The San Jose Real Estate Market Analysis

San Jose Real Estate MarketThe San Jose real estate market remains in a hot seller’s market, keeping active into winter with slight seasonal cooling. Demand may have shrunk between rising rates and inflation, but inventory remains historically low so it’s still far from balanced!

First, some quick data from my RE Report and hand-pulled from the MLS today. There appears to be a small amount of under- or over-counting between the RE Report and MLS Listings, so numbers vary slightly between the two, but the data is still useful for trend tracking.

  • The January 2024 sale price to list price ratio for San Jose single family homes rose to 104.7% of asking, that’s +1.6% from last month per the RE Report and +6.1% from this time 2023, following the bottom of the market’s decline. For the MLS stats we pulled today, however, it shows 104.4% average, up from 102.8% (+1.6%) the month prior. Either way, the average home is selling consistently over list price in San Jose, and warming up into the new year.
  • Home values for single family properties are up from this time last year by approximately 8% – 19%, and month-over-month closed sales prices rose around 1% – 5%.
  • The time on market slowed slightly month-over-month to a 22 day average (RE Report). That’s still quick turnover averaging well below a month, indicating a clear seller’s market.

Market Data: What Numbers Make a Difference

While prices and overbids have fallen since the peak, in some ways 2023 was even more challenging for buyers. For most buyers, their ability to purchase has been severely impacted by higher rates on home loans and the changing insurance market. But the biggest hurdle for most buyers is the extreme and persistent lack of available homes!

Since March 2023 San Jose has frequently had record breaking low inventory, often marking new lows with the fewest available listings by month in over a decade. And it doesn’t look like inventory will really pick up any time soon, either.

Why such low inventory?

While in a more typical market we might have a number of sellers looking to “move up” or downsize, most homeowners today couldn’t afford to move or don’t want to take on a higher-rate mortgage. Now it seems like a higher percentage of the listings we are seeing comes from investors, people leaving the area, and sales by family after a death – cases where there is no pressure to repurchase or where selling is the only option. One exception we’re starting to see is homeowners with adjustable rate mortgages who don’t have the same low rate to hold on to at their current home. Still, that limits significantly what is available to buyers!

Although inventory remains at record-breaking lows with higher demand than availability, sale prices and overbids are not breaking records like last year’s spring peak. Many buyers are experiencing significantly more pressure from higher interest rates, fluctuating stocks, looming layoffs, and other factors limiting purchase power and lowering confidence. That said, not every home will face the same challenges – there are loads of micro markets that influence how well any given home does, and decent homes that are marketed appropriately still regularly become bidding wars for driven buyers. All said, take this city-wide data with a grain of salt.

 

Inventory - San Jose CA listings of houses / Single Family Homes for sale

 

Inventory remains severely low – currently showing the second lowest January inventory over more than a decade (only January 2022 was lower)! If you’re an active home buyer, it is slim pickings!

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

San Jose Real Estate Market Trends at a Glance (RE Report)

 

Trends At a GlanceJan 2024Previous MonthYear-over-Year
Median Price$1,600,000 (+4.9%)$1,525,000$1,347,500 (+18.7%)
Average Price$1,693,940 (+1.0%)$1,677,520$1,563,350 (+8.4%)
No. of Sales157 (-25.2%)210128 (+22.7%)
Pending197 (+20.1%)164152 (+29.6%)
Active120 (+25.0%)96250 (-52.0%)
Sale vs. List Price104.7% (+1.6%)103.1%98.7% (+6.1%)
Days on Market22 (+14.1%)1931 (-28.7%)
Days of Inventory23 (+67.2%)1459 (-60.9%)

 

Available inventory is less than half of was at this time last year, while pending and closed sales have risen above 2023 numbers. Demand is extremely high! The chart clearly shows a strong seller’s market launching out of a slightly cooler December and into the new year. Winter tends to be the best time for buyers to snag a “deal”, however we’re beginning to leave the winter trends behind and spring is fast approaching! Keep reading below for more data and market analysis.

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Cambrian Park: Good Schools, Low Crime, Close to Los Gatos and Campbell

Cambrian Park, or more broadly, Cambrian, is a west San Jose neighborhood or district and is one of the high-value areas in Silicon Valley. The schools are good, the crime is low, and the commute is not too bad.

Cambrian Park Plaza signFor people relocating to Santa Clara County, this is a place to know about since quality education and affordability are often high priorities! Most Silicon Valley home buyers would say that Cambrian Park real estate offers a very good value.

