The Monte Sereno real estate market tends to be a good indicator of the high end market throughout Silicon Valley or Santa Clara County. While it may not be exactly the same in Los Altos, Los Altos Hills, Almaden or Saratoga/Los Gatos, it’s often very similar.

Homes at the high end of the price range have taken a beating in the downturn, as would-be buyers – mostly “move up” home buyers – haven’t got enough equity to purchase the next home.  Many are running into problems getting financing too. So without a large amount of money to put down, it’s very difficult for even willing buyers to make the purchase.

Prices have been dropping in Monte Sereno, as they have been dropping everywhere in the San Jose area.  Although we aren’t seeing the deep discounting here that we see in Alum Rock (where most of the houses bought are distressed properties, either short sales or bank owned homes), the rollback in pricing is still painful for home sellers, especially if they were counting on that money for retirement.

Let’s first look at the recent historical data on list prices in Monte Sereno (graphs courtesy of Altos Research, with which I have a subscription). First here’s a view of the median list price of all houses offered for sale in Monte Sereno in recent years:

Now, the asking prices in Monte Sereno in recent years broken out by quartile (each segment is 25% of the inventory):

The highest priced homes have shown the most volatility, as you can see by the swings in the top line.  That could be a statistical abberation since each quartile represents very, very few homes.

Next, a shorter time frame for a closer-in view.  Monte Sereno list prices by quartile over the last year:

Interestingly, in the above chart it appears that there’s a “levelling off” happening with pricing.  Are we at or near the bottom for those price points? Maybe so.

Now, Monte Sereno list prices with all quartiles combined and overall trend shown for last 180 days (last 6 months):

The dropoff looks like it came from the Giant Dipper roller coaster at Santa Cruz after a nearly 20% drop, but please note that at the tail end, there is an upswing. It appears that the lowest point may have been around May 1st.  Finally, the same quartile breakdown over just the most recent 90 days.

List prices among Monte Sereno houses appear to have stopped declining and are rising slightly in the lowest price ranges.  In the more expensive ranges, which really are more luxury properties than simply homes, the declines continue.

What about days on market and inventory?

A view of all Monte Sereno days on market for listed homes in recent years:

Next, just the last year of DOM among Monte Sereno houses for sale with it broken down by quartile:

The first quartile (black line) represents luxury homes. A year ago, it was difficult to sell the most expensive Monte Sereno properties, but now it is far, far worse – the days on market for luxury homes in Monte Sereno has approximately quadrupled from a year ago for these home sellers! (If you are in the market for an estate property, this is a great time to act as it is a very strong buyer’s market.)

At the other end of the spectrum, the least expensive homes in Monte Sereno also have worsened for days on market, but are selling in about 1/3 the time of the higher priced real estate.

Inventory (in MS and everywhere else in Silicon Valley) is often lowest in December and January, and a quick look at the chart below reveals that the inventory”dips” usually coincide with late December/early January.

Here’s the one-year view: in recent months, the best time to sell was in Feb-April, when there was the least amount of comptetion.

By quartile, same time frame – apparently the timing was about the same for all residential real estate in Monte Sereno – the patterns are almost identical:

It does appear that the dramatic climb in inventory that happened from March to June is levelling off, though.

Days on market are continuing to rise in this small city, but some of the lower price points are no longer dropping and the inventory is no longer rising in Monte Sereno.  The indicators are a little mixed, but in the lowest two quartiles, at least, it looks as though the worst is behind us and perhaps a recovery is underway.    This is what we are seeing in the markets across Silicon Valley, generally – the lowest priced homes are recovering the best and have stopped dropping in price, while the higher priced homes are selling more sluggishly.

It’s stil a great time to buy in all price ranges of Monte Sereno, and it’s still a challenging market to sell – it remains a buyer’s market. Even so, it does appear that things are beginning to shift.