The Cambrian area of San Jose is a very “hot market” overall, but it can be confusing to know how hot it really is, just like the rest of Santa Clara County, because there are multiple school districts – and schools are probably the number one driver of home values in this highly educated valley. Also, we know that in 2020 the market started off hotter than the year before but cooled down a lot in Spring due to the pandemic. As rules started to loosen again this spring, the market has started to heat up quite noticeably! The best homes are still the ones selling quickly and often with multiple-offers.
An explanation of “months of inventory”
What does “months of inventory” mean? This figure references how long it would take to sell a property if homes continued to sell and close at the current pace with no new inventory coming on the market. A good analogy is to consider a bathtub which drains. If you add no new water to the tub, how long will it take to empty out?
The months of inventory is sometimes called the absorption rate. The question is simple: how long will it take for the current inventory of homes for sale to get absorbed by the home buyers purchasing them? It doesn’t have to be calculated by months. It could be in days, weeks, or years. But months is probably most common.
The months of inventory for any part of the real estate market can vary, depending on many factors, including age of home, house size, lot size, and school district, whether or not there’s a pool, and many other things. It can be very useful to understand this metric when selling a Silicon Valley home. I’ve done market numbers crunching tied to the specific characteristics of a property (say, small yard with pool or big yard with no pool) to find the impact of those characteristics on the probability that a home will sell – or how fast.
The Cambrian area of San Jose’s months of inventory as a whole, and in one price point
Cambrian was once an enormous zone of the Santa Clara Valley. Today we mostly think of it as within San Jose in the 95124 and 95118 zip codes. Some of it it adjacent to Campbell – a very tiny sliver is IN Campbell (we’re only dealing with the San Jose portion in our charts), and a tinier still area is in San Jose and is under the Campbell School Union District. Most of this area is in one of three elementary school districts: Cambrian, Union, or San Jose Unified.
Here’s the breakdown – first, for ALL of Cambrian (MLS area 14 for my Realtor readers) that’s within the City of San Jose and second, by elementary school district. We will look at all prices for single family homes and then within a price range of $900K – $1.2M. The area for Campbell Elementary is so small that the numbers are usually not statistically useful (no offense to the Campbell school residents). It can just jump around too much to be helpful and often gives us no usable data. Often, as in this most recent batch, there are no homes available or sold from this area at all.
Please have a look – once again San Jose Unified holds the majority of the lower-price market! San Jose Unified also has the fastest turnover, both in the lower price point and across Cambrian overall. The Union School District holds a majority of the overall market, and all areas with sales are showing extremely low MOI!
Homes are flying off the market, though it’s past the spring peak. A majority of sales and active inventory are coming from the Union Elementary School District. San Jose Unified in a close second place for sales overall with less than half the available inventory. Limiting analysis to the entry-level market, San Jose Unified is outstripping inventory and sales across the other school districts. On the other hand, the Cambrian Elementary District has fewer sales and active inventory, but is a very active market (currently the second fastest MOI overall) and is significantly hotter than it has been in the past few years. Inventory remains low and struggles to keep up with the high levels of demand fueling a hot seller’s market in San Jose’s Cambrian district.
Below we have past charts for comparison. I usually do this analysis a few times a year, and it is good to see the long view.
First, let’s look at some months of inventory from earlier this year:
April 2021 was a red hot spring market! The Union Elementary School District still has the greatest volume of inventory and sales overall, and San Jose Unified is the clear leader in the entry-level market. Once again, the Cambrian Elementary District is a smaller part of the market with high activity (the MOI is almost as fast as the Union market) and is closest to our Feb 2018 analysis.
Looking back to July 2020, we see that inventory was beginning to recover after the unseasonal spring cooling brought on with the initial shelter in place order. The market was beginning to open up again and lingering demand brought plenty of competition between buyers for the still limited inventory. The market was red hot – especially in entry-level homes which were selling like hot cakes!
This chart shows data gathered mid-April 2020, one month after the shelter in place order began. Although inventory is low, we can tell that the most sales overall are happening in the Union Elementary district, but that the most sales in the entry-level $900K – $1.2M price point are happening in the San Jose Unified elementary school district. Both of these are also where the inventory is highest (though in the entry-level price tier, inventory is equal in the San Jose Unified and Cambrian Elementary districts).
Above we have data gathered in late January 2020. The hottest markets at that time, both overall and within our price band, was the Union Elementary district. The Cambrian Elementary area has the most available homes for sale, but is the slowest to move. That being said, even the slowest market is still red hot with market absorption a little over a month.
Now let’s go back a little farther. The first is from late June of 2019:
Surprisingly, the MOI are slower in June than they were the next January. Normally spring and summer are hotter than the winter market! But inventory is much higher, which fits the seasonal trend. Union Elementary is still the fastest.
Next, from February 14, 2018.
I highlighted the San Jose Unified Elementary School District in both blocks as the lowest MOI. You’ll see from the other charts that the fastest market shifts around, but usually falls in either Union Elementary or SJ Unified districts which also have the largest inventory and sales. Aside from Campbell, which has numbers too small to register a MOI, these are the hottest tickets in the district.
Next, early January 2018.
In this chart, it’s the Union Elementary School District in both charts with the lowest MOI.
Lastly, the the numbers from September 2017 for comparison:
The message I’d like to convey is this: you can read about information for your part of Silicon Valley, or your city or zip code, but it’s not until you drill things down to an area that closely matches your own home will you have a better sense of your own home’s “real estate marker.” It’s never “how is the market?” so much as “how’s the market for YOUR home – or the one you want to buy?”
Years ago, I had a Willow Glen listing where the whole back yard was the pool. I did a study on the months of inventory and learned that pools in properties with that lot size took substantially more time to be absorbed. Likewise, I had a Los Gatos estate property on an acre of land, and the reverse was also true: the months of inventory showed that large lots on $2 million and up homes for sale did not sell nearly as well without a pool.
The math is simple: using the same criteria, divide the number of active listings by those of homes sold in the last 30 days. The criteria can be anything you like – a property’s size, location, number of bathrooms, price, age, etc. Often I include approximately the same home and lot size together with the school district. That usually provides much more accurate info on “how’s the market” as compared to just getting it by zip code alone.
If you are looking to buy or sell a home in Cambrian, or anywhere in San Jose or Santa Clara County, this kind of information is really important. It is not hard to do, but very few real estate agents will provide this information before you list or before you make the final determination on the list price of your home.
Looking for a good Silicon Valley Realtor who will get you that extra data? Please call or email me. I would love to chat to see about possibly working together.
Want to check the school district for a Silicon Valley home? I recommend GreatSchools.com as a resource.