The San Jose real estate market is a strong seller’s market, and it has been for months. Available inventory remains unbelievably low and can’t keep up with the high demand. This article is updated monthly with the latest market data. Here’s a sample of the latest for San Jose’s single family housing market:
- The September 2021 market was distinctly hotter than the year before.
- San Jose homes took an average of only 14 days to sell.
- The average sale to list price ratio was a red hot 108.1%.
Last year the spring market experienced mild unseasonable cooling, but from the summer of 2020 on it’s been heating up in San Jose. Early winter saw a hint of seasonal cooling, but by mid-winter it was heating right back up again! Finally, after a hyper-competitive spring, summer 2021 finally experienced some slight market cooling. This is shown in the San Jose housing market data below, and I’ve also experienced it in my own real estate practice.
These charts will not reflect the full effect of the pandemic on the market. It will take a while before we see the full picture on how it impacted realty, but for now you can read about the Coronavirus’ impact on real estate sales on my other post.
Early on in the shutdown, the Multiple Listing Service (MLS) stopped the timer on all Days on Market (DOM). Therefore these numbers will be off beginning from March 17th through around May 17th of 2020. In the data below, this will affect any numbers related to the days on market, the absorption rate, and the days of inventory. Current numbers are accurate, but disregard this data for those previous months.
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 (updated October 11th) shows steady low inventory, speedy days on market, and high market action bouncing back after a recent decline. San Jose is in a strong seller’s market and holding, according to Altos! The Median List Price (for condos and houses combined) is usually stable around $1,250,000, though it has been getting nearer and nearer to $1.3 mil since last year and, around the spring peak was sticking close to $1.35!
Are home prices dropping in San Jose CA and nearby? Is the Silicon Valley real estate market seeing price reductions? San Jose is a large, sprawling city with about 1 million residents, so checking the San Jose real estate market a good marker for how the region is doing as a whole.
About the price drops, the quick answer is yes and no. Month over month, it’s true that home prices have inched down slightly. But year over year, they are still up significantly. The year over year part is more significant, because many years, maybe most, prices pull back a little from May to June and June to July. In other words, it is seasonally typical for prices to fall a little during this time of the year.
Are home prices dropping in San Jose CA? What does the data say?
Here’s a look at the average sale prices in S.J. from 2004 to the present for single family homes. The month of July is highlighted in yellow, generally. Most years are the darker yellow, but the “off” years where prices are a lower are in a paler yellow.
This same data may be better understood visually by some readers, so here’s a graph of the average home price in San Jose, CA, from 2004 to the present.
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. However with fantastic neighborhoods like Montanas de Los Gatos, Cambrian condos are not to be missed! So today we’ll take a closer look at the condominium and townhome market in this popular San Jose district!
Before we dive in, let’s see what’s selling now in the Cambrian Park condo & townhouse segment of the market.
Just now (as of April 15, 2021), I looked into the MLS to see the condo and townhome sales in Cambrian over the last 30 days. Out of 11 sales, 9 were listed as condos and 2 were listed as townhomes (all were held in in condo ownership). Condos sold between $430,000 – $1,005,000 and townhome sales closed between $855,000 – $980,000. Most sold in under 2 weeks and over list price, although the 3 properties that took longer than 2 weeks to sell closed under list price. Properties ranged from a 1 bed 1 bath to a 3 bed 2.5 bath, although most were 2 bed 1 bath units. The majority were built in the 1970s – 1980s, although the youngest property was built in 2007.
Now let’s have a look at some of the numbers from my Real Estate Report:
Real Estate Report: Cambrian Park Condo & Townhouse Market – San Jose
It’s a hot spring market for the Cambrian condo market!
|Trends At a Glance
|No. of Sales
|Sale vs. List Price
|Days on Market
|Days of Inventory
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.
How can you tell if it’s really a buyer’s market or seller’s market? One important data point is the months or inventory, also known as the absorption rate.
The months of inventory (MOI) tells us how long it would take for the current inventory to be absorbed if sales continue at the same rate and no new inventory were to be added.
What is the months of inventory?
The best explanation given to me for the absorption rate uses the analogy of a bathtub draining. If the tub has water in it, and no new water is added, and the drain is opened (and drains at a constant rate), how long will it take for the water to all be eliminated?
So too with Silicon Valley homes for sale. How long would it take for the current supply to be bought up if no new listings came on the market? That’s the question. It can be days of inventory, weeks of inventory, or months of inventory – or any other chunk of time you want to use. My monthly Silicon Valley RE Report uses days of inventory, referenced via DOI in the chart below, where you can see that the average days of inventory for the county is 61, or about 2 months. A quick scan down that column will provide a sense of the market for each city and town.
The faster the absorption rate, the easier it is for sellers to sell and the harder it is for buyers to buy. In the U.S., about 5- 6 months of inventory is a balanced market. Here in Silicon Valley, balanced is probably closer to 4 months of inventory.
Readers of this blog know that I really like the multi year view of data, and I think with the months of inventory that’s also really helpful. Here’s the rate for Santa Clara County, single family homes, from January 2014 to May 2020 (needs a full month to be accurate).
For the month of may, the months of inventory was 2.2, which is significantly more than most of the last six years, and double the height of the market in 2017 and 2018. Translation: buyers, this is the best it’s been for you to buy in years. Yes there may be multiple offers – but if so, it is very likely to be much calmer than this time last year or at any other time for this same season in years.
What does it mean when real estate professionals, journalists and consumers refer to a “hot seller’s market“? Simply put, it means there’s an imbalance in the market which is very much in the seller’s favor. In terms of supply and demand, it translates to far more demand than available inventory for sale (supply). It’s a good time to sell, but a hard time to buy.
The Elements of a Hot Seller’s Market
We measure or note the market conditions using a variety of data points;
- days to sell (and days on market for all homes, including unsold)
- sale price to list price ratio
- absorption rate (months of inventory, weeks or days of inventory)
- number of listings available vs pendings and recently closed homes
- rapid rise in home sale prices, especially if to unsustainable levels
- number of offers received on a property at once (multiple offers)
- buyers upping their price and improving their terms voluntarily, without getting a counter offer
- buyers writing offers with few or no contingencies, fast close of escrow or other extremely strong terms
- overall market trends of inventory lessening, prices rising, buyers getting more desperate – how all of these look when viewed as a whole
Basically, when buyers are competing against one another with multiple offers, when properties are selling quickly and over list price, and prices rise, the ball is in the seller’s court and you’ve got a hot seller’s market!
While some of the above can be easily tracked on our multiple listing service, some are not findable anywhere except in conversations with real estate agents who are actively working the market, writing and receiving contracts. What isn’t tracked includes the number of offers placed on a home for sale, whether buyers are engaging in “bidding war” tactics such as upping their price before even getting a counter offer, or offers with no contingencies.
A summary of tips for multiple-offer situations in Silicon Valley real estate contracts
Should you write an offer with no contingencies? What is the risk with a non-contingent offer?
Mistakes that buyers’ agents make which damage their clients’ chances of winning in multiple offers
It 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.
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!
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.
What Can You Buy in Cambrian?
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.
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.
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.)
It’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.