the mesh network | northern california real estate

Local sales data for Santa Clara County -- January 2009

What a difference a month makes!  Of course we are in the slow season and foreclosure sales are affecting all areas and all price points, forcing sellers to compete with bank-owned prices to attract buyers.  However, January finally saw the beginning of the high-end market hitting the brakes -- and I think this is just the beginning.  Saratoga only posted 2 sales for all of January and Los Altos posted only 8 sales.

We had 602 sales for Santa Clara County in January and currently have just over 4200 properties for sale.  Each chart here shows the percent CHANGE over the prior year in both the Average Sales Price and the Median Sales Price for single homes only, not condos -- enjoy!

Chart Analysis:

Almaden Valley hit the brakes.  As I noted last month, Almaden was moving along at a relatively stable pace of 10% to 15% down, but I was right to believe that foreclosures would eventually take their toll on prices here.  Almaden had only 5 sales in January.

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Blossom Valley looks like it is bouncing off a bottom!  Foreclosures are everywhere but sales are strong.  Many homes have multiple offers and the best values are going fast.  Some sales are 40% off their high of 2005 and we continue to find great values here for our first time buyers.

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Willow Glen is following the Almaden trend where high-priced homes are not moving.  We still had 22 sales in WG (compared to 25 last January) so the sales volume is not the issue.  Lower priced homes are selling well and the higher priced ones are sitting, so the price trend gets pushed down as a result.

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Downtown San Jose is still dominated by distressed sales and prices are still struggling to stabilize.  The Burbank area has 2 bedroom homes in nice condition for $250k and you can get into the Rosegarden at $500k.  Downtown SJ is another place for first time buyer gems or investor properties that will cash-flow even with 20% down.

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Cambrian has a trending chart that looks worse than it feels.  Prices are off 25% from last year, sure, but that is basically the same as most of the county.  I still believe that most of Cambrian is ON SALE right now and there are some great opportunities out there in the very nice Cambrian school system.

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Campbell is starting to show the weakness we have seen in nearby Cambrian.  Many of the short sales are now turning into bank-owned foreclosures.  Campbell is a very desirable location so well priced properties are still moving quickly.  Having 12 sales in January is basically the same paces as 13 sales last January so I would say demand remains solid.

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Los Gatos seems to be avoiding the high-price hit that neighboring Saratoga is suffering.  I cannot explain this behavior at the moment but feel that we will see the same dive in average price in the months to come so I am watching it very carefully.

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Saratoga prices finally hit the brakes as I have predicted it would for the last several months.  There were only 2 January sales in Saratoga, both in the $800s, so this is why the chart looks like it is falling off a cliff.  However, this reinforces my belief that we have not yet seen seller capitulation in Saratoga.  There are currently 126 Active homes for sale in Saratoga with an average list price of $2.4M, and they have been on the market for an average of 84 days.  If Sellers want to get moved we will begin to see price adjustments down in Saratoga.

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Santa Clara seems to be stabilizing at about 20% off last year’s price.  There continue to be MANY foreclosures in the area between Monroe and the railroad tracks.  If you are looking to get into Santa Clara there may not be a better time as prices are very attractive.

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Sunnyvale is bouncing back.  The Lakewood areas North of 101 have dozens of foreclosures and short sales that are selling in the $300s and low $400s.  But, their low prices are being balanced by the higher sales prices for the rest of Sunnyvale that also seem to be moving.  We recently had an Eichler listed at $999k come on the market and was sold in 3 days -- seems solid to me!

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Cupertino seems to be bouncing back much the way we see Sunnyvale bouncing back however the chart is clearly still trending down.  I’ve seen our first Cupertino foreclosure so we should stay tuned to see if others are coming to market in the months to come.

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Los Altos prices are definitely trending down, but if you look more closely you will see that prices are only off about 10%-15% from last January’s prices.  However, with only 8 sales in January and 76 active homes for sale it will take a while to go through that inventory at this pace.  I think in the coming months we may see the same actions as needed by Saratoga sellers where they are forced to reduce their listing prices if they want to get moved.

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Mountain View had it’s pop in December so it is now resuming the normal price-adjustment path.  The chart feels stable but we do have 5 active short sales in MV so it will be worth watching to see how these close and effect sales prices.

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Palo Alto prices are still trending down.  Again, the “on sale” season for Palo Alto may be just starting so if you are thinking to get into Palo Alto, 2009 may be the best time you have to negotiate your way into a great home.

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We bring you this information to help you make an intelligent decision about your next move.  Timing the market is impossible and unwise.  Your motivation for buying or selling -- like getting married and want your first home; just had a baby and need a bigger place; want your children to get into a better school; loved one passed away; job transfer out of the area; or looking for your first investment property -- should outweigh your concerns of market timing.  The market is always here, people are buying and selling every day, people are getting financing every day -- when are you ready to make a move -- this is the real question.

-mark

[Deal of the week] Willow Glen Flip, 3/1.5 under $500K

Have you ever seen these TV shows where someone buys a fixer-upper home that needs work, they go in and fix it up, and then they flip it for a quick sale?  A lot of people say those days are over but we’re always looking for new opportunities.  If you want to do a successful flip today you need to make your money going IN, and make sure you have reduced all the variables.

