Market Info

Los Gatos Real Estate Market

San Jose - Valley View 2019-1-20 - for the San Jose real estate marketThe San Jose real estate market is a strong seller’s market, heating up again after some winter cooling. However, this season has remained steadily active. We see this in the San Jose housing market data, below, but I’m also seeing it in my real estate practice.

First please find the Altos Research Charts, a live feed of data on the housing markets in San Jose. You will then also find the RE Report, charts with statistics comparing sales in the last month and comparing them month-over-month and year-over-year. These are both the usual tools I use to gauge a market. Directly below are links to the market analysis of specific neighborhoods in San Jose. Some of these, where I work the most, are updated monthly, and others are updated every few months.

Altos Charts for the San Jose real estate market as a Whole – automatically updated each week – single family homes

First, the market profile and then the basic charts for single family homes or houses in San Jose. FYI, Altos uses LIST prices. The RE Report further down uses SOLD prices (which is part of the reason why I utilize both).

 

 

This real time market San Jose housing market profile (last updated 3/10/2020 as of this writing) shows on the graph a slow increase of inventory, dropping days on market, and rising prices after some cooling. The Market Action Index still shows a Strong Seller’s Market that’s only getting hotter. The Median List Price (for condos and houses combined) is approximately $1,288,000.

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Sketch of houseIt can be really challenging for people moving to Silicon Valley to get a sense of real estate prices, and perhaps more, comparing cost of from one town or district to another.

One question I get a lot is this: what does it cost to buy a 4 bedroom, 2 bath house of about 2000 square feet?

So to answer this question, let’s see what houses like this are selling for (4 bed, 2 bath, appx 2000 SF or 185 square meters) and see how the cost looks in one Santa Clara County / Silicon Valley area versus another.

Today I compared several areas and cities using this criteria: single family homes of 1800 – 2200 SF, 3-5 bedrooms, 2-3 bathrooms, on lot sizes of 6000 SF to 10,000 SF. Normally I would chart this over the last 2 months, or 60 days, but because of the low inventory causing the sellers market I have expanded the search to the last 3 months, or 90 days, for a better range. Because some areas have had a scarcity of inventory, I’ve added an addition to the chart titled NoS for Number of Sales within the given range.

Here’s how it shakes out in the “west valley areas” along the Highway 85 corridor, most of which are known to have good to great public schools. What areas are most affordable? One way of analyzing this is the “price per square foot” figure. Whenever I update the chart, I re-arrange the order of the cities from high to low based on the price per square foot, although there’s usually minimal movement.

 

Feb 2020 Sales Comparisons

 

Within this range, Campbell only had one sale over the last 90 days, so data for that segment may or may not be a good average. Both Los Altos and Saratoga had no sales within the last 90 days within these criteria, so their searches have been expanded to 0-180 days (or 6 months / half a year) and 0-120 days (or 4 months / a quarter year) respectively to provide data for comparison for this chart. Now that we have the data, let’s analyze it!

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Silicon Valley home prices are sky high, if lower than the peak of the market in Spring 2018. The median sale price of houses across all of Santa Clara County as of February is $1,182,000, and the average is about $1,449,000. Would you be able to buy a house in Cambrian for that sale price, or a little lower? If so, what would it look like? What can you buy in Cambrian for about $1.25 million today? Here we’ll consider the cost of Cambrian housing.

Cambrian offers good schools, a reasonable commute to places like Apple in Cupertino, and a nice location near Los Gatos and Campbell with lower real estate prices than those two areas. For that reason, it’s become a magnet for smart home buyers over the last 20 years. If you have the budget for a median priced Santa Clara County home, how far would it go in Cambrian?  Here’s the data, pulled this week from MLSListings, to answer that question.

For the charts below: CUHSD refers to Campbell Union High School District, and SJUSD is San Jose Unified School District. Cambrian housing is most expensive in the Union SD, 2nd priciest is Cambrian, and most affordable is San Jose Unified.

 

Cambrian housing costs - What can you buy in Cambrian for $1.25 mil 02-2020

I need to add something very important here about the cost of  Cambrian housing, and that’s that the numbers above reflect CLOSED prices.

Pending sales right now are usually higher. Many homes with Union Schools especially, but in all areas, are experiencing multiple offers and overbids. In some cases, homes are selling for $250,000 or $300,000 over list price. 

Houses that had been modest 3 bed, 2 bath, 1250 SF homes that were selling for about $1,250,000 are now often selling for $1,350,000 or more, depending on walkability, lot size, and of course condition.

Despite what the closed numbers say, it is very difficult to find a house in Cambrian with Union or Cambrian schools that will actually sell for under $1.3 now. Cambrian housing prices are going through the roof at this point, particularly in areas with the best schools.

 

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"Multiple offers" - artwork

“Multiple offers”

Over the years I have been in quite a few multiple offer situations with my Silicon Valley home buyers and it seems that we are again in that kind of market in many parts of Santa Clara and San Mateo Counties. Understandably, home buyers do not want to pay more than a home “is worth”. With several buyers all vying for the same property, though, the price is driven up. That’s a seller’s dream and a buyer’s nightmare. Is it possible to pay fair market value, and not more, with multiple offers?

What is fair market value?

With a little research, you may find a few slightly different definitions of fair market value. Most, though, include these elements:

  • Both buyer and seller are reasonably motivated (but not under any undue pressure)
  • Both buyer and seller are well informed and acting in their own best interests
  • The home or property has been given enough exposure such that the market has been tested
  • There are no special concessions that would impact the sale price (such as a year long free rent back, including all the furniture or personal property, the seller carrying the mortgage at a very high or very low rate of interest). Likewise, no other special terms that would increase or decrease the sale price.

