Is it a good time to sell a home in Silicon Valley? One of the best ways to get a pulse on the real estate market with an eye to selling or buying is with the months of inventory (MOI), also known as the absorption rate. This is the months of supply of housing for sale.
The months of inventory tells us how fast the current inventory of properties will be sold off if sales were to continue at the same rate with no new inventory were to come on the market.
The easiest analogy is with a bathtub full of water. If we added no more water to the tub, and the drain were opened, how much time would it take for the water to be depleted if it continued to empty at the same rate? That’s the question being answered with the absorption rate of inventory.
Or, simpler still, if you have an hourglass that you turn over, how long does it take for the sand to empty from the top (since you cannot add more sand to that end)?
How to calculate the months of inventory or MOI
The way to calculate the months of inventory is simple: find the current available inventory of homes for sale (not under contract or sale pending), then find the number of homes with that exact criteria which have closed escrow in the last 30 days. Divide the first by the second and you get the months of inventory. Or, I can just use the stats program on the MLS to generate that number, as I did today.
Earlier I pulled this data from MLSListings.com, our local MLS association (of which I am a member) and I ran the numbers for single family homes (houses and duet homes) in Cupertino, Los Altos, Los Gatos, Monte Sereno, Mountain View, Palo Alto, San Jose (all areas combined), Santa Clara, Saratoga, Sunnyvale. Separately, I also ran this same query for the City of San Jose by district.
The months of inventory by city or town in Santa Clara County
A balanced market for our area is 2-3 months of inventory (for most of the US it’s 4-6 months). Two months or less is a seller’s market, and one month or less is a very hot seller’s market.
Here’s a look at the months of inventory by city or town in SCC in April 2023 for single family homes. As you can see, the vast majority of the county is a strong seller’s market, with the only exception being Los Altos Hills.
Which are the hottest markets? They’re the ones with the smallest months of inventory -Sunnyvale, Santa Clara, Cupertino, Milpitas and many more are well under the 2 month market. A few are a tad higher and in the “balanced market” area, and only one is in a deep buyer’s market.
The months of inventory by area within the City of San Jose
What does it cost to buy a home with really good schools in Silicon Valley? Los Gatos, Saratoga, Cupertino and Palo Alto are all areas with highly regarding public schools and high home prices. These aren’t the only areas with good schools but they are popular “west valley” areas that people may consider if working for Apple, Google, Microsoft, Facebook or any number of high tech employers.
Los Gatos and Saratoga both have multiple school districts, running from good to very good or excellent. The cost of housing tends to follow the popularity of the district, so for those areas I’m showing the breakdown not just for the whole town of Los Gatos but also by the high school district (Los Gatos-Saratoga or Campbell Union High School District). Same with Saratoga. (The Monte Sereno real estate market is very similar to Los Gatos, but slightly more expensive. Most of Monte Sereno has Los Gatos schools, but a small number of homes are in the Campbell area.)
Cost Comparison: 4 West Valley Communities with Good Schools
Here are the average numbers for single family homes sold in the last 60 days ranging from 1,500 – 2,500 square feet, on a lot between 5,000 and 10,000 SF, with 3-5 bedrooms and 2-3 bathrooms to give a sense of what it would cost to purchase a typical house in these areas. Please note that right now it’s a strong seller’s market, so many (if not most or all) homes are selling for more than the list price. DOM stands for days on the market.
If you are new to Santa Clara County, you may be wondering if this is correct. The cost to buy a home in these areas is what?
Los Gatos: approximately $2,000,000 to $2,600,000 depending on the school district and size of the home and condition (more on that below)
Saratoga: more on this below, but approximately $2,800,000 to about $3,500,000 depending on the schools, condition, etc.
