suburbs – especially more yard, and more rooms in the house for separate “work from home” offices. Strong public schools remain a big draw.

Cambrian single family homes trends at a glance – numbers from the RE Report

Here’s the RE Report info for last month’s sales:

(Mobile viewers, swipe to scroll if the graph you are viewing extends beyond the screen.)

Trends at a Glance

Trends At a Glance May 2021 Previous Month Year-over-Year
Median Price $1,600,000 (+6.5%) $1,503,000 $1,235,000 (+29.6%)
Average Price $1,656,030 (+2.5%) $1,615,810 $1,224,770 (+35.2%)
No. of Sales 75 (0.0%) 75 39 (+92.3%)
Pending 69 (+13.1%) 61 65 (+6.2%)
Active 29 (-29.3%) 41 44 (-34.1%)
Sale vs. List Price 115.0% (+1.8%) 113.0% 100.9% (+14.1%)
Days on Market (-34.5%) 10 13 (-46.1%)
Days of Inventory 12 (-26.8%) 16 34 (-65.7%)

 

It is a prolonged, strong seller’s market. Sellers and buyers today continue to face restrictions under the coronavirus order that affect the market. While homes may still be appreciating (on a case by case basis – much has to do with the exact location, condition, etc.), before you list you should know how your sale would be affected by these changes.

Please see the whole Cambrian Real Estate Report for charts, stats and more.

Learn about the Cambrian months of inventory, or absorption rate, by elementary school district. (Please note that the months of inventory post is not updated as often as this monthly market analysis.)

The condo and townhouse real estate market for San Jose 95124 & 95118

The townhouse and condo real estate market in San Jose’s Cambrian area (also from my Real Estate Report) – with great schools and relatively affordable pricing, this market segment is usually popular and remains hot, although nowhere near as hot as the single family housing market! Last month condos saw clear warming. May sales averaged at 105.5% of list price.

 

Trends at a Glance – Cambrian condos

Trends At a Glance May 2021 Previous Month Year-over-Year
Median Price $735,000 (+18.2%) $622,000 $660,000 (+11.4%)
Average Price $827,719 (+19.6%) $691,900 $752,500 (+10.0%)
No. of Sales 18 (+28.6%) 14 (+200.0%)
Pending 17 (+13.3%) 15 11 (+54.5%)
Active (-27.3%) 11 14 (-42.9%)
Sale vs. List Price 105.5% (+2.8%) 102.7% 102.7% (+2.7%)
Days on Market 13 (+8.7%) 12 20 (-36.4%)
Days of Inventory 13 (-41.5%) 23 70 (-81.0%)

 

 

The Cambrian Park Real Estate Market Update for San Jose 95124 – Altos

Let’s do an update of the Cambrian Park real estate market courtesy of Altos Research (which uses LIST prices for its charts). The next few data sheets show the housing market trends and updates, live and updated weekly. My observations are from the most recent update at the time of writing, May 12th. This first item reflects the weekly Altos Research report right now for San Jose 95124 and will provide an approximation of how much home your money can buy in this district of San Jose.

The median list price is at $1.475 million, fairly flat from last month.

San Jose, CA 95124 Real-Time Market Profile by Altos

 

The chart above shows extremely low days on market (for the third month in a row it’s showing zero median days!), gently increasing inventory, and stable elevated market action. Overall San Jose 95124 remains in a fiercely strong seller’s market.

The Cambrian Park Real Estate Market Update for San Jose 95118

Next let’s look at the listing data from Altos Research for 95118, single family homes (east side of Cambrian Park).

Normally, prices are distinctly different between 95118 and 95124 – we’re seeing that now, though it can be more pronounced when demand isn’t as high and inventory isn’t so low.

And below, an update of the market data from Altos for this part of the district.

 

Cambrian 95118 Altos Real-Time Market

 

Inventory in 95118 is beginning to grow, days on market are extremely low (down to 7 median days here), and overall it is strong seller’s market with mostly stable market action.

