Is it a good time to sell a home in Silicon Valley? One of the best ways to get a pulse on the real estate market is with the months of inventory (MOI), also known as the absorption rate. The way we calculate it is simple: find the current available inventory (not under contract or sale pending), then find the number of homes with that exact criteria which have closed escrow in the last 30 days. Divide the first by the second and you get the months of inventory.
Today I spent a little time on MLSListings.com, our local mls association (of which I am a member) and I ran the numbers for single family homes (houses and duet homes) in Cupertino, Los Altos, Los Gatos, Monte Sereno, Mountain View, Palo Alto, San Jose (all areas combined), Santa Clara, Saratoga, Sunnyvale and three of San Jose’s districts: Almaden, Cambrian, and Willow Glen. Below, please find the results of that study. (This is for single family homes of any price range or school district in each city or area named.)
Which are the hottest markets? They’re the ones with the smallest MOI – Mountain View is at .56 of a month (about 2 weeks), Sunnyvale at .66 month (about 2.5 – 3 weeks), Cupertino at .8 of a month, Palo Alto .81. All of these are very, very red hot seller’s markets. Every area, city or town studied was a hot market except for Monte Sereno, which at any given time has few listings and few sales plus a wide range of pricing, so often for this small city it’s best to look at the Los Gatos and Saratoga stats to see what’s really happening. A few very high priced listings may make the whole area look slow, when it fact it may be just a function of the pricing tier.
Digging a little deeper: months of inventory by pricing tier
To dig into the issue of pricing tiers a little more, I pulled the numbers for houses in Saratoga by price groupings. Please note that Saratoga has several school districts and these can also dramatically impact the market there too, but for our purposes today I simply wanted to make the point that some price ranges are selling better than others.
The Saratoga real estate market is an extremely strong seller’s market in the lowest pricing group of properties listed up to $1,000,000. The half a month’s inventory, you could say that these houses are flying off the market. Conversely, homes offered for sale at over $5 million are not selling well at all right now – in fact none has closed in the last 30 days. The $3 – $5 million isn’t doing well either with 13 properties for sale and just 1 closed in the last month. Of course, if we dug deeper we might see that there are a lot of pending sales, and we might take a different view of these statistics.
I spot checked the Saratoga pending sales. There are 35 as of this moment. (Of those, 2 are bank owned properties or REOs, and 6 are short sales.) Regarding the prices of these under contract houses, there are a couple listed at just under $3.3 million – and that’s the highest amount in any stage of pending right now. In fact, only 6 of the 35 are over $2 million, which translates to 83% of the homes which are selling are under $2,000,000. The median list price is $1,399,000. So it’s fair to say, after verifying the pendings, that right now it’s not easy to sell a house in Saratoga if it’s listed over $3,300,000. Selling under $2,000,000 appears to be a very good market overall in Saratoga.
Nothing’s every 100% simple, so when listing a property for sale it’s best to try to find the probable buyer’s value from a few angles. One of those angles, at least for much of Santa Clara County, is school districts. The process offered above could be repeated for any number of criteria, such as with or without pools, the number of bedrooms, corner lots, etc.
Overall, it is a great time to sell a Silicon Valley house. Some areas, some pricing levels may not be equally good. But if you’re thinking about getting your property on the market because this is the year for moving, I’d encourage you to act quickly, during the spring home buying season, which is often the best time of year to sell.