Multiple offers are common right now in Silicon Valley

Multiple offers are common - sellers and listing agent discussing the open house and biddingMultiple offers are common right now in the Silicon Valley real estate market. With them typically come overbids and sky high sales prices. Clair and I have shown several homes that our buyers did not bid on but which got many offer contracts and which sold for 15 – 20% over list price just over the last 30 days or so.

The hottest part of the market seems to be properties under $2 or $3 million, depending on the area.

When there are tons of buyers lining up to purchase a home, the sellers have usually put a substantial amount of time, energy, and money into making their property look fantastic, and they also take a risk in pricing it low to attract a large number of home buyers.

Multiple offers are common when property sells fast – but it doesn’t always!

When there aren’t multiple offers, it could be location issues, condition of the property (or neighborhood), overpricing (the most common culprit), difficulty in viewing the home, or other missteps on the selling side.  Buyers today want a turnkey home in a superior location that’s in great shape – not remodeled 20 years ago or more – and they will pay a premium price for it.

When homes have been on the market for 3 weeks or more, this may be a great opportunity for buyers to be the lone bidder on it. Does it have the right things wrong? Can what is off be fixed? Is it only overpriced? I would suggest buyers focusing on all of the inventory and not just the hot new inventory.

Why is it that multiple offers are common now?

There are a couple of reasons why homes that are in great shape, priced low, and given good exposure to the market are selling so strongly now.

  • First, there is a dire shortage of inventory, or lack of supply.  This is a chronic problem, but it’s acutely so now due to the higher interest rates and home owners not wanting to sell. It’s unlikely for this to change anytime soon, unfortunately.
  • Second, because Silicon Valley residential real estate has a long track record with good appreciation, those who can buy want to do so. Many are empowered by the rising stock market. If they are here for the long haul, buying makes more sense than renting.
    • Many are purchasing with more than 20% down, and they will watch for an opportunity to refinance.
    • Others are buying all cash. Those buyers may be anywhere from 15% to 35 % of the successful home buyers.

The inventory crisis will likely improve a little as the year goes on because inventory normally rises with the peak being somewhere in the summer most years.  No guarantee – sometimes it doesn’t behave “as usual”.

How can you tell if a home is going to get multiple offers or what the selling price will be?

These are really two different, but related, questions.
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The Cambrian Park Real Estate Market Update

Cambrian Park Real Estate Market graphicThe Cambrian Park real estate market remains a strong seller’s market.

For those new to the area, Cambrian is most of the 95124 zip code (south of Foxworthy) and most of 95118 (west of Almaden Expressway). It borders Los Gatos, Campbell, Willow Glen, and Blossom Valley.

The Cambrian Park Real Estate Market

QUICK NOTE: Just now I looked at the pending sales online. If we consider only resale, not the homes at Cully Place, there are 25 houses which are pending (no contingencies) and the average days on market for them is a mere 7. The largest days on market is 15! This is an indicator that the market is white hot – pending sales are an early warning to buyers taking their time that conditions are swinging more deeply into the sellers’ favor.

This is very much what Clair and I are seeing across the valley. We’ve learned of many homes that sold within a week in which there were multiple offers, sometimes more than 10, with the resulting sale 15 – 20% over list price! It’s not limited to one area or another but truly seems to be all over, particularly for houses under $ 2million.

The chart below is from the RE Report. Home prices are up both monthly and annually by a solid amount. The sale to list price ratio rose again. It remains a strong seller’s market in Cambrian Park with just 12 days of inventory and 106.6% sale price to list price ratio.

Trends at a Glance

Trends At a GlanceJan 2024Previous MonthYear-over-Year
Median Price$1,755,000 (+0.4%)$1,747,780$1,576,500 (+11.3%)
Average Price$2,032,290 (+6.8%)$1,902,930$1,552,860 (+30.9%)
No. of Sales17 (-45.2%)3114 (+21.4%)
Pending32 (+45.5%)2220 (+60.0%)
Active(+16.7%)621 (-66.7%)
Sale vs. List Price106.6% (+2.0%)104.5%100.0% (+6.6%)
Days on Market15 (+22.8%)1323 (-32.1%)
Days of Inventory12 (+112.7%)645 (-72.5%)

 

 

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Santa Clara County Real Estate Market

The Santa Clara County real estate market remains hot, despite weather that has been cold and wet. Few quick points, then the details:

  • Home prices and sales were both up in January 2024 compared to January 2023.
  • Inventory is starting to pick up, however it remains far below normal. As of this writing on Feb 6, there are 600 single family homes for sale in Santa Clara County. Typical inventory between 2012 and 2023 was 1046. (I ran it from the MLS today.)
  • Since August, the current price has been higher than the same month the year before (after the opposite was true Jan – July 2023). Taken as whole years, home prices were lower in 2023 than in 2022, but the momentum is now going in the opposite direction. Home prices are rising.
  • Nearly all stats point to an increasingly hot market.

 

January 2024 sales stats – Santa Clara County real estate market

 

Here’s the RE Report summary table. It’s an excellent summary of our Silicon Valley housing market. January is usually the lowest month of the year, followed by December. Once in a while December is worse than the January that follows it, and in those cases, the month over month numbers look soft.

