the mesh network | northern california real estate

December sales trend for Santa Clara County

We had 992 home sold in December this year compared to 742 homes sold last December.  For the year, we had a total of 11,781 homes sold, up 30% over 2008 where we had 9079 homes sold.  I believe 2009 was the year we “turned the corner” -- prices dipped to their bottom and bounced off as the overall economy showed signs of recovery.

I will write a more detailed blog entry on my thoughts for 2010, but the short version is that I expect sales through April to be at a record pace -- the tax incentives and treasury buy-back programs will end in the first half of the year.

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 has basically returned back to where prices where a year ago, in fact it is also about the same as 2 years ago.  December sales for 2007, 2008, 2009 have all averaged in the high $900k range, indicating some stability.

Blossom Valley continues to demonstrate solid sales.  It also shows us what is really happening in the best sub $500k price point.  Prices are starting to show growth over the prior year.

Willow Glen has slowly and steadily recovered off the bottom earlier last year.  Basically we are seeing average sales prices equal to the sales of 1 year ago.  

Downtown San Jose has recovered, similar to the way Willow Glen and Blossom Valley has.  I have not included Condo sales which are a heavy part of the DTSJ area.

Campbell sales seem to have fully recovered and the average prices are back to 2008 levels. 

Los Gatos is not recovering as quickly as most other areas due to their higher price point and few recorded sales.  On the positive side, it is also not down nearly as far as I expected it to fall.

Saratoga has rebounded, surprisingly enough, and even shows a small pop last month.  January is going to look like an even taller spike because closed prices for January 2009 were so low.

Santa Clara will continue to show price increases since the early parts of 2009 were recording sales in the mid-$500k range and we are now in the mid-$600k range.

Sunnyvale is posting the strongest recovery of the entire County.  Evidence continues to show us that Sunnyvale is a solid community with good schools and easy commute to most Bay Area businesses.

Cupertino sales are still averaging about $1M, and holding steady at the same level as a year ago.

Los Altos prices look like a steady decline, and based on the chart below it feels like prices are searching for a bottom somewhere about 30% off their highest levels. 

Mountain View prices appear to have a very stable flat-line forming throughout most of the past year, even to my surprise as I thought we would see a greater price deflation.  

Palo Alto prices are basically at the same levels as 12 months ago.  From the valleys on this chart it seems clear that prices are trying to recover and may be heading higher.  I’m very encouraged to see Palo Alto putting in support at the lower levels because what happens in Palo Alto seems to impact the rest of the county.

We are Realtors.  We are in the market every day representing Buyers and Sellers throughout the areas above.  We bring you this information to help you make an intelligent decision about your next move.  Timing the market is impossible and unwise because you may ultimately not be able to meet goal.  The market is always here -- people are buying and selling every day -- people are getting financing every day.

-Mark

Is there a tidal wave of foreclosures coming?

I get this question all the time.  The media keeps mentioning something called “ghost inventory” or “shadow inventory”, referring to the number of homes that are bank-owned but not yet for sale on the open market.  Some people believe that this growing number of homes represents an overhang of inventory that will bring prices down even lower as they release them for sale.  I don’t believe a tidal wave is due to hit the Bay Area -- let me explain. 

 

First off, banks and asset managers have no interest in seeing declining home prices, especially if they believe they will continue to take back more houses through foreclosure.  So “dumping” a bunch of new inventory and driving down prices will only hurt prices further for homes they currently have or will be taking possession of soon.

 

Perhaps the most important reason we won’t see a wave of foreclosures is due to the bank’s own loss-recognition policies.  From my limited understanding, when a bank reclaims a home through foreclosure, the property becomes a managed asset to the bank, but the loan that went bad has not yet been fully recognized through their accounting rules as a loss.  When the asset is sold, then they need to recognize the actual loss (difference between net after sale and the value of the original loan).  Of course, the bank can’t sell every property they have and recognize their losses immediately because it would devalue the bank completely.  As a result, Wall Street would hammer their stock price and question management of the company.  They have no choice but to slowly recognize these losses over time.