Cupertino: approx $2,600,000 – $3,200,000 (some areas will bring in higher prices and others lower)
Palo Alto: approx $2,700,000 – $3,900,000 and any home over 2,000 SqFt (except for one fixer) sold at or over $3.7M
Remember, these prices do not mean that the houses being sold are perfect. Because it is a strong seller’s market, many properties are being sold which need new roofing, extensive pest work, remodeling, perhaps updating of electrical or plumbing systems or more. Many home buyers will need to spend 1-2% on things like termite fumigation, dry rot or roof repairs, carpets, paint, windows and more, and usually this will be done before they move in. So whatever the budget is, buffer it a little bit for both money and time to make it turnkey.
Palo Alto, a popular mid-Peninsula city, is one of the northernmost of Santa Clara county, and one of the most expensive.
Sometimes called “the birthplace of Silicon Valley” this city is home to many high tech firms with a rich local history. It’s also famous for high scoring schools, Stanford centers, shopping and dining opportunities, low crime rates, beautiful parks and neighborhoods, and a milder Peninsula bayside climate.
Read more about this first class community over on our other blog PopeHandy.com. Not to be confused with its neighbors East Palo Alto (in San Mateo County)or the unique community of Stanford, CA. Stanford is its own municipality, though adjacent to PA.
The Palo Alto Real Estate Market
We subscribe to a few services to get the latest data from the MLS and market conditions for the areas where we sell homes.
The first is the RE Report which shows the data from closed sales, updated around the 5th of every month. The landing page if you follow that link will show you the data for this city’s single family homes, but near the top you can change the criteria to hone in on a particular neighborhood or show condo and townhome sales.
Neighborhoods available to view on the RE Report for this city:
Please keep in mind that we are in a time of very low inventory, so many of these smaller sections of the city won’t have many sales, and in some cases, none at all in the last month or so. It can make the data appear to be swinging wildly when that is not actually the case.
Below please find the next: a live Altos Research chart, showing the real-time market profile of homes for sale (updated about once per week) – this will give you an idea of what a house might cost in this sought-after community.
Often I have clients who are interested in purchasing a 4 bedroom, 2 bath home in a good school district in Silicon Valley, particularly in the South Bay and West Valley areas. But what does it cost to buy that “average home”? Tonight I did a study on the MLS of homes that have sold and closed escrow in the last 4 months with these characteristics:
single family home (house)
2 full bathrooms
1800 to 2200 square feet of living space
6000 to 10,000 sf lot
Disclaimers aside, here are the numbers for select West Valley Communities in the West/South Bay area with good schools.
Cost to Buy 4 Bed 2 Bath Home in Popular Silicon Valley Communities
The first number is the number of sales during that time (more sales = more reliable averages). This one is not in the older charts, but with inventory as low as it has been lately this makes a huge difference. The second number is the average sales price per square foot, the third number is the average sales price, and the last number is the average days on market:
And now a look back to late winter, early spring of 2017…
What’s changed? A lot! The order has shifted some, showing where demand has increased or decreased. Most noticeably, the prices are mostly up significantly, which is most noticeable in the price per square foot. Cambrian has traveled a good deal up the ladder. Palo Alto and Los Altos were displaced by the sole Saratoga sale, and Blossom Valley of San Jose remains in it’s regular position at the bottom.
The home prices tend to run with school rankings. Previously this was by district API scores. You cancheck the 2013, three year average, API scores in Santa Clara County for both the districts and the individual schools online here, however that system is no longer used. So how to people judge? Most buyers use sites like GreatSchools.org when looking for a home with good schools which ranks schools on a scale of 1-10 in a few categories. (more…)
Mid-century modern homes, including those designed by Joseph Eichler, dot the Silicon Valley & South Bay Area real estate landscape. There are probably more than 5,000 Eichlers in Santa Clara County altogether, plus all the other homes of that genre with the similar modern style, which was influenced by the ranch and prarie styles as well as the dramatic work by Frank Lloyd Wright (open beam ceilings, nearly flat roofs, lots of exposed wood & glass windows stretching from the floor to the ceiling). Eichlers, especially, put a premium on privacy from the street but open to the outdoors otherwise.