Please see the Cambrian Condominium & Townhouse Real Estate Report for all of the numbers in this area and the rest of Santa Clara County! Now let’s work with Altos Research’s graphs and get a feel for the Cambrian realty market in “real time.” These use list prices, whereas my RE Report uses sold data.

First, the statistics by quartile for houses in San Jose 95118. A quick note: most of 95118 has San Jose Unified Schools, while 95124 has Cambrian and Union schools, which are normally preferred.

Quick profile of 95118 and 95124 from Altos – this is dynamic and should update automatically each week:

 

Cambrian 95124 Real-Time Market Profile by Altos

 

and

 

Cambrian 95118 Real-Time Market Profile by Altos

 

Here, both 95124 and 95118 remain a strong sellers’ market. In 95124 there is lower market action for condos than in the single family market, but in 95118 that’s reversed with a slightly higher market action in condos compared to single family homes! However, with such small inventory these charts can have severe swings in data, so take this data with a grain of salt. Right now these both continue to look hot, although 95124 has slightly lower market action than 95118 and both have the same active inventory.

What is happening with the Cambrian real estate market? A lot of it seems to depend on the price point, school district, and condition of the property.

Turnkey houses, townhomes, and condominiums in Cambrian Park which have a contemporary look and are priced aggressively are selling fast. They need to look like 2019 and not like 2010 or 2012, though. Home buyers are very fussy and most households are either 2 income or 1 income and 1 very busy parent home with little ones. They don’t have the time or the energy to remodel. (Most buyers want grey hardwood or high quality laminate that looks like wood throughout – they don’t want 4 or 5 different types of floor covering.)

Cambrian home buyers often move to 95124 or 95118 for a combination of strong schools and relative affordability. Having a worry free home that does not look like it will cost a fortune to be made ready is a big plus and will help tremendously with the sale-ability of that residential real estate.

The part of Cambrian with Union schools continues to have the strongest demand (mostly 95124 but also part of 95118), followed by the area with Cambrian schools, and then those with San Jose Unified. All of them are doing well, but some areas are stronger than others.

How's The Silicon Valley Real Estate Market? If you live in Cambrian Park now, or are thinking you’d like to buy a home there, you’ll want to get a better understanding of the current real estate market conditions for your part of the market. The information above is naturally a little generic, applying to either all of Cambrian or to either 95124 or 95118. All real estate is local, though. It may be different by pricing tier, exact location, home style, or amenities (such as pool versus no pool, large garage vs no garage, walking distance to elementary school or really having to drive there). All of these things can be factored in and may apply to your particular home – or dream home – market. For the most specific to you data, please reach out to me by email to request a phone conversation. If it seems like a good fit at that point, we can arrange to meet in person and formulate a plan.

See also:

What can you buy in Cambrian for about $1.25 million?

Cambrian Park homes for sale

Want to learn more about Cambrian Park real estate, the Cambrian district, Cambrian neighborhoods, school districts and zip codes? Please also see this article: Cambrian Park: Good Schools, Low Crime, Close to Los Gatos and Campbell. Cambrian neighborhoods can be located at the menu bar: Neighborhoods –> San Jose (all areas) –Cambrian Park (SJ).

Getting priced out of the market when housing prices rise rapidly

Home being carried up and away from earth by balloons with the words "Priced out of the market?"Are you getting priced out of the market? If so, you’re not alone. In Silicon Valley, the prices of houses are rising dramatically right now. In some cases, homes are selling for 20% or more than list  price. Recently I’ve heard of at least 2-3 homes which sold $400,000 or more over the asking price. This is happening in prices up to $3 million especially, but I’m also hearing it in the luxury tier.

With rapid housing price appreciation in Silicon Valley, home buyers who are “patiently waiting” for more inventory and just the right house to come on the market can end up finding themselves “priced out of the market“.

What does it mean to be “priced out of the market”?

In a nutshell, it means that while a few months before, you could afford the type of house you wanted (more or less), but prices have risen so fast that now you feel that you cannot buy anything at all.