 

So, for these reasons, I believe we will see foreclosures continue to trickle onto the market at a controlled pace, keeping prices stable and generating opportunities for buyers like we’ve never seen in our generation.

 

-mark

Local Sales Data for Santa Clara County - September

We had 1186 closed home sales in September this year compared to 1001 sales last September.  This increase in volume is keeping prices competitive but many buyers are competing with multiple offers.  Looking at the average sales price, in September of 2008 the county average was $750,000, but this year it is down to $687,000.

But here is the most interesting twist.  You would think that the prices are down because of increased supply and lower demand (more inventory means Sellers have to lower their prices), right?  Well, that’s not what the numbers say.

In fact, last year we had 4938 Active listings in September and this year we only have 2298.  We had 1967 homes Pending with accepted offers in September 2008 and this year we are up to 2900.  Clearly we are more active and have less inventory -- so prices must be down because the lower priced homes are selling as fast as they come on the market, while higher priced homes sit on the market much longer.

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 is clearly struggling to recover.  Again, for Almaden schools at 30% off there are some good opportunities out there for a move-up buyer.

Blossom Valley is an example of what a recovery looks like for affordable homes in San Jose.  The hard part is actually getting into a home as almost everything that comes on the market has multiple offers.

Willow Glen has become a very price-stable area of San Jose.  It was hammered earlier because WG still has high priced luxury homes, but it seems to have recovered nicely.

Downtown San Jose follows the chart for Blossom Valley because both areas support a very similar affordability factor.  I still believe that investment buyers will find great deals here because you may be able to cash-flow for the first time in a long time!

 

Campbell is a perfect example of what I have been saying is the March bottom for Bay Area housing.  Campbell prices are down about 10% from last year but have stabilized nicely and are giving buyers a nice value.

 

Los Gatos is not going down as far as I thought it would.  Sure, it took a hit early in the year, but it looks to have recovered and shows prices off about 20% from last year.

Saratoga prices are leaking slightly, about 25%, but properties are finally moving.  As Sellers adjust their expectations down, there are Buyers stepping up to get a great value in this precious area.  This trend should continue for the next several months.

 

Santa Clara showed an unexplainable spike last month but overall it continues to be an area for buyers to find a 25% discount in prices compared to last year.

 

Sunnyvale prices are just 10% lower than last year at this time and the “V” shape recovery could not be more clear!  Very reasonably properties are being bought and sold every day so I believe Sunnyvale to be a solid community for good schools and good commute location.

 

Cupertino has quickly stabilized, but there are more distressed sales than last year at this time.  I do not believe that prices are going to drop considerably from here, but there will be pockets of great deals from time to time.

 

Los Altos prices have been under pressure, but are balancing between 10%-30% off last year sales prices.  Again, some distressed sales will record lower numbers but it does not appear that the broad base of Sellers are under too much pressure.

 

Mountain View prices are slowly deflating and as I mentioned in previous months, I see MV coming under distressed-sale pressure.  It will be interesting to see if October prices bounce back up or continue the downward trend.

 

Palo Alto prices have continued to stabilize as Sellers quickly adjusted their expectations to attract Buyers.  I expect that prices will continue to bounce around a 20% discount from last year for the next 3-6 months.  Get your discount now before it goes away…

  

We are Realtors.  We are in the market every day representing Buyers and Sellers throughout the areas above.  Everyone has a reason why they are making the move (buying or selling) at this very moment.

We bring you this information to help you make an intelligent decision about your next move.  Timing the market is impossible and unwise because you may ultimately not be able to meet goal.  Your motivation for buying or selling 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 -- the real question is ‘when are you ready to make a move?’

-mark

Local Sales Data for Santa Clara County -- June

About 1 year ago, crazy-man Jim Cramer of CNBC’s Mad Money predicted that the housing market would bottom on June 30^th, 2009.  I’m not saying that I agree with everything he says, but I do find his honest and open delivery style quite refreshing.  At the time, it was a tough call and pretty hard to see where he came up with the idea given all that was happening in the financial and housing industry.

 

Here we are one year later, and on June 16^th he announced on his show that the housing market had hit bottom 2 weeks earlier than he thought -- based on the housing start numbers showing an increase, and based on 3 months of improved sales figures in the number of homes being sold across the country.