What’s the compromise for the more reasonable prices of homes for sale? Well, Cambrian doesn’t have an interesting, upscale downtown area like Campbell, Los Gatos, Saratoga, or Willow Glen. (It may, when the Cambrian Park Plaza redevelopment takes place.)

But it does have tons of shopping & restaurants and even a Farmer’s Market. It also enjoys a top notch hospital (Good Samaritan) and plenty of parks as well as a fantastic rec center with a large park adjacent to it, the Camden Community Center, which has loads of programs (including an after school program for youth), classes, and a fabulous pool.

Altogether, there are about 75,000 to 80,000 residents in Cambrian, spread throughout part of two zip codes, part of 95124 and some of 95118.

If there is a “central Cambrian Park”, it would have to be near the original Cambrian Park Shopping Center, which was the first actual mall in San Jose! That area is sometimes known as Cambrian Village.  People sometimes use the three names interchangeably: Cambrian, Cambrian Park, Cambrian Village.

 

Where is Cambrian Park? Map of approximate Cambrian Boundaries:

 


View Cambrian Area of San Jose in a larger map

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

Why is inventory so low? As of today, October 26, 2023, there are 796 single family homes for sale in Santa Clara County (population appx 2 million people). A year ago it was about 1165 and the end of October. 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.)

Why is inventory so low: historical perspective, how low IS it?

Here’s a look at our houses for sale from Jan 1999 to today. Please note that the MLS has a problem with its data sharing feeds, and if I pull this same info in a month, some of the numbers (not just this month) will likely change.

Inventory 1999 - Oct 2023 for single family homes in Santa Clara County

 

Inventory Averages:

  • Inventory Oct 1999 through October 2022 (only Octobers, 24 months) = 2640.  Inventory was bloated during the Great Recession, so that’s not representative of “normal”.
  • If we consider just 2013 – Oct 2022 (10 Octobers), which I think is much more typical, the average inventory is 1403.5
  • The current inventory level is 57% of the last 10 years and 30% of the last 24 years (not including 2023 in the averages).

The lack of inventory is causing a lack of sales, layoffs in various real estate related industries, and pretty much economically challenging for Realtors, lenders, title and escrow people, inspectors, stagers, photographers, and anyone else involved in the buying and selling of homes.

We have a supply and demand imbalance, with demand outpacing supply but available homes for sale low.

Why is inventory so low?  What is causing the shortage?

Next, let’s consider the root causes of the problem, and which ones may not be ongoing.
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Weather, mother nature and home sales

Without stop signSo many variables impact the real estate market, both here in Silicon Valley but across the country.  Employment, interest rates, the stock market, the availability of real estate inventory, the confidence of the buying public (say, in the wake of a terroristic attack, announced layoffs, or global conflicts like the invasion of Ukraine) all can move the housing market one way or the other. But they’re not the only forces that do.

Weather and natural disasters can likewise have a pronounced effect on a local housing market too.

My Experience: The ’89 Quake

Anyone in the San Jose area in September of 1989 will vividly recall the Loma Prieta Earthquake, which occurred in the Santa Cruz Mountain Range between Los Gatos and Aptos. Jim and I were buying our first home at that time, in San Jose’s Cambrian district, and in fact did our “final walk through” just two hours before the quake hit.

Our closing got delayed as the lender refused to fund the loan until the home was professionally checked out by an appraiser. They’d seen images of the Bay Bridge, homes off their foundations, fallen chimneys and other disastrous structural failures and weren’t taking a chance on any home!

Luckily for us, the property we were in contract for was essentially unscathed. It was not a young home, but built by a respectable builder, and more importantly it was on solid ground. Thankfully the house was fully vacant since we were close to the planned close of escrow, so there was no fallen furniture or broken glass in the carpeting and most everything was visible and easy to check later for damages. We did close, though it was about 10 days later than expected.

For listings not yet sale pending, it was already a slowing market and the beginning of a correction, but the earthquake plunged the market more deeply into the doldrums. At least for awhile.

Weather Forecasting the Market Activity

There are similar stories with markets all across the state, country, and globe after similar disasters. More recently here in California we’ve seen major impacts on various markets after fiercly destructive wildfires. But mother nature can effect the housing market in much more subtle ways as well, no disaster necessary.

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How do prices compare between Los Gatos, Saratoga, Cupertino and Palo Alto?

Los Gatos Saratoga Cupertino and Palo AltoWhat does it cost to buy a home with really good schools in Silicon Valley? Los Gatos, Saratoga, Cupertino and Palo Alto are all areas with highly regarding public schools and high home prices. These aren’t the only areas with good schools but they are popular “west valley” areas that people may consider if working for Apple, Google, Microsoft, Facebook or any number of high tech employers.