If that’s the case, you feel that it’s no longer worth it to buy – so you continue to rent (or not purchase that investment property).

The waiting strategy may backfire

Have you been patiently waiting for just the right house to come on the market?  Let me suggest to you that it may not be forthcoming. What you could afford a year ago is no longer possible today, and we do not see that situation changing anytime soon. In fact, appreciation would appear to be steeper now than it was 12 months ago. Waiting can be very expensive in a market like this one.

Why do buyers wait when they might do better to jump in?

Want to be a home owner in the San Jose area? Hire a great agent, but then LISTEN to him or her! (more…)

Open houses are returning

Hand Sanitizer - use before entering open houseOpen houses are returning to the California real estate scene, and private showings are also becoming more relaxed, but it won’t be a return to pre-pandemic practices just yet. The announcement that open houses would be permitted caught most of us Realtors (and our managers and brokers) by surprise a couple of days ago, and all of the details are not yet published, but I’ll share what I have learned so far.

Required protocol and open house paperwork

First, a home seller must decide whether or not to permit an open house (and a listing agent if he or she wants to do it). Naturally, there’s a form for that – an addendum to the listing agreement, LOHA (LISTING AGREEMENT OPEN HOUSE ADDENDUM OR AMENDMENT). Here’s a bit of a screenshot to give you a sense of what is required if the seller agrees to have an open house at the property:

Part of the new listing agreement addendum for open houses, LOHA.

If the seller wants the home to be held open, and the listing agent is willing to do it, there’s a bit of protocol to follow. Visitors to an open house must sign in for contract tracing purposes. If you’ve been house hunting over the last 14 months, you are probably used to signing the PEAD-V form for visitors. With that document, the listing agent got your name and saw your electronically signed signature, but that is it. Only your buyer’s agent had your contact info.

As open houses are returning in this transitional phase, the new Property Sign-In (PSI) will ask you for your name, phone number, and email address. This is not for marketing purposes, but for contact tracing purposes only. (Some agents may opt to still use the PEAD, but if so, they’ll need a way to contact you should you end up exposed to COVID-19 at the open house.)

You should expect that at an open house there will likely be a table set up before you can enter where you sign in and use hand sanitizer, which is required. The agent will make sure you are wearing a mask. Some sellers and / or listing agents may have additional requirements, such as your wearing shoe covers (usually provided) or gloves (not usually provided).

You should also expect that it’s possible you’ll need to wait to get inside. This is very important to keep in mind if there’s a heat wave. More on that below. (more…)

No more love letters

Love Letters and Implicit Bias word balloonFor years, Realtors have encouraged their home buyers to write “love letters” to go with their purchase offer on the home the buyers were trying to buy. The idea was to be more likeable so that the sellers would want to sell to them, as opposed to any competing home buyers. But as of now, the guidance from the National Association of Realtors is different: no more love letters.

What is wrong with buyer love letters?

The U.S. Fair Housing Act protects home buyers and renters from discrimination or bias under protected categories of race, color, national origin, religion, sex, familial status, and disability. (In California, there are even more protected areas.) Put another way, when a home seller looks at a buyer package, the decision should be based on the offer price and terms, not on who the buyers are.

The concern with love letters is the risk of implicit bias: that the sellers would like or dislike buyers, even unconsciously, because of non-contractual facets that are protected.  While it’s not illegal for a doctor to want to sell to another doctor, it is illegal for one member of a religious group to give preferential treatment to another member of the same religious group. It’s also illegal to give preferential treatment to buyers who have children versus those who do not. Photos are especially risky as they may enable things from the protected class list to be known.

Last October the National Association of Realtors published an article for its members in Realtor Magazine on this topic, Why a Buyer Love Letter Could Turn Into a Poison Pen. This short piece admonishes that even innocuous sounding statements are problematic:

Even a mention within a letter of envisioning “children running down the stairs on Christmas morning” could stir up trouble. After all, such a statement reveals the buyer’s familial status and religion, which are both protected under fair housing laws.

(more…)

Why do you keep losing out on multiple offers?