 

In the charts you see below it might be hard to see that we are bottoming, but that’s what it looks and feels like to me.  Most every one of the entry-level priced homes ($400k-$500k) have multiple offers on them within days of hitting the market.  It’s like Buyers have an appetite that cannot be satisfied.

 

As for the higher-priced homes, they are still correcting.  Palo Alto between $1M and $1.5M is stabilizing, however Saratoga is down 25% and recently 2 short-sales have been listed at $1M and $1.2M (the first of more to follow no doubt), Los Gatos is down 40%-50%, but Los Altos is only off about 15%.  I think the biggest gaps are with Sunnyvale and Cupertino as compared to Palo Alto or Saratoga.  I’m hearing a lot of questions like “Why would I buy in Sunnyvale or Cupertino at $1.2M when I can get Palo Alto for $1.2M now?”

 

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 has some very attractive deals coming onto the market but they are being snapped up equally as quickly.  Still, there is a healthy inventory of homes around $1.2M that offer great square footage values with excellent schools, something you would not have seen a year ago.

 

Blossom Valley has been negative for the entire 12 preceding months -- but look at that bounce off the bottom, further evidence that the market is stabilizing in the most affordable areas.

Willow Glen is still seeing some deals on homes around $600k but several low-end foreclosures are skewing the price averages down further than normal.  Most of WG will be priced above $750k.

 

Downtown San Jose looks a lot like Blossom Valley because the affordability factor is very similar.  Investment and first-time buyers are still getting great deals here with properties that may even cash-flow for the first time in a long time!

Campbell is perhaps the most interesting chart of all the areas we cover.  As I’ve written in prior posts, Campbell homes that come on the market around $500k+/- are sold quickly.  There is very little price depreciation over last year and I believe Buyers will keep Campbell where it is without much if any price erosion.

 

Los Gatos will continue to slide down as long as financing is hard to find for higher loan amounts.  We may begin to see short-sales and foreclosures putting additional pressure on prices in the coming months.

Saratoga prices seem to be holding better than I expected although it now has 160 Active homes for sale.  I still believe that Sellers will need to reduce their prices to get moved given this kind of competition for Buyers looking in this wonderful area.

 

Santa Clara continues to show a 25% discount in prices compared to last year.  New foreclosures come and go very quickly as Buyers recognize the values they are getting. 

 

Sunnyvale prices are still correcting, but the bottom may be near.  I’m seeing more distressed sellers coming to market with higher-priced homes (around $1M).  Now that it seems Palo Alto prices have stabilized we should see some stabilization in Sunnyvale as well.

Cupertino has quickly stabilized, much to my surprise.  We may see another short dip but I have to say it looks like the biggest discounts were already taken earlier this year so that window may be closed.

 

Los Altos prices are under huge pressure and it looks like they are still searching for a bottom given this chart below (same comment as last time, yes).  Look at this chart -- lower highs and lower lows.  Any “chartistician” will tell you that it looks like we are still heading lower in Los Altos.

 

Mountain View prices are slowly deflating.  In a way similar to Sunnyvale, I am seeing a few distressed sales coming to market that will definitely have an impact as those properties attract bargain hunters.

 

Palo Alto prices have again shown that they are stable, yet lower than prices of a year ago.  It may take a few more quarters before we see price gains but the window for buying in Palo Alto is now from what I can see.

We are Realtors.  We are in the market every day representing Buyers and Sellers throughout the areas above.  Everyone has a reason why they are making the move (buying or selling) at this very moment.

 

We bring you this information to help you make an intelligent decision about your next move.  Timing the market is impossible and unwise because you may ultimately not be able to meet goal.  Your motivation for buying or selling 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 -- the real question is ‘when are you ready to make a move?’

Local sales data for Santa Clara County -- April 2009

The lower prices are bringing out a “feeding frenzy” from buyers looking for great deals!  Just last week I thought we had a great property for a client looking in Almaden -- a 4/2 foreclosure in very nice condition listed for $688k.  Before we could even get an offer in it had 10 offers -- crazy!  Palo Alto between $1M and $1.5M is stabilizing and Los Altos is seeing some movement.  I think the biggest gaps are with Sunnyvale and Cupertino.  I’m hearing a lot of questions like “Why would I buy in Sunnyvale or Cupertino at $1.2M when I can get Palo Alto for $1.2M now?”

