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.
The amount of all cash offers in Santa Clara County has been very high for the last couple of years, and I’ve written about it here. But what of the luxury market? At one point, I read that nationwide, 50% of all homes sold at over a million dollars were bought all cash, no loans. So I thought it might be similar here.
Just now I logged onto MLSListings.com to run the numbers for the last 90 days in Santa Clara County. I ran the numbers with the following criteria:
houses, duet homes, townhouses and condos
sold within the last 90 days (closed escrow)
within Santa Clara County
sale price at or over $2,000,000
The number of properties matching this list over the last 90 days was 351 (it was 306 on 5/24/14).
The number of properties matching this list which were identified as having all cash, no loans financing = 108 (it was 111 on 5/24/14)
The percentage of all cash sales identified as such on the MLS for this period is 30.77% (back on 5/24/14, it was 36%). (For all prices right now, it appears that the average is 16.86% or so. – it was 18% on 5/24/14.)
Disclaimer:for this to be accurate, it requires the listing agent or office admin who closes out the sale on the MLS to accurately represent the financing used. It is possible that this is off, and the more accurate data could be from the county records themselves. If I can obtain that data, I’ll update this article then.
Back to the ratio of cash sales in the luxury market: why does it matter? More than anything, it matters because interest rates are rising and this impacts the buyers’ ability to purchase property. In real estate generally, if interest rates rise, home values are negatively impacted. We’ll want to see what impact the more expensive loan products have on high end or estate housing, not just here in Silicon Valley, but across the country.
See homes currently for sale in Santa Clara County in the map below:
The luxury homes market frequently behaves very differently than the rest of the real estate market as a whole. If interest rates jump around, the impact is often far less since the home buyers of estate properties may not be nearly as dependent upon financing. Many of these fine homes & estates are paid for “all cash”. (In some cases they do this but later arrange financing, perhaps funding a “charitable remainder” trust rather than a more typical institutional loan.)
How’s the real estate market for high end homes in Los Gatos, Monte Sereno and the Los Gatos Mountain communities? Defining “luxury homes” is a bit tricky because what constitutes luxury can vary from area to area (check out these estate homes for sale in the Buffalo NY area). For now let’s use prices of $2 million or greater as we first look at the Months of Inventory or Absorption Rate – though in fairness, the luxury price point is a little lower in the mountains. (Six months is considered balanced by the National Association of Realtor, less is a sellers market and more is a buyers market.) I first did this study in October of 2012 and will provide those numbers as a window back in time for comparison purposes.
Monte Sereno is having no trouble selling luxury homes compared to the rest of the Los Gatos area right now. The Los Gatos Mountains (Chemeketa Park, Redwood Estates, Aldercroft Heights and other areas) struggles with the over $2 million market.
No matter how you look at it, overall it is a seller’s market in the luxury home strata in Monte Sereno and Los Gatos – but not the Los Gatos Mountains. It is not so crazy as the entry level homes, which have a much faster absorption rate, so buyers, take heart! Three months of inventory is pretty doable and not so far from a “balanced” market here.
Altos charts on the LG area
Next we’ll change gears and use Altos Research and quartiles to evaluate the most expensive listings. We will look at the top quartile of list prices, the high end listings in Los Gatos (zip codes 95030 and 95032 in town), in the Los Gatos Mountains (unincorporated, 95033) and Monte Sereno (99.9% of which is in 95030 but a tiny sliver has the 95032 zip code). The charts I’m using are live and will be continuously updated by Altos Research, to which I have a subscription.
List prices of homes for sale in the topmost price quartile in Los Gatos, Monte Sereno and the Los Gatos Mountains
Saratoga and Los Gatos are neighbors, but their real estate markets are not the same! Today we’ll consider the condo and townhouse market in these two upscale Silicon Valley areas and view some elements “side by side”. See what you think!
First, let’s have a peek at how fast things are selling. Saratoga & Los Gatos both are at under 3 week for the “days to sell over time”. Saratoga tends to sell a little better than Los Gatos for condominiums and townhomes, and that’s the case now as well – at least months months, and recently. (Reasons, not sure – perhaps because the location is a little closer to Cupertino and Sunnyvale and the many high tech jobs there. Or it could be related to the school scores or any number of factors.)
Saratoga days to sell over time 2014 – condos
Los Gatos days to sell over time 2014 – condos
Let’s check some other criteria and see how they stack up there. Let’s look at the new listings as opposed to the solds. How far apart are they? (The closer they are, the “hotter” the market. If the solds are going faster than the new listings are coming on, it’s a red hot seller’s market.) For most of the last year, Saratoga condominiums have been selling and closing faster than new ones have entered the market, or have tied it, except for March and April. In Los Gatos, same pattern recently of new listings outpacing sales, and in January the closed sales outpaced new inventory. But overall, it’s close to a tie or there’s a slight leaning toward new listings rather than sales unless you look back to last fall. So a little bit cooler of a market in Los Gatos by this standard.