We’ve found a house that is flip-worthy.  Here is a 3 bedroom 1 and ½ bathroom foreclosure home on the Willow Glen / Cambrian border just waiting for a remodel.  There is equity to be made on this deal.

Details:
1871 Potrero Dr, San Jose CA  95124
MLS #80903690
3 Bedrooms, 1.5 Bathrooms
56 years old
1050sf living space
7200sf lot

Why is it a good deal?
A similar home was listed just 4 houses away on the same street for $575,000 in great condition and it sold in 7 days.  So, we know the market is there.  This house is right down the street from Fammatre Elementary School and Ida Price Middle so the family who buys it will be walking distance to school for up to 8 years.  It has a big lot so there may even be a possibility of expanding.

Here is what you need to do:
Turning the ½ bath into a full bathroom in the master suite will add huge value (it now becomes a 3/2).  The existing layout makes this easy because you can reposition some closet space to make room for a shower so it really isn’t that much work.  It needs new hardwood floors (and maybe some sub-flooring) since I can see termite damage in the floors.  It needs 2 bathrooms remodeled.  It needs a kitchen makeover as well, but now is the time since there are no appliances at all (it’s a foreclosure, remember).  I say you offer $400k for it, plan to put $75k into it and go to market at $559k.  You’ll make $45k after transaction costs.  The question is - How fast can you get it done because springtime is coming!

Estimated Makeover:
$10k master bath
$6k hall bath
$30k Ikea kitchen and appliances
$15k for nice new hardwood floors throughout

What is the risk?
Maybe you can’t get it for $400k, and that certainly is a challenge here.  It has just been on the market for 2 weeks so maybe let the bank get a little more “flexible” the longer it stays on the market.  Do inspections ahead of time (roof, chimney, furnace) just to make sure there are no surprises.  There is a risk that your flip takes too long and too much money of course which will eat any chance of profits.

Who is the best buyer?
This could be a first-time flipper because the work is mostly cosmetic and not very structural.  It may be possible for someone who wants to live in it as you go through the remodeling however you need to find a way to survive without a kitchen.  To have your best shot at the highest return, you need to be on the market for the summer selling season in June.

360 S Baywood Ave, San Jose -- Unique Opportunity

Here is a place I need to bring to our readers so I can pose a question -- who do you know might make a good fit for this property?

Here we have a home that’s 1 street away from Santana Row on a 6500sf lot for only $499k.  It’s about 1200sf and is basically a “shell” of a house -- the roof and outside are great, but it needs everything on the inside.  This is a chance to reconfigure the whole inside of the house to suit your needs and be just a few steps away from Santana Row!

Based on the location -- just ½ a block from Santana Row restaurants and shops, it seems to me that it would be a nice fit for a dentist, doctor, chiropractor, physical therapist, acupuncturist, architect, psychologist, family counselor, photo studio or home base cater, maybe even a daycare center? If this is you, let’s talk.  If you’re an investor who may want to makeover this space to rent to one of these professions, let’s talk.

It is not the kind of place that will get a lot of foot traffic, however.  It is actually zoned for light commercial so there are several homes nearby that are being used by other professionals -- dentists, doctors, etc.

Who can you think of who may be looking for a mixed-use space (live and work) in a nice area that is often overlooked?  Think of the potential growth in value as well -- if Santana Row continues to expand who knows what might happen to the value of this land!

MLS = 80903678 (S + C Perry of Sereno Group represent the Seller)
3 Bedroom, 1 Bathroom
1187sf on a 6490sf lot

List Price = $499,000

-mark

Home Prices Down, Sales are up in Santa Clara County

But there is a story behind the story of course…

Ok, I haven’t written a post for a while, sorry about that, but it’s because we’ve been busy for the very same reason the Mercury news headline article written earlier this week.  They reported that prices are down 17% (something you knew from reading my monthly closed sales blog post) and that 44% of all sales in the county are sold at a loss to the owner.  The Mercury doesn’t say exactly what that means, but we can assume it basically means “distressed” sales -- foreclosures and short sales.

This Mercury News article is a fantastic news for buyers in the Bay Area.  We are working with more first-time buyers and investors than ever before!  We just closed a foreclosure sale for one of our buyers last week for a 4 bedroom 2 bathroom house in Campbell at $549k -- that’s a price not seen in years and our clients knew it was time to take advantage.

There are similar deals like this throughout Sunnyvale, Santa Clara, Cambrian, and Willow Glen and that is what will drive the average sales price down from prior years because this is what is selling.  The $400,000 to $600,000 price points are the hottest selling homes right now!  First-time buyers should be back in the market NOW - the price is good, the choice is plenty, and the interest rate is under 5%.

Investors are waking up because we are finally seeing single homes in the Bay Area that, with 20% or 25% down, will cash flow even -- meaning that the rent payment will cover the carrying costs like mortgage, taxes, etc.  With $75,000 to $100,000 you can get a property where the renter will start paying it off for you and after 30 years it’s owned free and clear.  Some people feel that’s a better retirement plan than what their 401k has been doing recently.

When you see these sensational stories in the news, first of all turn to this blog and post a question for me or other readers, but also, ask the question -- what is the story behind the story?