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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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Silicon Valley real estate market predictions

Photo of Mary Pope-Handy, crystal ball, Mary's logo and the words "Mary's Predictions" - Silicon Valley real estate market predictionsSilicon Valley real estate market predictions – it’s time for an update!

Summary:

  • Today we look at the question of What would have happened with our prices if we hadn’t had the pandemic?
  • It’s a mixed market, but if interest rates don’t continue their steep climb, my Silicon Valley real estate market predictions are that home prices would be fairly flat for the remainder of the year. Any given area could rise or fall a little, but I would not expect a huge change, as we are under the “high” projection based on the years of 2013 until right before the pandemic began.
  • We are seeing the market pick up as of mid August. Perhaps home buyers feel that sale prices have come down as far as they will?

We began this current year with wildly appreciating home prices. We believed or knew that if interest rates rose more than 1 point it could be a game changer. We didn’t foresee Russia invading Ukraine, the stock market taking a nosedive, or interest rates climbing so high, so fast.

Combined, they have shaved the top off of home prices in Santa Clara County and across the country. Our appreciation was steeper than most places. Will value adjustments be just as steep?

The super surge in home prices were part of the Covid package deal. I have been wondering something:

What would our Silicon Valley home prices be like today if we hadn’t had the coronavirus pandemic?

There are different ways of trying to assess this, but I decided to plot the trajectory from February 2013 (when our housing market recovery began in earnest) to Feb 1 2020 when our lives were turned upside down by Covid-19. Microsoft Excel has a forecast program and that’s what I used to create the chart below. I ran the projections through the end of this year and found the results to be interesting. What kind of real estate market predictions can we see if there hadn’t been Covid over these last 2.5 years?

The excel Silicon Valley real estate market predictions – high, medium, and low values:

 

SCC Market projections without Covid - Silicon Valley real estate market predictions data

 

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The San Jose Real Estate Market Analysis

San Jose Real Estate MarketThe 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.)

San Jose Historic Active Inventory 2022-11-15

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 Oct 2022 Previous Month Year-over-Year
Median Price $1,450,000 (0.0%) $1,450,000 $1,450,000 (0.0%)
Average Price $1,582,630 (+1.7%) $1,556,090 $1,544,870 (+2.4%)
No. of Sales 329 (-12.0%) 374 519 (-36.6%)
Pending 516 (-11.2%) 581 624 (-17.3%)
Active 357 (-19.0%) 441 249 (+43.4%)
Sale vs. List Price 99.7% (-0.6%) 100.4% 108.5% (-8.1%)
Days on Market 27 (-3.9%) 28 15 (+88.0%)
Days of Inventory 33 (-4.8%) 34 14 (+126.2%)

 

Please keep reading below for more data and market analysis.

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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 Glance Oct 2022 Previous Month Year-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%) 8 18 (-61.1%)
Pending (+60.0%) 5 14 (-42.9%)
Active (+25.0%) 4 (-44.4%)
Sale vs. List Price 101.1% (+2.6%) 98.5% 102.1% (-1.0%)
Days on Market 17 (+30.6%) 13 16 (+8.3%)
Days of Inventory 21 (+47.8%) 15 15 (+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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The Monte Sereno Real Estate Market

The Monte Sereno real estate market is similar to Los Gatos, but distinct - Monte Sereno shares many features with Los Gatos but is a distinct cityHow is the Monte Sereno real estate market? Because the city is small, with just about 3,500 residents, there usually are few homes listed for sale or selling, and with small numbers we can get seeming volatility. This article is updated monthly with new data and analysis, so scroll down to read the latest and check back regularly. Here are a few details from the latest market update:

  • All sales data for the month of October is based on 4 closings – and one of those was a luxury property selling over $10M. That can skew the data pretty quickly!
  • This city is currently in a strong seller’s market with low inventory – just 9 available homes at the end of October.
  • Closed sales held stable month-over-month, but pending sales have fallen significantly.
  • The sale to list price ratio dropped sharply from last month and well below last year.
  • The October 2022 market is showing clear signs of cooling overall, but there are clear micro-markets at work here with varying levels of heat.

There are ALMOST no condominiums or townhomes in Monte Sereno. As of October 2022, the MLS showed just 6 sales in these two categories in total – and that’s going back to 1998! One of the major challenges for this city is to ensure that at least some housing units are deemed “affordable.” You can find the city’s housing plan here (an online pdf):  http://www.montesereno.org/DocumentCenter/Home/View/674

Below is a quick market profile for Monte Sereno. This is updated automatically weekly, so please check back often.

Monte Sereno Altos Real-Time Market Profile

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Los Altos: Beautiful Silicon Valley Suburb

Los Altos downtownLos Altos is a scenic town, semi-rural, conveniently located, with notably good schools (Los Altos or Cupertino schools). The charming old style downtown enjoys superior restaurants, shops, and is a pleasant place to stroll. The town enjoys a community college and a golf course. Its a great place for pedestrians and cyclists (lots of paths), and is a quick jaunt to both Palo Alto and Mountain View, both very popular peninsula destinations.

