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The San Jose Real Estate Market Analysis

San Jose Real Estate MarketThe San Jose real estate market is now clearly in transition. While it remains a strong seller’s market, things are beginning to cool off from where they were earlier this year.

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 August 2022 sale price to list price ratio for San Jose single family homes slipped again to 100.0% of asking (-1% from last month compared to -5% drop in July), and remains below last year for the third month in a row.
  • Average monthly home prices are down from a year ago for the first time since 2019
    • The median sale price is $1,400,000 (-5.4% from the month before, and -2.4% from a year ago)
    • The average sale price was $1,525,840 (-5.0% from the month before, and -2.0% from last year)
  • The days on market slowed again to an average of 3.5 weeks at 24 days, 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 2022-09-14

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 Aug 2022 Previous Month Year-over-Year
Median Price $1,400,000 (-5.4%) $1,480,000 $1,435,000 (-2.4%)
Average Price $1,525,840 (-5.0%) $1,605,590 $1,557,630 (-2.0%)
No. of Sales 359 (+29.1%) 278 495 (-27.5%)
Pending 642 (+7.5%) 597 627 (+2.4%)
Active 469 (-21.0%) 594 357 (+31.4%)
Sale vs. List Price 100.0% (-1.0%) 101.0% 108.8% (-8.1%)
Days on Market 24 (+12.3%) 21 12 (+94.4%)
Days of Inventory 39 (-38.9%) 64 22 (+81.1%)

 

Please keep reading below for more data and market analysis.

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Finding scenic places in which to live in Silicon Valley

View from Montevina Road in Los Gatos, Scenic Silicon ValleyIf you arrived into Silicon Valley via Highway 101, driving south from San Francisco, you might believe that the Santa Clara Valley, the San Jose area and Silicon Valley as a whole has got to seem to be the ugliest place on earth. Although heavily traveled, that is not the “scenic route”.

So, too, if you are looking for a place to live and are groping to find a place that is reasonably priced, fairly safe and not a terrible commute distance. You might not even have “is nice looking” on your wish list. You might not think it’s possible if all you ever see are the ugly concrete tilt-up buildings in north San Jose, Santa Clara, Alviso, or anywhere along the 237 corridor.  That area is an architectural wasteland.

Let me assure you: there are a lot of beautiful places in Silicon Valley where you can rent or buy a home. But how do you find them? It helps a lot to have a local give you a few pointers.  I’ll give you some tips today on finding a scenic place to live.

Hills – An easy way to find a scenic location to make your home is to settle near the hills, especially those in the west valley (the Santa Cruz Mountains or the Coastal Range) as they are green year-round. Communities at the base of the west valley foothills include, in Santa Clara County, Palo Alto, Los Altos, Los Altos Hills, Cupertino, Saratoga, Monte Sereno, Los Gatos, and the Almaden Valley area of San Jose. All of these areas are adjacent to the hills or mountains and offer far better than average schools (many of them qualify as great – compare costs between these areas). (more…)

Alviso Marina: San Jose’s Bayfront

Alviso enjoyed an important position in local Silicon Valley history.  It was once a bustling port from which important products were shipped – things like mercury (quicksilver) from New Almaden, tallow, hides and grain. It was incorporated in 1852 but in 1968 became a part of San Jose.  As a bayfront community, Alviso’s residents have suffered some severe flooding in the past.  Today, though, the water front and marina are a shadow of their former selves, due to the fact that the slough is no longer dredged and vegetation has overtaken much of the marina.  Today I’ll share some photos of the Alviso Marina area which I took a few months back and hope it will encourage this site’s readers to make a trip out there and enjoy the local sites in person.

 

Alviso Marina - where San Jose meets the San Francisco Bay

 

In the photo above, you can see that boats are now surrounded by rushes and reeds rather than open water.  The next one, below, provides a view of the San Francisco Bay in the distance.

 

Alviso Marina and San Francisco Bay

 

The public shore sign seemed out of place today.

 

Alviso's Public Shore sign - but no visible shore today

 

Closer to the slough, a clear channel does remain but it’s not very deep. (more…)