A crowd running to an open house - many of these losing out on multiple offers

Multiple Offers

The real estate market in Silicon Valley is a hot seller’s market, and that means that often there are multiple offers, overbids, and sales with no contingencies. (I would say it’s the most overheated market I’ve seen in my 28 year career.) Some buyers may get it on the first attempt, but many are bidding over and over – why do they keep losing out on multiple offers?

Over the course of my career, I have noticed that often there is a consistent “spread” of offers.  Most of the time, there’s a pack or band of offers at about the same level, sometimes 10% or more over list price, then a couple higher that that, and maybe one or two (once in awhile 3) at the top of the heap in terms of both price and terms which are attractive to the seller.

Not everyone is losing out on multiple offers: what are the winners doing?

  1. The top offer frequently has the highest price and best terms. It is 10-20% over list price or more, 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).  But that’s not all. The winning offer’s buyers and agent followed directions. Normally that means that they 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 (all needed) which prove that the buyer can absorb any appraisal shortfall and is prepared to do so. ( Right now, many homes are not appraising to sale price, so this is awfully important for sellers.) Sometimes the listing agent asks for a particular contract to be used or a particular summary sheet to be filled out. The best agents do all of that. The 2nd tier offers often are incomplete – the listing agents may or may not circle back and ask about missing items, so it’s important to remember that you only get one chance to make a first impression.
  2. 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. 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 and competence.
  3. 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 – they didn’t offer to put the deposit into the escrow account the next day, they didn’t check all the needed boxes in the offer, they have a contingency when all the competing bids have none..  If the offers are tied but one buyer has no contingencies and the other has any, that will be the tie-breaker.
  4. 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. The folks in the middle of the pack are usually the ones, together at the bottom, who keep losing out on multiple offers. (They will say things like “we are cautious…)
  5. 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  repeatedly find yourself losing out on multiple offers, 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

(more…)

House hunting online

House hunting online - graphic of woman in PJs looking at computerLooking to purchase real estate this year? Most interested home buyers are doing their house hunting online. Today I’d like to share a couple of tips with you that I think may be helpful.

  1. The local MLS is MLSListings.com. That is the most complete database of information for house hunting online. (Some listing agents will not permit their listings to syndicate to Zillow, Redfin, or Realtor.com.)
  2. Not everything is seen by the public on the MLS. MLSListings has 2 databases: most of it can be seen by the public, but there are some which may never show up on Realtor.com or other portals. These are homes which are either “coming soon” (but could sell before hitting the open market) and some which are “members only” and by design won’t be seen by the public, only by paying members of the MLS. To get access to all data, make sure that you are working with a real estate professional who is a member of the MLS. (He or she may also be able to tell you about disclosures online or offer due dates if they are published – or can reach out to the listing agent for that info.)Listing
  3. Redfin features the “hot home” label which lets you, the consumer, know that a property is likely to sell fast and over list price. Once in awhile a house or condo is “hot” and then it’s not. Sometimes the delisted from the hot list homes still do sell for more than list price, though.
  4. Syndication errors can happen. With syndication, some listing info that you see on one of the large portals, or perhaps through another MLS organization (not MLS Listings) may have old or outdated information. Best to always check the MLS local to the market where you want to buy.
  5. The status may not be updated immediately. Listing agents are allowed a couple of business days to change the status from active to pending once an offer is accepted. Many will wait for the buyer’s initial deposit to go to the title company. Typically that happens the next business day. If a property still shows active after a due date, it doesn’t necessarily mean that no one bid on it. For the same reason, the “days on market” on sold or pending properties could be a a little longer than what actually happened, particularly if the sale ratified on a Friday or a day before a holiday weekend and the check or wire could not go to title until the next business day.

If you are working with a local Realtor who knows the market and is partnering with you in your house hunting online, you are less likely to be surprised either when a home goes pending or closes if it’s your target.

How long does it take to write an offer?