There’s a brief history of Los Altos on that city’s website that I found interesting. First, the land that started the community was originally 140 acres purchased from Sarah Winchester. Second, Foothill Expressway used to be a right of way for the Southern Pacific Railroad. The train line ceased operations in 1964, and the expressway was put in. Love local history from the Valley of Heart’s Delight? The Los Altos History Museum is a worthwhile destination.

The zip codes don’t stay within the city’s boundaries. Both 94022 and 94024 can be found in Los Altos and adjacent Los Altos Hills.

Los Altos Real Estate Market Conditions

Below please find first information from Altos Research, and then from the RE Report (I have subscriptions to both). Altos’ data is for the city and by zip codes. It uses list prices and its charts and reports are updated automatically each week. The RE Report uses data for each full month and provides it for the city as a whole and also by four distinct regions or neighborhoods. Both reports offer a subscription option if you click on the links.

The next 3 charts are from Altos Research and they are updated weekly, so check back often!  You can see the weekly report, with even more data, by visiting the link. Subscribe for Los Altos, for one of its zip codes, or anywhere else nearby by first entering the desired zip or city in the “Search Anywhere” button and then clicking on subscribe.

Whole town- both 94022 and 94024

 

 

94022

 

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The Cambrian Park Real Estate Market Update

Cambrian Park Real Estate Market graphicThe Cambrian Park real estate market is flattening, and for this part of San Jose generally,

  • Single family home prices are down a little for Cambrian as a whole as compared to the month before.
    • Houses sold in the Union School District are up month over month, but down year over year.
  • The sale price to list price ratio is 101.1% for both houses and condos / townhomes.
  • Pending sales of single family homes are down, but there are double the number of pending sales versus active listings. For condos it’s similar but not as extreme: 8 pendings versus 5 active listings in October.
  • Homes with the best locations and schools are selling well.

For those new to the area, Cambrian is most of the 95124 zip code (south of Foxworthy) and most of 95118 (west of Almaden Expressway). It borders Los Gatos, Campbell, Willow Glen, and Blossom Valley.

The Cambrian Park Real Estate Market

Here is a good summary on the Cambrian real estate market. The RE Report is having some issues with reporting from the MLS, so this data may not be exact but we can still understand the current trends with this chart.

Trends at a Glance

Trends At a Glance Oct 2022 Previous Month Year-over-Year
Median Price $1,639,000 (+0.9%) $1,625,000 $1,647,500 (-0.5%)
Average Price $1,661,970 (-0.3%) $1,666,320 $1,733,170 (-4.1%)
No. of Sales 48 (+2.1%) 47 66 (-27.3%)
Pending 67 (-17.3%) 81 85 (-21.2%)
Active 30 (-6.3%) 32 17 (+76.5%)
Sale vs. List Price 101.1% (-1.6%) 102.8% 110.5% (-8.5%)
Days on Market 24 (+15.3%) 21 11 (+110.8%)
Days of Inventory 19 (-5.0%) 20 (+142.6%)

 

Multi year average sale prices of Cambrian houses sold each month

What are home values doing in Cambrian? The low point appears to have been in August (sales ratified in July). Prices have been flickering or hovering in a fairly tight band of pricing since then for Cambrian as a whole.

 

Average Sale Price SFH in Cambrian

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City of Santa Clara real estate market

Santa Clara real estate market - The Santa Clara Women's Club http://www.santaclarawomansclub.org/

The Santa Clara Women’s Club (old adobe house)
http://www.santaclarawomansclub.org/

The real estate market in the city of Santa Clara, like the rest of Silicon Valley, is one which continues to be impacted by low inventory and high demand. Over the last few months, the market here has seen significant cooling. However October shows some up and downs that may indicate the market is starting to even out.

  • The October sale to list price ratio rose above the month before, but is a full 9% below last year at 101.8% of asking.
  • Pending and closed sales fell month-over-month while active inventory remained fairly stable.
  • The average days of inventory (or market absorption) slowed to 26 days, and the days on market sped to 16, still quick turnover.
  • Prices continue to fall month-over-month and year-over-year.

Prices in Santa Clara rose astronomically over the last year. I grew up in that city and was amazed to see that the average and median sales price there had been hovering around $2 million last spring! In summer it finally started to come down. This autumn prices have finally begun to drop below what we saw last year.

The Real Estate Market for the City of Santa Clara

Below there are charts for the market activity over the last few months for single family homes in Santa Clara. Market activity has been high for months, but finally began to cool down this summer. Low inventory across the valley means there is still a greater demand to fill than properties available. Further down in the article, we’ll check in on the condo market, too.

First, a market profile, automatically updated weekly, for the city of Santa Clara (these reports are available by zip code, too, and for condos/townhomes as well as single family dwellings). Check out the weekly Altos report HERE and click on subscribe to get weekly updates on all of Santa Clara or any particular zip code. (Scroll to the bottom and check out the profile of houses across 4 pricing quartiles – super interesting.)