Fabulous opportunity to purchase a spectacular view home with a close-in location on gated lot in Los Gatos! Ideal for entertaining with oversized rooms, most with valley views.
Open Saturday June 15 & Sunday June 16, 2-4 pm – 110 Alerche Drive (off Harwood Road), Los Gatos
110 Alerche Drive, Los Gatos – view at twilight
Unique find! Very spacious, sunny home with open floor plan on gated lot in an easy-to-access location. Nearly all rooms enjoy expansive valley views! Ideal for entertaining!
• 4 bedrooms • 4.5 baths • Living space approx. 5,326 SF (per county) • Lot size approx. 41,382 SF (.95 acre, per county) • Year built: 1991 • 3 car garage + 2 car carport • Gently sloping lot with room for pool
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…)
Mini update for Santa Clara County as a whole as of September 17, 2012 for houses in SCC:
Actives = 1295
Regular sales for sale = 1157 (89%
Short sales for sale = 95 (7%)
Bank owned houses for sale = 43 (3%)
Sold in the last 30 days = 859
Regular sales closed in last 30 days = 675 (79%)
Short sales closed in last 30 days = 151 (18%)
Bank owned houses sold in last 30 days = 33 (4%)
It seems that although short sales are in increasingly smaller part of the inventory of available homes, they are highly desirable and are showing up in the solds at twice their ratio of actives. Put another way, the absorption rate looks to be higher. Let’s check the math on the moths of inventory:
All houses in SCC: 1295/859 = 1.51 months of inventory
Regular sales in the county: 1157/675 = 1.71
Short sales in SCC: 95/151 = .63 moi (63% of one month!)
Bank owned homes: 43/33 = 1.3
All of these numbers are low, low, low – but the short sales are the lowest of all!
-mph
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POST FROM APRIL 22, 2011: Yesterday we looked at the types of home sales around Silicon Valley by price point. Not terribly surprising, most of the short sales and bank owned homes were in the lowest price ranges. Today we’ll look at this type of information not by pricing tier but instead by geography – in other words, by either town, city or district of San Jose (area). This post will not cover every area but will be a sampling a few communities, mostly on the west side of the valley (since that’s primarily where I work).
By way of reminder, the small image to the left reflects Santa Clara County’s houses for sale as a whole – all areas and all price points. (You can see the full sized image by clicking on it.) The green area represents “regular home sales” and the brick red and light orange signify distressed properties listed on the MLS for sale (red is short sales and orange is bank owned or REOs). Next let’s see a few regions within the county to see how things are faring geographically.
1. Almaden Valley area of San Jose – homes listed for sale by type – very few distressed properties on the market!
Almaden is a lovely southwest San Jose suburban community (zip code 95120) that grew up initially with the cinnabar or mercury mining activity. Today it’s an upscale area of more expensive homes than most of the county, it enjoys really good schools and scenic views of the coastal range as well as the Santa Teresa Foothills. Housing here is costly but residents love the quality of life. Since the cost of homes for sale here is high, it’s not super surprising, after seeing yesterday’s post, that there are very few distressed homes on the market here. Next we’ll check the other extreme…. (more…)
In many communities such as Saratoga, Los Gatos, Los Altos, Willow Glen, Campbell and Palo Alto, there is a high premium placed on homes which are close to the downtown area. Many real estate agents advertise these as “walk to town” but the idea is simple: it’s nearby, you can stroll, skate, ride or bike, wheel yourself and forget the car. Downtown Saratoga, also called Saratoga Village, welcomes residents and visitors to a charming, scenic area with fabulous shops, spas, wine tasting venues, restaurants and more. This part of the city boasts top scoring schools as well as lovely older and historic buildings and a gorgeous park alongside Saratoga Creek. Whether you spend an afternoon or a lifetime in Saratoga, this part of town will call you back again and again!
What do you need to know about buying a house, townhouse or condo in downtown Saratoga?
There are a few points which you are well served to know when purchasing residential real estate in this upscale community. We’ll touch on a few of them here: historic homes, traffic & noise, natural hazards, parking, and special issues with condos, townhouses and PUDs (planned unit developments).
First, this downtown Saratoga Village zone is historic; while not every property is deemed historic, many are and that means that there will be restrictions on remodeling and expansion of single family homes or houses. For instance, original glass in windows may need to remain if you’ve got a Victorian house dating from the 1890s, and expansions may need to be off the back of the home so that the facade keeps its initial look and feel (just examples). This can be frustrating if you buy a luxury home that “needs work” and you are surprised later. If the house was built before 1950 or so, double check the rules! (more…)
What should you look for when buying a luxury home in Silicon Valley? Whether it’s a move-up purchase or a first home, there are a few tips which will be helpful for you to know going into it that will make the whole home buying experience smoother and easier. We’ll hit on 3 areas: first geography & construction, second hyper local factors that impact market value, and finally qualities or features of the property or house itself.