ClockIn the current hot seller’s market here in Silicon Valley, most real estate agents representing the seller set an “offer date” for would be buyers and their Realtors to submit their offer packages, also known as their bids, for the property. How long does it take to write an offer? You may be tempted to do it on short notice.

The time commitment it varies – I would say you want to give yourself 2 days for a reasonably comfortable amount of time to read and absorb everything and to write your offer.  It is difficult if you only have 24 hours between when you see and like a home and when the offer is due.  It is possible, but only if you (and your Realtor) drop everything and only focus on this for the next 24 hours.  And let me tell you, that is not fun – in fact, it’s miserable!  Much better is to have several days.

Last week, though, I showed a home at 9 a.m. and turned in an offer before the 4 p.m. deadline. Never again. It was incredibly stressful and there was no way that we could all review everything as much as we should have done. The stress of it was sickening (literally) for me –  I take my fiduciary obligations seriously and felt like I was cutting corners left and right to make a deadline. And I had to ignore all my other clients for a few hours to make it happen. (And no, my clients did not get it. Their offer was far too low, unfortunately.)

Most of the time, right now offers in the San Jose – Los Gatos – Saratoga – Campbell area are due on Tuesday.  Once in awhile they are due on Monday and rarely on Wednesday.   Seeing a potential target on Sunday is possible but it is still really hard (and about impossible if the due date is Monday).  Much better is seeing it on Saturday, or, if possible, before the weekend even begins.  If you can do that, it will be immensely easier and less stressful!

Why does it take so long to write an offer?

(more…)

How many offers will there be on that Silicon Valley home?

Graphic of person with computer and cell phone and words "How many offers are expected for that listed home?"The deep sellers’ market continues to frustrate Silicon Valley home buyers.  With scant inventory and sales, sometimes there’s very little to pick from, and many, many buyers all vying for the same property. A common question from Realtors and buyers alike to listing agents is this: “how many offers are you expecting?”

In short:

  • when showings change from 30 minute windows to 15 or 20 minute viewing times, you know that there’s a lot of interest
  • online, look to see if Redfin calls it a “hot home” – those are more likely to attract multiple offers (also, watch the Redfin price estimate, it changes with its website traffic)
  • the ratio of disclosure packages out to offers written is about 1 in 3 for most homes (a near perfect house will have a higher ratio – perhaps 50% or a little more, a home with issues will have a lower ratio)
  • it’s not an exact science – some buyers will drop out even after writing an offer, and some buyers will swoop in at the last minute
  • the overbids are often proportional to the number of contracts received, but not always (an old rule of thumb is 1% per offer)
  • listing agents may play down the number of offers expected since they don’t want to discourage anyone from writing

It can be hard to know.  While some real estate agents advise their sellers to market the home with an unrealistically low price in an effort to obtain an avalanche of bids, most do not, but instead caution that it’s better to list on the lower end of the probable buyer’s value than the high end. If it’s a little low, the market will correct it (at least in a sellers’ market) but if it’s too high you may see no contracts on it at all.

How many offers? Communication is key

(more…)

Can you change your purchase offer after it’s signed?

Pen and edited text with the words - Can you change your offer? With multiple offer situations in Silicon Valley real estate bids, sometimes buyers write an offer and later decide that it’s too much or too little, or that some other change is warranted (before it’s submitted).  Can you change your purchase offer after it’s written, or is it a “done deal” once you’ve signed it?

The good news is that you can change your offer before it has been given to the listing agent / sellers. Many buyers do, either because they changed their mind or strategy, or because they just got new information. What is key is circling back to your buyer agent quickly, before the email is sent.

Why would you change your purchase offer?

Awhile back, some of my buyers were bidding on a San Jose home. As I asked the listing agent more questions and we got a little more information from that agent on the numbers of offers being received, my clients wanted to improve their offer. We redid page 1 of the contract, which is where all the financial basics are listed. Their improved offer went to the listing agent and it was seamless.

At other times, even after the offer is submitted, I have had buyers ask to improve their offer. The pages of the contract which were involved in the change were redone, signed and resubmitted. This is a bit like going through the counter offer process yourself. (more…)