The Silicon Valley Luxury Home Market

El Sombroso peaking over a bridge at Vasona County Park in Los GatosWhat 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.

(more…)

Luxury Real Estate in Silicon Valley

How is the Luxury Home Market?Silicon Valley features a number of upscale communities that enjoy beautiful estate properties. These luxury homes are not simply large houses, but rather they boast qualities generally not seen in regular residential real estate.

What makes a house a “luxury home”?

A luxury property in Santa Clara County often includes a number of elements that set it apart, such as:

  • price tag: these homes usually sell for more than three or five million dollars (and may be $10 or $20 million or more, though in some cases as low as $2 million – that largely depends on location)
  • close to an acre or more of land
  • house larger than 4000 or 5000 sf
  • the inclusion of “out buildings” such as a guest cottage, gatehouse, etc.
  • views (valley, hill, acreage) or special features of the land (waterfront, riverfront adjacent), a vineyard, or something else special and uniquely beautiful
  • amenities such as a pool, tennis court, racquetball court, gym, sports court or facilities for enjoying other sports & exercise on site
  • specialized hobby or relaxation rooms, as in a darkroom, library, workshop, conservatory, wine cellar & tasting room
  • entertainment centers not commonly found in private homes, like a ballroom, dedicated home theater room for movie viewing, bowling alley, shooting range, or place to practice a golf swing; pool or billiards and “game room”, and ice cream parlor
  • safety tools such as a video surveillance system, electronic gates
  • neighborhood: it is very hard for an expensive house to be viewed as a luxury home if the surrounding properties are not also high end homes

The (main) house itself is qualitatively different too.

Kitchens tend to be the most important room for San Jose area home buyers of all price ranges, and this includes homes that cost upwards of ten million dollars. Usually, kitchens in these homes are designed with a very clear purpose in mind and are done beautifully, though recently in Los Gatos I saw a home listed for about ten million with a kitchen that needs to be completely remodeled. This is very unusual, though.

Most luxury homes features kitchens of one extreme or the other. On the one hand, it may be more industrial in nature if those cooking in it are primarily professional chefs, domestic employees or catering services rather than the homeowner. This is not the kitchen of glossy magazines, it’s not meant to impress anyone for all the maple cabinets, stainless steel appliances and granite countertops. This sort of kitchen is functional, not gorgeous, and it may have stainless steel countertops, for instance, alongside the giant gas range. Such a kitchen is usually separate from the living areas and the guests are not expected to visit this part of the home.

Far more commonly found in Silicon Valley is the other end of the spectrum, the kitchen where residents spend most of their time, and it’s meant to impress. Here we see high end materials and appliances in a room viewed as much as art as the meals created in it are. This type of kitchen is often the focal point of today’s upscale or luxury home. The home’s floorplan is “open” to the kitchen – often the kitchen and family room blend together as part of a Great Room. This is a kitchen designed for owners who cook, not those who have servants.
(more…)

Ratio of Listings to Sales in Silicon Valley Real Estate

Today we’ll look at the ratio & relationship between real estate listings and sales of houses and duet homes in Silicon Valley over the last eighteen months. The goal is to get a sense of the market trends in terms of the overall absorption of homes for sale.  (We’ll give a glance at condo and townhome sales but the focus is on single family homes.) How hard is it to sell a home?  The answer has to do with supply and demand – the number of listings and the number of sales.

In the graphs below, the reddish brown line represents the number of pending sales.  The blue line indicates the number of listings or homes for sale. Put simply, the closer these two lines are together, the hotter the market – that is, the more of a seller’s market it is.  When they are far apart, it’s more cold, more of a buyer’s market.  If the lines cross, it is a wild frenzy (that does happen in one case, as you will see). Below please find the graph for the homes in Santa Clara County overall (all areas).

 

Santa Clara County listings to sales Jan 2009 to June 2010

 

You can see that these two lines pinch together in about December 2009 to January 2010.  Prices had dropped and investors were swooping in! The  market has cooled since then.

 

Santa Clara County condo & townhome listings to pending sales March 2008 to June 2010

Santa Clara County condo & townhome listings to pending sales Jan 2009 to June 2010

 

For condos and townhouses, all of Santa Clara County:Here the two lines  – or the market – were close together for about 3-4 months.  Buyers understood that condominiums in Silicon Valley were bargain priced, and they responded by buying.Now let’s look at various areas around the county.  We’ll take these in Alphabetical order, beginning with Almaden Valley.

 

Almaden Valley listings to pending sales Jan 2009 to June 2010

 

As you can see, the market improved but never got as “hot” as in the county generally.  This is because it’s a more expensive area, and most of what was selling in winter consisted of entry level housing.

(more…)