 

Santa Clara Real-Time Market Profile

According to Altos, it’s a strong seller’s market that’s dipping again after a mild recovery in market action, low median days on market, and subtle growth in inventory.

Data from my Real Estate Report

Next, stats at a glance for the Santa Clara real estate market for single family homes.

The year started out hot after years with minimal inventory, but the spring market began to cool down following the invasion of Ukraine and rapidly rising mortgage rates set to combat inflation. That pent-up demand is still around, however buyers have become more choosy since feeling the impact of changes towards stocks and mortgage rates. Homeowners also appear unwilling to part with their properties and lower mortgage rates in the current market environment and available inventory remains low.

Have a look at the market by the numbers below, or visit my RE Report page for Santa Clara stats here.

 

Trends at a Glance

Trends At a Glance Oct 2022 Previous Month Year-over-Year
Median Price $1,482,500 (-13.5%) $1,713,060 $1,641,000 (-9.7%)
Average Price $1,566,360 (-11.8%) $1,774,930 $1,685,120 (-7.0%)
No. of Sales 34 (-26.1%) 46 57 (-40.4%)
Pending 41 (-24.1%) 54 61 (-32.8%)
Active 29 (+3.6%) 28 16 (+81.3%)
Sale vs. List Price 101.8% (+0.6%) 101.3% 110.8% (-8.1%)
Days on Market 16 (-27.2%) 22 14 (+17.3%)
Days of Inventory 26 (+45.0%) 18 (+203.9%)

 

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Santa Teresa real estate market

Silver Leaf Park in the Santa Teresa area of San Jose - the proximity of parks will impact the Santa Teresa real estate market for that neighborhood

Silver Leaf Park in the Santa Teresa area of San Jose

How’s the Santa Teresa real estate market? The scenic Santa Teresa area of San Jose is popular as it’s a bit more affordable, offering lovely views of the hills and public schools that seem to be improving over time making the area more desirable. These positives appear to be helping that district hold its value well. Here are a few details from the latest monthly market update for Santa Teresa single family homes (read the full analysis below):

  • The average and median sales price rose above last month and last year, a shift from the previous month.
  • Available inventory shrank again with just 14 active listings at the end of October.
  • Closed sales shrank month-over-month, and are less than half compared to this time last year.
  • Days on the market sped up by more than a week, averaging 31 days.
  • The sale to list price ratio dipped to 99.6% of asking. That number has fallen by a whopping 10.6% since this time last year.
  • In general we’re seeing some up and down across the data, but it remains a sellers market that’s significantly cooler than where we were a year ago.

Santa Teresa (our MLS Area 2)  includes a small bit of the 95123 zip code, which is more expensive, but most of that zip code is Blossom Valley, so we will omit it. The 95138 zip code is about half Santa Teresa and half Evergreen (more expensive area), so take those numbers with a big grain of salt. I find the 95119 zip code to be most helpful, but even then, the school district is divided between Oak Grove and Morgan Hill.

Weekly update from Altos Research with a “market profile” of San Jose’s Santa Teresa area, zip code 95119 for single family homes / houses:

When there’s not enough data, the fields will be blank.

 

Santa Teresa of San Jose 95119 Real-Time Market Profile

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Sunnyvale real estate market trends & statistics

The Sunnyvale real estate market has heated up in the last 2-3 months. Are people returning to work in the office, or are they anticipating that they will need to do so soon? Even a hybrid work schedule is made easier by a shorter commute.

Sunnyvale real estate market  trends and stats at a glance

Here is a quick data table with the trends at a glance for the Sunnyvale real estate market:

PLEASE visit our ReReport page for data here, throughout Santa Clara County, and also for San Mateo and Santa Cruz Counties.

(If you’re viewing this on a mobile phone, swipe horizontally to see the full chart if it goes off the screen.)

 

Trends At a Glance Oct 2022 Previous Month Year-over-Year
Median Price $2,412,000 (+17.4%) $2,055,000 $2,215,000 (+8.9%)
Average Price $2,337,420 (+6.5%) $2,194,890 $2,253,280 (+3.7%)
No. of Sales 33 (-5.7%) 35 52 (-36.5%)
Pending 79 (+1.3%) 78 92 (-14.1%)
Active 38 (-5.0%) 40 22 (+72.7%)
Sale vs. List Price 102.0% (-1.5%) 103.6% 115.2% (-11.4%)
Days on Market 19 (+12.4%) 17 10 (+100.9%)
Days of Inventory 35 (+4.2%) 33 13 (+172.2%)

 

The Sunnyvale average house price is rising and is up both month over month and year over year. That’s also the case with the median sale price.

You may also want to see how Sunnyvale stacks up to other communities in Santa Clara County. If so, click to see the PDF Real Estate Report for Santa Clara County, updated monthly.

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