Los Gatos and Saratoga both have multiple school districts, running from good to very good or excellent. The cost of housing tends to follow the popularity of the district, so for those areas I’m showing the breakdown not just for the whole town of Los Gatos but also by the high school district (Los Gatos-Saratoga or Campbell Union High School District). Same with Saratoga. (The Monte Sereno real estate market is very similar to Los Gatos, but slightly more expensive. Most of Monte Sereno has Los Gatos schools, but a small number of homes are in the Campbell area.)

Cost Comparison: 4 West Valley Communities with Good Schools

Here are the average numbers for single family homes sold in the last 60 days ranging from 1,500 – 2,500 square feet, on a lot between 5,000 and 10,000 SF, with 3-5 bedrooms and 2-3 bathrooms to give a sense of what it would cost to purchase a typical house in these areas. Please note that right now it’s a strong seller’s market, so many (if not most or all) homes are selling for more than the list price.  DOM stands for days on the market.

 

Comparing Los Gatos, Saratoga, Cupertino, and Palo Alto Markets 3/27/2023

 

If you are new to Santa Clara County, you may be wondering if this is correct. The cost to buy a home in these areas is what?

  • Los Gatos: approximately $2,000,000 to $2,600,000 depending on the school district and size of the home and condition (more on that below)
  • Saratoga: more on this below, but approximately $2,800,000 to about $3,500,000 depending on the schools, condition, etc.
  • Cupertino: approx $2,600,000 – $3,200,000 (some areas will bring in higher prices and others lower)
  • Palo Alto: approx $2,700,000 – $3,900,000 and any home over 2,000 SqFt (except for one fixer) sold at or over $3.7M

Remember, these prices do not mean that the houses being sold are perfect. Because it is a strong seller’s market, many properties are being sold which need new roofing, extensive pest work, remodeling, perhaps updating of electrical or plumbing systems or more. Many home buyers will need to spend 1-2% on things like termite fumigation, dry rot or roof repairs, carpets, paint, windows and more, and usually this will be done before they move in. So whatever the budget is, buffer it a little bit for both money and time to make it turnkey.

A Closer Look: Los Gatos and Saratoga

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Online home valuation programs and why they are usually inaccurate

The online home valuation websites are in high demand for spot checking a price. They are fast, easy, and free. 
Online home valuation graphic: same House Different ValuationsEveryone wants an easy answer, but often the easy answers aren’t all that accurate.

Online home valuation confusion

Sometimes our clients present us with “THE VALUE” of property per one of these free online home valuation websites sites and in some cases, they challenge us to disprove it (Zillow says it, or some other site, so it must be right, goes the thinking).  If they want to buy a house which is listed for more than the auto-comped value, it may cause some emotional anguish.  And if they want to buy one which is listed for less, they may feel a little giddy – unless multiple offers are looming.

The same is true with home sellers.  They agonize when Zillow, Trulia or some other big name site places a worth on their property which is less than what they feel it should be.

Often the best way to respond is to show many of the online valuations and not just the one the client is focused on (often that’s either Zillow or Redfin, but some are attached so some other site’s numbers.

What might surprise a lot of people is the huge discrepancy in values given.

Sample auto comp values online

A good exercise is picking a home that you know fairly well and then seeing what the online home valuation tools say for each one. I picked a home that I know and ran the address through several websites that provide automatic pricing info. Here are the results, from low to high:

Not included in online home valuation study:
Eppraisal $2,072,000 (too high)

Included in the online home valuation study:
Chase $1,721,800
Collateral Analytics (via Realtor.com)  $1,671,000
Redfin $1,644,906
CoreLogic (via Realtor.com) $1,631,300
NAR RPR $1,617,440 (subscription only for Realtors)
Zillow $1,580,300
Quantarium (via Realtor.com) $1,566,759
Bank of America $1,504,391

(Please note: the Trulia home value estimator is the same as Zillow’s Zestimate because Zillow owns Trulia.)

From top to bottom, the amount varies by $217,409! That’s a 14% gap between top and bottom. Had we included Eppraisal, it would have been even crazier.

How can the online home valuations disagree so much?

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Cambrian Park Condo & Townhouse Real Estate Market Update

Cambrian Park Real Estate Market graphicHow’s Cambrian Park condo & townhouse market? Normally we answer this question in brief with regular monthly updates over on the Cambrian Park Real Estate Market Update. Here we will provide some more depth  with condominium and townhome data.

Before we dive in the the statistics for sold properties last month, let’s see what’s selling now in the Cambrian Park condo & townhouse  segment of the market.

