The online home valuation websites are in high demand for spot checking a price. They are fast, easy, and free.
Everyone 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:
Collateral Analytics (via Realtor.com) $1,671,000
CoreLogic (via Realtor.com) $1,631,300
NAR RPR $1,617,440 (subscription only for Realtors)
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?
The San Jose real estate market remains in transition. While it is still a clear seller’s market, things are much cooler than what they were earlier this year. Demand may have shrunk, but so has inventory, so we’re not seeing dramatic cooling.
First, some quick data from my RE Report via the bullets and chart below. There appears to be a small amount of undercounting or overcounting between the RE Report and MLS Listings, but the information is still good for tracking trends.
- The October 2022 sale price to list price ratio for San Jose single family homes dipped to 99.7% of asking (-0.6% from last month), and remains below last year for the fifth month in a row.
- Monthly home prices are up a sliver from a year ago after falling below last year in August for the first time since 2019
- The median sale price remains $1,450,000 – astonishingly consistent with the month before and with last year!
- The average sale price was $1,582,630 (+1.7% from the month before, and +2.4% from last year)
- The days on market held relatively stable at an average of just under a month at 27 days, almost twice as long as last year.
War, inflation, stock market, recession concerns – and real estate
Many of our home buyers are financially powered by tech stocks, stock options, and RSUs. When the stock market tanks, some buyers will rush to put their cash into real estate (the quip we often hear is that “real estate does not go to zero” and “at least you can live in it”.
For some, the rising interest rates combined with the lower stock values have been a double whammy on affordability in a market still seeing sky high prices. If the most amply capable buyers don’t want to sell their holdings at a 10% or more discount from what they were, that will impact how much they are willing to pay.
We are finally seeing signs of cooling in the market with homes recieving fewer offers than they may have at the peak of the market, and prices are coming down. That said, much of the entry-level market is still raging hot. The best homes, when appropriately priced and marketed, are still recieving multiple offers and selling well above asking.
However one thing is keeping the market hot: limited inventory. Nationwide, inventory has begun to drop again and overall we remain in a housing supply shortage (each market will vary, of course). So how far off are we from “normal” inventory levels? Let’s have a look at historic active listings in San Jose. (If the chart is too small, click to see in full size.)
At the start of the chart, 2010, the market was still reeling from the 2008 recession, but by 2017 we were seeing a strong sellers market with record low inventory. While listings are certainly up from 2021’s rock-bottom lows, it’s still limited and well below that of more balanced market years like 2013 and 2014.
Will the shortage of homes lead to wild market action like earlier this year? Unlikely. With everything else that’s changed such as the interest rates rising. But will it continue to cool or will it heat up again in autumn? We’ll have to wait and see.
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 Glance
|No. of Sales
|Sale vs. List Price
|Days on Market
|Days of Inventory
Please keep reading below for more data and market analysis.
How’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 Glance
|No. of Sales
|Sale vs. List Price
|Days on Market
|Days of Inventory
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.
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:
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 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? 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.
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.
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…)
As 2021 comes to a close, it’s time to start looking forward to 2022. What are your real estate related goals and resolutions for this new year? Do you plan to buy, sell, or remodel your Silicon Valley home? If so, this is a great time to sketch out your objectives and start early preparations to get the wheels in motion.
For South Bay home owners who want to make 2022 the year to sell and move, it’s wise to plan ahead so you can maximize your return on investment of time and money. A clean, well-prepared listing gives buyers greater confidence, and confident buyers tend to make higher offers! Take the time to do it right and you will reap the rewards of your effort.
Quick Tips for Planning to Sell a Home in 2022
- Hire your real estate professional early in the process so that she or he may provide additional guidance from the beginning. It won’t cost more to hire early and you get more help. You may even save money by avoiding costly mistakes. A good agent will help you prepare your listing and determine a timeline to sell, whether you plan on selling this spring, next year, or next month.
- Decluttering is one of the biggest task for home sellers and it can be where you get the most bang for your buck. Presenting a property to buyers in a way that feels like home, but not your home is a balancing act. Some homeowners choose to move out and stage their home to sell, which has been increasing in popularity and is certainly a successful way to declutter! Sellers occupying a listing should commit to depersonalizing the house and creating a marketable space. Some sellers will discover this is a much bigger undertaking than expected, and requires more time and energy than originally planned. This can be particularly challenging for long-term residents, sellers who are downsizing, and seniors. Talk to your Realtor before embarking, as some items may be helpful for staging and you don’t want to totally empty the house! Completely empty homes do not sell as well as those which are thoughtfully furnished.
- Fix everything that is broken or in disrepair. No home is perfect, and buyers will not expect it to be (unless it’s brand new, of course), but everything you can repair is one less thing the buyers will worry about when writing an offer. That lightbulb that’s burnt out? Replace it now so that it doesn’t wind up in inspections or worrying buyers about the electrical system! Low cost repairs are often an excellent investment, but so can some more expensive fixes. I have had sellers who willingly go above and beyond preparing their home, from repiping to reroofing, see a clear return on investment for their efforts! However most sellers don’t want or need to do that much work. A bid with a price for the work from a reputable company is usually enough. Speak with your listing agent before tackling any major projects.
- Clean everything: windows, window tracks, hardware, lamps, mossy patios, etc. A clean home is inviting and feels well cared for. Professional cleaning can make lightly used carpets look new again. Areas that easily show wear, like grout, caulk, and kitchen appliances, can give that “new home” feel when they are looking fresh!
- Plan to have pre-sale inspections, but hire inspectors with your real estate salesperson.
Tips for Silicon Valley Home Buyers This Year
The Silicon Valley real estate market tends to have seasonal pricing patterns. They are not rigid, and some years the typical or expected patterns don’t really hold. Generally, though, we expect the Spring market to be hot and the winter period to be cool. Is that true? Let’s take a look at the stats that I pulled today from MLS Listings.
Seasonal pricing patterns and today’s market
I spot checked the median sale price as well as the average sale price for houses in Santa Clara County, and they both followed the same seasonal pricing patterns. In the chart below, we have data from January 2013 (when the recovery really began) to November 2021. I’ve named the months with the peak prices and also the biggest dip each year. The pattern is a bit like the stock market – it does not only move up or down, but there are a lot of both with a generally upward trend.
This image is best seen on a tablet or desktop computer. If it is too small, please click on the image to view a larger version of it.
If you prefer a data table, here’s one with just the peak bolded (please click to view larger image):
Today I want to share with you some stats provided by my real estate brokerage, Sereno Group. One of our own has crunched the numbers by school districts across various counties. Schools are a major driver in the real estate market, often more than zip code or city name, so here’s a very valuable approach to understanding the local housing market a bit better: a view from the vantage point of school districts.
Most of Silicon Valley is in Santa Clara County, followed by San Mateo County and a few neighboring areas. (It is sneaking into San Francisco and has also been present in pockets of Alameda and Santa Cruz Counties also.) Today, I’ll just focus on Santa Clara County.
Many cities or towns have multiple school districts. For instance, in Los Gatos, students may be served by Campbell, Los Gatos, or Union schools – depending on the address. San Jose, being the largest city in the county, has far more school districts than that.
First up, here are the numbers for Santa Clara County by high school district, a market update for May 2020:
Continue reading to see Santa Clara County’s real estate market data sorted by elementary school district.