Not every community in Santa Clara County has Eichler homes, but most have the mid-century modern style homes & neighborhoods. These homes vary from tiny, modest cottages of 1100 square feet to large & elegant houses of nearly 3,000 square feet, featuring big, central atriums or courtyards. (There are also some co-ops in the valley too.) The quality varies, as the homes were constructed by several different builders with different home buying budgets in mind. Real estate prices range from “entry level” to very expensive, depending on the location (city and schools), size of the home & lot, and condition of the property. Most of them are now about 50 years old, though some are a little younger.
Some of the West Side Silicon Valley Communities which feature Eichler and Mid-Century Modern Homes
In Los Gatos there are no Eichlers but there are a small handful of single family homes which are mid-century modern on Eastridge Drive (just off Blossom Hill Road and Hillbrook). There are a couple more at the end of Magnuson Terrace (off Magnuson Loop and Los Gatos Blvd). Additionally, there are some smaller mid-50s homes on El Gato (and adjacent portions of Escobar) off of Los Gatos-Almaden Road. Unfortunately, not all of these homes are “well kept”, though many are.
Monte Sereno is home to 16 Eichler houses on Via Sereno beginning at the intersection of Winchester Blvd with Via Sereno. These houses were built in the late 60s to early 70s. (more…)
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!
It’s a seller’s market in Silicon Valley right now. Many sellers are getting multiple offers and overbids, especially in Cupertino, Sunnyvale, Mountain View, Palo Alto and Menlo Park. For home owners trying to maximize their sales price, does it make sense to have an “offer deadline”?
If you are pretty confident that you can get multiple offers, the deadline helps in a few ways.
it prevents the offer situation from being a mere “foot race” (fastest one wins, rather than highest offer and best terms)
it allows everyone enough time to see the house, read the inspections, disclosures etc.
it provides enough time for the sellers and agents to plan
As with all strategic plans, this one can backfire too. If you or your agent publishes an offer deadline and then no bids are forthcoming, it’s more than just a let down. It’s a market signal that this home is overvalued by its owner and agent. Then, suddenly, it can appear to be an old or stale listing, even if it’s just been on the market 7 to 10 days.
Many real estate agents take a middle path, saying nothing about offers until agents ask. If they are asked, they will give a date in the future – usually a couple of days after the open house. But the MLS won’t say it for these agents unless they hear many buyers’ agents asking about offer presentation. They don’t want to look bad, they don’t want your house to look bad.
We never know until a property goes on the market how it will fare. It is wise to be cautious about advertising an offer date unless you are very certain that you will be seeing multiples! The market right now is a little funny. Homes priced aggressively are getting multiple offers. Homes priced AT value are not moving quite so fast. And homes price for values in spring of 2018 are not selling well at all.
What makes an expensive house in the San Jose area more than just a pricey bit of real estate, but instead a Silicon Valley luxury home? How is high end real estate different from the rest of the market? When is a property not just a home with land, but an estate?
In other parts of the U.S., spending $1,200,000 may fetch a 4000 square foot home, new construction, in an upscale gated community with country club amenities such as a golf course, tennis courts, and more. Here, that same $1,200,000 will procure an entry to mid-level single family home in many parts of Santa Clara County. It won’t necessarily be a Silicon Valley luxury home.
Luxury connotes a combination of qualities, features, and amenities. And it includes pricing (relative to the nearby market), condition, land, design.
Pricing Luxury Homes in Silicon Valley: What Do They Cost?