Cambrian Park Condo & Townhouse market

Just now (as of November 14, 2022), I looked into the MLS to see the condo and townhome sales in Cambrian over the last month. Inventory is painfully low, and therefore, so are the sales.

  • There are 8 units listed for sale as “active” (not pending or under contract)
    • 6 are listed as condos (1 is “agent only” status, do not show)
    •  2 are listed as townhouses (both are “agent only” status)
  • 0 homes are under contract with one or more contingencies
  • 0 homes are pending with no contingencies
  • 7 condos / townhomes have sold and closed escrow in the last 30 days (4 condos, 3 townhomes)
    • They sold with an average of 14 days on market (condos 17 days, townhomes 9)
    • Average sale price to list price ratio was 101% (range 97% – 112%, condominiums averaged 99%, townhouses 104%)

Home prices appear to be down about 10% from the peak generally. It could be more or less in any given micro market.

Now let’s have a look at some of the numbers from our Real Estate Report:

Real Estate Report: Cambrian Park Condo & Townhouse Market – San Jose

Home prices are down from the peak here as they are throughout the valley. Please take the month over month and year over year sale price numbers with a big grain of salt. With so few transactions happening, there’s not enough data to be really accurate. What’s better is finding what else has sold for your home (or the one you’re interested in) recently. It should be within a mile, have the same school district, zip code, and similar location overall, and it should be within 10% of the home size of the comparable, or “comp”.

What we do know is that the days of inventory and the days on market are both longer than they were.  The market is jiggling up and down a little each month, and the general trend may be that we’ve hit the bottom of pricing for now.

 

Trends At a GlanceOct 2022Previous MonthYear-over-Year
Median Price$680,000 (-24.9%)$905,000$901,250 (-24.5%)
Average Price$814,271 (-9.9%)$903,625$945,883 (-13.9%)
No. of Sales(-12.5%)818 (-61.1%)
Pending(+60.0%)514 (-42.9%)
Active(+25.0%)4(-44.4%)
Sale vs. List Price101.1% (+2.6%)98.5%102.1% (-1.0%)
Days on Market17 (+30.6%)1316 (+8.3%)
Days of Inventory21 (+47.8%)1515 (+42.9%)

Altos Research Live Charts

The market profiles are live, updating automatically once every week, with active inventory from MLS listings.

Most of Cambrian Park falls under the 95124 zip code.  Here’s a quick look at the main real estate market data points for Cambrian 95124 this week:

 

What’s making it strong when prices have fallen? Mostly it’s a lack of inventory couples with a healthy buyer demand.

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What Does It Cost to Buy a 4 Bedroom, 2 Bath Home in Silicon Valley with Good Schools?

Often I have clients who are interested in purchasing a 4 bedroom, 2 bath home in a good school district in Silicon Valley, particularly in the South Bay and West Valley areas. But what does it cost to buy that “average home”? Tonight I did a study on the MLS of homes that have sold and closed escrow in the last 4 months with these characteristics:

  • single family home (house)
  • 4 bedrooms
  • 2 full bathrooms
  • 1800 to 2200 square feet of living space
  • 6000 to 10,000 sf lot

Disclaimers aside, here are the numbers for select West Valley Communities in the West/South Bay area with good schools.

Cost to Buy 4 Bed 2 Bath Home in Popular Silicon Valley Communities

The first number is the number of sales during that time (more sales = more reliable averages). This one is not in the older charts, but with inventory as low as it has been lately this makes a huge difference. The second number is the average sales price per square foot, the third number is the average sales price, and the last number is the average days on market:

2022-11-3 Average Cost to Buy West Valley Homes 120D 4b-2b West Valley

 

And now a look back to late winter, early spring of 2017…

 

 

What’s changed? A lot! The order has shifted some, showing where demand has increased or decreased. Most noticeably, the prices are mostly up significantly, which is most noticeable in the price per square foot. Cambrian has traveled a good deal up the ladder. Palo Alto and Los Altos were displaced by the sole Saratoga sale, and Blossom Valley of San Jose remains in it’s regular position at the bottom.

The home prices tend to run with school rankings. Previously this was by district API scores.  You can check the 2013, three year average, API scores in Santa Clara County for both the districts and the individual schools online here, however that system is no longer used. So how to people judge? Most buyers use sites like GreatSchools.org when looking for a home with good schools which ranks schools on a scale of 1-10 in a few categories.            (more…)

How Long Does It Take to Sell a Home in Today’s Market?