 

Santa Clara County real estate market trends and statistics at a glance for January 2024

Real estate market statistics

 

Multi year real estate data charts for Santa Clara County real estate market (single family homes)

PLEASE NOTE: to view any of the data tables / images below in a larger version, just click on them and you will be taken to our blog post, where the images are larger (except for the first one). Still too small? Click on them in the article and a larger still version will pop up. 

Months of Inventory

First, the months of inventory. At 1.6 months of inventory is not bad for January. This is one of the softer data points – and it is not really soft.

 

SCC Months of inventory for Feb 2024 - single family homes
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The real estate market in San Jose’s Blossom Valley area

Pan of Santa Teresa and Blossom Valley

Pan of Santa Teresa and Blossom Valley

The Blossom Valley real estate market continues to be a strong sellers’ market into early 2024. Homes in good shape which are priced appropriately regularly sell quickly and well above list price, despite new hurdles for buyers to overcome over the last two years. While trends can vary based on price point, schools, zip codes, etc., the entire area is still in high demand.

Here are some bullet points from the latest statistics:

  • Closed sales are a little ahead of this time last year, but with less than half the available inventory
  • The average sale to list price ratio soared above December, and outpaces this time last year by over +10%!
  • Days on market show a rapid turnover with a 17 day average and slightly faster market absorption (days of inventory) at just 15 days

Often we see month-over-month softening into the new year with lower inventory and demand over the busy holiday season, followed by a late-winter increase in activity as the market moves towards the spring trends. That said, the market remained strong through winter and appears to be experiencing rapidly increasing activity earlier than usual. It’s a hot market in Blossom Valley!

About Blossom Valley

The Blossom Valley area of San Jose is on the south end of the city and covers the 95123 and 95136 zip codes. For our MLS, it’s “area 12.” A more affordable section of Silicon Valley, it has much to offer in addition to more reasonable housing prices. Many areas enjoy views of the Santa Teresa Foothills or the Communications Hill knolls or even the coastal foothills in the distance and Mt Umunhum. One corner of it sits alongside beautiful Almaden Lake, too. Another corner is located at the crossroads of Highways 85 and 87, making it an easy commute destination for those working in downtown San Jose. And there’s an abundance of shopping and dining opportunities.

Now for some market data.

Live Altos Reports

We’ll start with the Altos Reports, which gague the market based on active listings, not sales, and is updated about once per week.

95123 real estate market trends, automatically updated weekly:

Blossom Valley Real-Time Market Profile by Altos Research

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Cambrian Park: Good Schools, Low Crime, Close to Los Gatos and Campbell

Cambrian Park, or more broadly, Cambrian, is a west San Jose neighborhood or district and is one of the high-value areas in Silicon Valley. The schools are good, the crime is low, and the commute is not too bad.

Cambrian Park Plaza signFor people relocating to Santa Clara County, this is a place to know about since quality education and affordability are often high priorities! Most Silicon Valley home buyers would say that Cambrian Park real estate offers a very good value.

What’s the compromise for the more reasonable prices of homes for sale? Well, Cambrian doesn’t have an interesting, upscale downtown area like Campbell, Los Gatos, Saratoga, or Willow Glen. (It may, when the Cambrian Park Plaza redevelopment takes place.)

But it does have tons of shopping & restaurants and even a Farmer’s Market. It also enjoys a top notch hospital (Good Samaritan) and plenty of parks as well as a fantastic rec center with a large park adjacent to it, the Camden Community Center, which has loads of programs (including an after school program for youth), classes, and a fabulous pool.

Altogether, there are about 75,000 to 80,000 residents in Cambrian, spread throughout part of two zip codes, part of 95124 and some of 95118.

If there is a “central Cambrian Park”, it would have to be near the original Cambrian Park Shopping Center, which was the first actual mall in San Jose! That area is sometimes known as Cambrian Village.  People sometimes use the three names interchangeably: Cambrian, Cambrian Park, Cambrian Village.

 

Where is Cambrian Park? Map of approximate Cambrian Boundaries:

 


View Cambrian Area of San Jose in a larger map

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Gilroy and the South County’s Fruit Stands and Farmland

Fruit stands are ubiquitous in rural Santa Clara County, particularly in the South County communities of Morgan Hill, San Martin, and Gilroy. If you’re driving to Los Angeles, you may not be able to miss the largest of them all, Casa de Fruta, which is just barely inside of Santa Clara County.

Fruit stands and where to find them

Along 152

f you’re driving to Los Angeles from Santa Clara County using Highway 5, you will turn off of Highway 101 and take Hwy 152 in Gilroy to cut across the Pacheco Pass to get to 5. Almost immediately on 152 you’ll encounter produce stands selling fruit, nuts, artichokes, and all sorts of vegetables, and, of course, garlic!

One of these fruit stands along Highway 152 near Gilroy is the Merry Cherry Fruit Stand.  There we have purchased some cherries (naturally!) and pistachios at various times. Here are a couple of photos from there,  taken in a May evening, around 6:15 or 6:30, so there are long shadows – but it was fabulous spring weather and very pleasant out. It’s a pretty typical roadside stand and there are many of them in this region.