In other words, fair market value is usually achieved when the buyer and seller have a normal sale, with normal time frames, normal contingencies, normal relationships to one another. Most of the time, this is the result of one offer on the house after two or three weeks on the open market. (Sooner than that, there may be pressure and other bids.)

If a seller or buyer is desperate to sell or buy, you probably won’t see fair market value. Similarly, if a parent sells the family home to a son or daughter, there’s a good chance it will never be a matter of exposing it to the pool of buyers, and the price is likely to be soft. Off market sales may be on the low side, though recently we’re seeing buyers in those circumstances paying more just to secure the property. A buyer who writes an offer subject to the sale of her or his home will be at a negotiating disadvantage, but a seller may accept that bid if the home has been on the market awhile, there is no other competition, and if the sale price is higher than it otherwise would be. (They’ll accept more risk for a higher sale price.)

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Photo of ranch style house with the question - Is it too early to begin house huntingIt’s a January that feels like March, if a dry one.  The weather is clear, mild, and temps are sixty to seventy degrees, the skies are blue and trees are beginning to blossom – a great environment for house hunting. Is it too early in the season to begin your search for the right home in Silicon Valley?

Each prospective home owner’s situation is different, but for many people, January is a great time to jump in with house hunting, before the Super Bowl, Valentine’s Day or some other point a little later in the calendar year.

Weather, Inventory, Interest Rates and Silicon Valley house hunting

First, to note the obvious: there is no weather related reason to wait. (Sellers: pay attention!)

Second, let’s discuss selection. Inventory is horribly low (see the inventory data table in my 2020 predictions article). Most people expect the number of available listings to be higher in Spring.  Seasoned Realtors know that while this often happens, it doesn’t always, so we cannot count on it. (Check the Santa Clara County monthly real estate statistics here.)

How bad is it?  I’m on the MLS right now.  For single family homes (houses and duet homes) in Santa Clara County, there are 411 for sale right this moment which are not sale pending or under contract. This is for the whole county, where there are 1.8 million people residing.

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What does it cost to buy a home in Los Gatos “with the schools” (as opposed to the Union School District or the Campbell School District areas)? In the last 90 days, 30 houses have sold in Los Gatos within the Los Gatos Union School District.  The averages will give you some idea of pricing, but remember that the range is very broad!  Disclaimers aside:

Average home size appx 2200 SF

Average lot size aboout 9500 SF

Average sales price appx $2,270,000

That’s not to say that you cannot purchase a house in town for quite a bit less!  Here’s what has sold for UNDER $2,000,000 (17 homes in all):

 

Chart of single family homes sold in the last 90 days in 95030 and 95032 zip codes under $2 million

Chart of single family homes sold in the last 90 days in 95030 and 95032 zip codes under $2 million

 

You can also view the info at the bottom of the Altos charts for 95030 and 95032 to get a profile of homes for sale by pricing quartile.

 

 

Ten dollar bill (shown in part) with the words "Cash Is King" - all cash offers are preferred by home sellersHow common are “all cash” transactions for Silicon Valley real estate right now?  During the first couple of years after the downturn ended and the recovery cycle began, we had a large percentage of all cash buyers in Santa Clara County and nearby. In recent years, though, that ratio has been declining. Where are we now?

Some areas and some types of sales are more frequently all cash than others.  Here are a few quick stats for the last 60 days  (numbers from MLSListings, crunched by me – disclaimer on good intentions but no guarantee) for single family homes, townhouses, and condominiums (not included are multi-family homes, apartment buildings, mobile homes, farms / ranches etc.). Also, please note that this is for closed sales, not pending sales.

What percentage of sales are all cash?

  • Santa Clara County: 12% all cash
  • San Mateo County: 20% all cash
  • Santa Cruz County: 18% all cash

Few areas in Santa Clara County

  • San Jose (entire city): 10% all cash
  • Los Gatos: 12% all cash
  • Cupertino: 11%
  • Milpitas: 4%
  • Morgan Hill: 13%
  • Campbell: 10%

All cash sales close escrow without a loan. In higher priced homes, some new owners will put financing on the property after close of escrow.  Particularly in lower priced homes, though, these are investor buyers who will be renting out the property.  This is often the case with the lower priced distressed properties in particular.

With the crazy new demands that keep coming at us from banks and new requirements being imposed on appraisers, now more than ever, cash is king.  That doesn’t mean that the cash buyer will get a deep discount, but there will be a slight one in most cases and certainly preferential treatment that will create a great advantage in multiple offer situations.

Learn more about buying and selling Silicon Valley real estate with cash offers:

Cash offers: what do you need to know if buying “all cash”?

Finding Your Next Home

What’s My Silicon Valley Home Worth? Estimating the Probable Buyer’s Value  (financing impacts market value)

 

 

 

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Mary Pope-Handy
Realtor
ABR, CIPS, CRS, SRES
Sereno Group Real Estate
214 Los Gatos-Saratoga Rd
Los Gatos, CA 95030
408 204-7673
Mary (at) PopeHandy.com
License# 01153805


Selling homes in
Silicon Valley:
Santa Clara County,
San Mateo County, and
Santa Cruz County.
:
Special focus on:
San Jose, Los Gatos,
Saratoga, Campbell,
Almaden Valley,
Cambrian Park.
Mary’s other resources
Silicon Valley real estate report
Real estate statistics and trends for Santa Clara County, San Mateo County, and Santa Cruz County

Live in Los Gatos blog
Los Gatos neighborhoods, history, businessses, parks, restaurant reviews, and more

Valley Of Heart's Delight
Santa Clara County Real Estate,
with an interest in history

Move2SiliconValley.com
Silicon Valley relocation info

popehandy.com
Silicon Valley real estate,
focus on home selling
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