House with words - How long does it take to sell a home in Silicon Valley today?How long does it take to sell a home in Silicon Valley right now? It depends on what segment of the real estate market the property is in, and what type it is. Most homes are selling in 3-4 weeks.

How long does it take to sell a home in Santa Clara County?

First, for the success stories, the properties that do sell, what’s the timeframe?

  • Houses which have closed escrow averaged 27 days in September 2022 so far
  • Also in September, the median days on market is 17 days
  • For condos and townhouses, the average days on market so far this month is 38
  • The median days on market for condominiums and townhomes is 27

Pending sales – how long were they on the market?

  • Pending houses right now average 33 days on market
  • Pending condominiums and townhomes average 28 days on the market

It’s interesting to see that the more recent sales were slower for the houses but faster for condos and townhomes as compared to the closed sales.

Active listings and length of time on the market

  • Houses for sale in Santa Clara County that are not under contract (and not listed as “Agent Only”) average 52 days on market
  • For townhomes and condos, it’s an average of 44 days on market

So it seems that for the homes which DO sell (and not all homes which are listed become sale pending), the average is in the 3-4 week range.  What that says, pretty clearly too, is that if your listing is well marketed but doesn’t sell in three to four weeks, you’ve got a problem.

Some types of properties will always take longer (think Santa Cruz Mountains, ultra luxury homes and others), but overall, your home should be seeing 3-5 showings per week and get at least one offer for approximately every 10 showings, which should happen within 3-4 weeks.

What if your home has been on the market for a month with no offers, or only low offers?

If your house or condo has been actively listed and marketed for more than 4 weeks and isn’t selling, it’s time to have a conversation with your agent. Every situation is different and I cannot advise anyone but my own clients about what needs to happen in your case.

I can tell you that if your home does not get an acceptable offer in 3-4 weeks, there’s a good chance that the number one obstacle is a price that’s too high for the current market. If that is the case, it’s time to make a serious change in the price – think hedge clipper, not nail clipper. Otherwise, if home values are dropping and your price does not get ahead of it, you will be chasing the market down. It is very expensive when that happens.

Beyond price and just getting or not getting offers, you will want to understand:

  • how many showings are there each week?
  • what is the feedback from the buyer’s agents? (what are the buyers saying?)
  • what homes ARE selling?
  • how long does it take to sell if it’s underpriced? (that’s a common strategy today)

Some flaws are fixable and some are not fixable. You cannot do anything about a less desirable location or a neighbor with too many vehicles or an eyesore of a front yard. But you do control the price.

Some real estate gurus like to say “there’s no problem that the right price can’t fix”. That’s true, but sometimes there are cheaper ways to solve whatever the problem is.

In some cases, home sellers are offering to pay points on the buyer’s loan to offset the rising interest rates. Frequently it’s a lot cheaper for the seller to buy down the loan rate than to take a price reduction of 3-5%.

Related reading to how long does it take to sell:

Why didn’t my San Jose home sell? (on this site)

Beware over improving your property when preparing to sell (on this site)

Selling your home in Silicon Valley – 9 FAQs (on popehandy.com)

 

Are home prices dropping in San Jose?

Are home prices dropping in San Jose? The Bay Area housing market is cooling all over.

  • Overall, yes, we have home prices dropping in San Jose month over month.
  • As of now, home prices are not down year over year for the city generally.
    • in some areas, price points, or select segments, year over year prices could be up or down as compared to a year ago
    • in part of the market, the year over year number is flickering back and forth (see the $2 million pricing band, below)

Let’s see what the data says. I pulled this from MLS Listings just now for all of the city.

In what price points do we see home prices dropping in San Jose?

If we look at all San Jose single family homes (mostly houses, but a few duet homes), we can see that prices were higher in April 2022 than they are now. In general, values have been falling month over month since April’s peak.

We also note that prices do not only go up, that there are many movements up and down over the course of a few years. The first question we should ask is if this is seasonally normal or not. From the graph below, it appears clear that while home values do rise and fall seasonally, this is a larger drop than is typical, and it’s both faster and steeper. Please also see Seasonal Pricing Patterns on this site.

 

Month over month, home prices are dropping in San Jose, CA for single family homes - chart from 2016 to present

This is a lot of sales over the years – 30,691 in all.

If we view this same info in a data table of average sale prices, we can better compare any particular month to the same month in other years. This eliminates the normal seasonal fluctuation.

The peak pricing was April 2022. The average sale price for July 2022 remains above July 2021 and all previous Julys. In 2018 prices got a bump and went down in 2019, but marched upward again after that.

 

Data table - Average sale price in San Jose - SFH all price points

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