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 is seeing some foreclosures coming on the market and as I mentioned above, they are being snapped up.  Trending down 10%-20% doesn’t seem that bad compared to some other areas, however I think there is a growing inventory of $1.3M+ properties that are hard to move.

Blossom Valley is stabilizing and much of the buyer frenzy is in this area.  This is truly the foreclosure buffet and prices are finally bouncing off the bottom here.

Willow Glen is offering some nice deals on homes around $600k-$800k which are now easily 25%-30% off years past.  Surprising enough we are seeing a lot new listings coming on from builders of new homes in the $1.4M+ range -- stunning homes that would have sold for hundreds of thousands more just 2 years ago.  I have to believe they are taking a loss on some of these incredible homes.

Downtown San Jose is proving that it has found a bottom on area pricing.  If you like downtown, there are some phenomenal deals on great places including some of the brand new condos -- I’m seeing 2/2 units in The 88 being listed for $499k now!

Cambrian is really showing a steady path for prices and with the very decent schools it is offering our buyers a very nice option in this market.  I think foreclosure and short sale inventory is starting to run low so we’ll see if it can start bouncing off a bottom through the summer months.

Campbell is still averaging in the mid-$600s level.  Although I have seen a couple deals come up at $450k but they sold very quickly.  Anything in the $500s here will be a good deal that seems to be holding it’s price for the moment.

Los Gatos is finally hitting the wall that for months I’ve been saying it would.  Even though this trend chart shows it’s down 75% from last year, it’s deceiving.  Basically, most of the homes that are selling are around or under $1M so that’s why the average has moved down as compared to last year.

Saratoga believe it or not seems to be improving.  I’m seeing Seller’s adjust or at least begin to reasonably price their homes and people are getting moved.  21 homes sold in April this year and 24 last April so the sales volume is still respectable.

Santa Clara as we saw last month seems to be stabilizing nicely at a 25% discount over 2008 prices.  If you believe the worst is yet behind us as far as the economy and housing issues, now would be a great time to get into Santa Clara because there are great properties coming to market every week.

Sunnyvale prices are just too early to call a bottom.  We just sold Mary Ave and I have information about several other nearby Sunnyvale homes that may be distressed (short-sale or close to short).  As Palo Alto has adjusted their prices down, the gap between Palo Alto and Sunnyvale needs to be maintained -- so I think we may continue to see Sunnyvale lowering list prices slightly.

Cupertino at 25%-30% discount over last years prices should be something Buyers have been waiting for.  Same rule for Sunnyvale applies to Cupertino.  Watch Palo Alto to see where Cupertino should be priced.

Los Altos prices are under huge pressure and it looks like they are still searching for a bottom given this chart below.  As long as large loans are hard to come by, I believe we will continue to see the inventory slowly move along.  I’ve even seeing some short-sales at the $1.5M price!

Mountain View prices are finally beginning to feel gravity.  When prices of Sunnyvale, Palo Alto, and Los Altos are all sinking, why would Mountain View be immune?  With prices down 30% over last year’s April prices, it will be VERY interesting to watch May to see if the trend continues.

Palo Alto prices have stabilized now for the last 2-3 months.  If you’re expecting another drop, I can’t say that I see that just now.  The sweet spot seems to be around $1.2M right now where homes are consistently moving.  I still feel that we are in an “on sale” season for Palo Alto so if you are thinking to get into Palo Alto, 2009 may be the best time for you.  Waiting until Spring 2010?  You may begin to see it coming back up again.

We are Realtors.  We are in the market every day representing Buyers and Sellers throughout the areas above.  Everyone has a reason why they are making the move (buying or selling) at this very moment.

We bring you this information to help you make an intelligent decision about your next move.  Timing the market is impossible and unwise because you may ultimately not be able to meet goal.  Your motivation for buying or selling 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 -- the real question is ‘when are you ready to make a move?’

-mark