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

The most expensive of these four areas is Monte Sereno.

Notice, for a moment, the “dip” in the last year in each area. For Monte Sereno, it came early, around April. For Los Gatos 95030 (the area closest to downtown), it came a bit later, in around June. For Los Gatos 95032 it was later still, and much milder, with the low point in about September. And the Los Gatos Mountains, which tend to move very slowly in the best of markets, had a gentle downward drop that appears to have hit bottom in November. It as if there had been a rolling wave…. Monte Sereno got hit, and then recovered, the fastest. The lower the prices, the gentler the fall and rise. Interesting!

Also of interest is that the list prices in the mountains and in Monte Sereno are as good as or better than a year ago, but not so in Los Gatos 95030 or Los Gatos 95032.

Average Days on Market for Los Gatos, Monte Sereno & the Los Gatos Mountains among the top tier of pricing in each

Over the course of the last year, it appears that homes were selling faster (or perhaps being yanked off the market faster) such that it was easier to sell last summer than it is today for luxury homes in these parts of Silicon Valley.

Let’s look at the patterns.  For the most part, these four areas all have a “V” type of movement with days on market. Visually, we again see dramatically different level of drop, though, almost exactly like we saw with the list prices. Monte Sereno sees a sharp drop – very low, very fast. Los Gatos 95030 is just behind it in terms of the type of falloff of DOM and then Los Gatos 95032 a little less. In the mountains, though, we don’t see a dramatic change at all. There’s a little dip, but nothing like what we see in Monte Sereno.

Inventory of the most expensive quartile of homes in Los Gatos, the Los Gatos Mountains and Monte Sereno

Again, we find that although these are four different (but adjacent) areas, all follow the same pattern for inventory, which was at a height last summer and is fairly low now. That seems to be somewhat seasonal, though. Let’s see how it looks over more time.

We can note that there are dips in inventory levels each winter. Even so, what we see more recently is a lot more dramatic – or volatile – than what we’ve seen prior to 2010.  Year over year, inventory is up – and that doesn’t help to sell a luxury property.

Luxury house buyers, this is a great opportunity for you to get the best home for the money!

Luxury home sellers, you need to be serious about selling if you want to be effective in this market.  There are lots of ways to get qualified traffic through the door, and just as many to make those same buyers not bother. It’s imperative to leverage everything you’ve got going for your property if you’re serious about selling.

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Please call or email me if you’d like assistance with buying or selling high end real estate in the west valley.  I’m happy to meet with you confidentially.