Please note: some of the produce stands may take cash only, though I suspect it’s changed as technology has improved.

 

Merry Cherry fruit stand near Gilroy CA along Highway 152 - of of many produce and fruit stands in the South County area of Santa Clara County

 

This next photo was taken from the parking area of the Merry Cherry stand. I loved how the shadows looked in the groves of the ploughed field, waiting for the next planting, or perhaps for sprouts to soon appear.

 

farm field near Gilroy CA along highway 152 (photo taken at Merry Cherry fruit stand)

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The percentage of all cash sales in Santa Clara County

The percentage of all cash sales (all cash, no loans) rose in July, but the actual number of sales, shown immediately below, shrank a little. I pulled this data from the MLS today and it’s reflective of whatever the listing agent entered into the fields for financing.

Number of Cash Sales of Single Family Homes in Santa Clara County

 

Percentage of All cash sales, month by month, in Santa Clara County (single family homes)

Next, the actual percentage of all cash sales in the county for houses and duet homes.

Percentage of All Cash Sales in Santa Clara County for Jan 2013 - July 2023

 

The average for the 11 Julys shown is 13.9%, so July 2023 with 15.7% is interesting to see. Interest rates have skyrocketed over the last 14 months, forcing home prices down in the 2nd half of 2022. It’s a little surprising that we did not see a surge of cash buyers then, but their numbers stayed in the typical range from what I’m seeing.

Now, in mid 2023, we have seen both interest rates and home prices rising – at least for the first 6 months of the year – in most of the valley.

Cash buyers are usually investors, but not always. Sometimes they are homeowners who sold their long held family home and are now downsizing and buying with the proceeds of the larger home that they just sold. We don’t get that piece of data from the MLS, but anecdotally, that’s what I’m seeing with the cash offers I’m seeing and hearing about.

 

What does it mean that cash buyers are an increasing percentage of the closed sales?

  • Rising interest rates not only don’t harm the all cash, no loans buyers, it actually helps them as it weakens their competition
  • These buyers may be feeling more confident with the softened market and easier buying conditions generally
  • My thinking when we saw interest rates rising is that it would help the mortgage free buyer more than anyone else – that seems to be the case.

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Hot Times, Home Selling in the Summer!

Selling in SummerSelling your Silicon Valley home this summer? Don’t make the two most common mistakes which cost sellers money when marketing their home in the hottest months of the year!

Common Home Selling Mistakes in Summer

The “Closed Up” House

Many people try to beat the heat by closing up the house, turning off all the lights, and shutting blinds and curtains.  I see this all the time in summer, particularly if the San Jose area is enduring a horrendous heat wave. While it’s good practice for homeowners, it can cost home sellers!

Walking into a darkened house, condo or townhouse is a huge turn-off for home buyers. It’s depressing, unflattering, can make a space feel smaller and less inviting. Yes, we can turn on lights and open blinds, but the initial impression is terrible, and that feeling is often the one that sticks with buyers!

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Is your property tax assessment too high?

In the 4th quarter of 2022, Santa Clara County home prices bottomed out after 6 months of interest rate hikes and sliding home values. The property tax assessment for many home owners on January 1st from the county tax assessor’s office may have been higher than market value for that day, depending on which comparable sales or comps that office used.

If your property tax assessment for this year came in a little higher than market value, you may be able to appeal that assessment.

 

Property tax assessment bill - the annual county tax assessor's office will issue the valuation to home owners on this card each September or October

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Appealing the property tax assessment

 

The county tax assessor’s office uses comparable sold properties, or comps, just like you or I would do, to try to determine the current market value of your home.  The comps used may or may not be the best or most realistic – they could be too dissimilar in size, location, or amenities, for instance.

If they aren’t good, you may be able to get your home’s assessed value, and hence the bill, reconsidered if you present better data and explain why your data is more accurate.

No one wants to see their property values depressed, but if it does happen, there may be a small silver lining: getting slightly lower property taxes, at least for a while.

 

How to appeal your property tax assessment

START HERE TO APPLY – you will find the prerequisites, the instructions, and the login to begin. (Have your comps ready!)

Information on appealing can be found on the county tax assessor’s office website.  This page has links and information on the process and procedures of appealing the valuation.

The appeal application form can be found here:  Assessment Appeal Application form

The folks in charge of the property tax assessment and appeal process, the review, and the hearing are:

Assessment Appeals Division
70 West Hedding Street
East Wing, 10th Floor
San Jose, CA 95110
Phone: (408) 299-5088
Fax: (408) 298-8460
Email: AssessmentAppeals@cob.sccgov.org

It’s actually very straightforward to appeal your property tax assessment: you simply complete the form and submit it online together with PDFs of your comparable sales to provide support for the lower valuation. The application form states at the end: “The request must contain the basis of your opinion of value. Please include comparable sales, cost, and income data where appropriate to support the value.”
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Check the months of inventory to see if it’s a good time to sell your home!

Months of Inventory explained with an hourglassIs 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.

 

Santa Clara County months of inventory by city in Santa Clara County - single family homes for April 2023

 

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

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