Expensive Silicon Valley homes are not necessarily luxury homes. Depending on the city or town, the price tag could be higher or lower. For instance, a fabulous house on a large lot in Gilroy’s Eagle Ridge might sell for 1/3 as much as the identical type of home, land and neighborhood found in Saratoga, Monte Sereno, or Los Gatos, or Los Altos, if a similar home happened to be available. Generally, though, luxury homes could cost as little as $1,000,000 or so in some parts of Silicon Valley or in neighboring counties, but in most parts of Silicon Valley, a true estate type property will be valued at $2,000,000 or $3,000,000 or more. In some areas, such as Palo Alto, that $2 million doesn’t go too far and the home you can purchase at that price tag may need major updating – or it could be “land value”. For our purposes today, we’ll use $2 million as the bottom number for estate properties, but it may or may not be the case in some areas.
This upcoming weekend, Aug 22-23, 2015, 10am to 6pm, is the annual Palo Alto Festival of the Arts along University Avenue, featuring over 300 artists’ booths! Additionally, there will be 60 chalk artists along Tasso Avenue.
Things to know:
Admission is free. Please bring your own bags or totes to carry your purchases as Palo Alto now bans vendors providing customers with plastic or paper bags. Parking may be a challenge (disabled parking available in city lots, others must find street parking), so the use of public transit is very highly encouraged.
Many thanks to the Palo Alto Chamber of Commerce for sponsoring this very popular happening!
To get all of the details on this fun Silicon Valley event, check out these websites:
The beautiful Beckwith Building in downtown Los Gatos, California
I have been fortunate to have made 5 trips to Europe, one of them lasting 9 months, and will be returning again before the end of 2013 (this time to Belgium). It is so diverse, beautiful and compelling! Having experienced a little culture shock myself (when living in Florence, Italy, for one year of university), I’m very sympathetic about how hard an international move can be, and I understand that for Europeans moving to Silicon Valley, there can be an acute culture shock, particularly for those coming from more rural areas.
The bulk of Silicon Valley is located in Santa Clara County, which is at the southern end of the San Francisco Bay. In this county, there are approximately 1.8 million people, almost a million of them in the city of San Jose. Some areas, or districts, of San Jose have a distinctive character and are almost like towns or small cities themselves. So in this article I’ll mention both cities and towns, but also areas or districts of San Jose, which might appeal to our European transplants. Most of my comments will reference Santa Clara County or “south bay” locations, but I will also mention others on the San Francisco Peninsula and SF Bay Area too.
Architecture, Urban Centers and Charm
It is an unfortunate negative in Silicon Valley that much of our housing consists of ranch style tract homes, and truthfully, they are not exactly a work of art. New or newer homes tend to be on very tiny parcels of land (or “lots”) and for many people may simply feel too congested or crowded. But there are beautiful residential neighborhoods – you just need to know where to look! In many ways, the areas with higher charm can make our global home buyers feel more comfortable than if they were faced with only track, ranch neighborhoods.
Do you value unique, older architecture with Victorian, Craftsman, Tudor or other home styles? Then check out these areas:
Within San Jose: the Japantown, Vendome, and Naglee Park areas of downtown San Jose. Also in central San Jose are the Rosegarden, Shasta Hanchett and Burbank neighborhoods which all boast some lovely older homes. Or, if you love classic Spanish Revival style homes with views, consider the old Alum Rock area of San Jose near the country club (golf course). The Willow Glen area of SJ (zip code 95120) is full of lovely old established neighborhoods with historic homes and tree lined streets. If your job takes you to downtown San Jose, all of these areas will be fairly close.
Please read the rest of this article on the Move2SiliconValley.com website:
Christie's International Real Estate Sereno, Los Gatos, CA 95030 408 204-7673 Mary@PopeHandy.com License# 01153805
Clair Handy, Realtor
Christie's International Real Estate Sereno 214 Los Gatos-Saratoga Rd Los Gatos, CA 95030 ClairHandy@sereno.com License# 02153633
Mary & Clair sell homes throughout Silicon Valley: Santa Clara County, San Mateo County, and Santa Cruz County. with a special focus on: San Jose, Los Gatos, Saratoga, Campbell, Almaden Valley, Cambrian Park.
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