It’s hard to assign an exact price tag on what constitutes an estate or luxury property, but in and near Silicon Valley, in most regions it’s the $2,000,000 and up price point (it will be less in Morgan Hill, Coyote and Gilroy – and likely more in Hillsborough).
1. Geography and Bay Area Construction: it’s different here!
The first and most important thing to understand is that real estate and housing construction vary from one region of the country (or the world) to the next. This is true for all types of homes, actually, but perhaps more obvious in the priciest homes. Luxury real estate in Silicon Valley is a little different from similarly expensive homes in other parts of the country due to our climate, soil conditions, and natural hazards, such as earthquakes. What seems mandatory for a high end home (and might be ideal to have elsewhere) could be a problem here, so it’s helpful to literally understand the lay of the land before you get too far along the home buying path. A couple of quick examples:
A fabulous home in Boston or anywhere in New England may be built of brick.
Here, a brick house is seldom seen because of earthquakes – we need our houses to move and bricks are not usually too good at that!
I mention these two upfront because well intentioned friends and relatives may want to stress the importance of this or that in a property – and it may simply not apply here. (Please see article: Qualify The Advice You’ll Accept When Buying or Selling a Home in Silicon Valley) If you are non-native to the San Francisco Bay Area, you may have assumptions about construction or architecture that may not work here. Please just be aware of that possibility.
2. Understand the importance of hyper local factors on the market value of a property
Schools can be a main driver for home values in the luxury market as all other segments. Home buyers may not know that the town or city boundaries are usually irrelevant to school district boundaries. Here are a few examples:
In Saratoga there are 3 high school districts and 4 elementary school districts. Before buying anywhere in Saratoga, then, you’ll want to know which district is which and where you’re buying. If you want to utilize private schools, you may be delighted to find that you can buy more house for your money in one area of this lovely city than another. Or you may want one school area over another for any number of reasons.
In Los Gatos there are 2 high school districts and 3 elementary school districts.
In the Almaden Valley area of San Jose, there are 3 high school districts and 3 elementary school districts
Often the lesser public school districts will have a lower lid on pricing than the very top districts or schools, so it’s important, when analyzing the pricing of an estate home, to factor in the weight of the school. (more…)
You’re invited to see this stunning young urban living condominium in Campbell close to everything featuring two bedrooms plus loft, 2 bathrooms and approximately 1610 square feet. All of this can be found in an elegant resort-like setting! New listing, open this weekend from 2-4 (Aug 13-14) so please stop by!
Urban Living in Campbell
This sleek condo, the Sapphire Penthouse floorplan (see below), is located just steps from the light rail and Los Gatos Creek Trail, shopping at Whole Foods and many other shops across Bascom, the Pruneyard a block or so away and downtown Campbell just around the corner! A myriad of restaurants lie within a tenth of a mile. One of my sellers told me that she had only put 1500 miles on her car in the year living there. Imagine simply not needing your auto much at all!! (The building does include two spots in the underground garage for your vehicle, should you still want one while living there!)
Resort Living, Contemporary Setting
Built by Pinn Brothers with great attention to detail, the Onyx offers tremendous features both in the condo itself and in the many fabulous shared areas.
Interior features include:
open floor plan with high ceilings and dark floors
elegant kitchen with mostly Bosch appliances (fridge is Fisher & Paykel), tremendous counter space with slab quartz countertops, recessed lights and contemporary dark cabinetry
an abundance of natural light, loads of windows and recessed lighting
spacious bedrooms (the master is really large!) and bathrooms
Master bath features two sinks, large soaking tub and separate stall shower
Helping nice folks to buy and sell homes in Silicon Valley
Mary Pope-Handy, Realtor ABR, CIPS, CRS, SRES
Christie's International Real Estate Sereno, Los Gatos, CA 95030 408 204-7673 Mary@PopeHandy.com License# 01153805
Clair Handy, Realtor
GREEN
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.
The real estate search
Use this link to browse properties which are for sale, under contract (pending) or sold. Want to view only homes which are available now?
Mary Pope-Handy, Realtor ABR, AHWD, CIPS, CRS, SRES Christie's International Real Estate Sereno DRE License #01153805 408-204-7673 mary@popehandy.com “Helping nice folks to buy and sell homes in Silicon Valley since 1993”
Clair Handy, Realtor, GREEN Christie's International Real Estate Sereno DRE License #02153633 408-721-6160 clairhandy@sereno.com “Helping nice folks to buy and sell homes in Silicon Valley”
This is the Valley of Heart's Delight blog , covering Silicon Valley real estate - Santa Clara County, San Jose, Los Gatos, Cupertino, and nearby communities in the South Bay Area and lower Peninsula. Find info on neighborhoods, disclosure issues, buyer and seller tips, and housing market conditions in the west valley and most of the county.Please also see my other websites and real estate market statistics site, which are listed in the sidebar, above.
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Mary Pope-Handy, Realtor ABR, CIPS, CRS, SRES Sereno DRE License #01153805 408-204-7673 mary@popehandy.com
“Helping nice folks to buy and sell homes in Silicon Valley since 1993”
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?
