From the trenches: real estate in the Silicon Valley - 2nd week of October 2016

Market Watch - Coldwell Banker.

...Silicon Valley 

– It has been a relatively quiet two weeks, according to our Cupertino manager. Open house traffic is steady.

Our Los Altos manager sees continued signs of seasonal adjustments although inventory is low as summer comes to a close and we move into fall.  New inventory has slowed of late.  This lack of inventory has had a direct impact on those homes which had been "lingering" on the market and agents have seen additional price reductions on homes with higher than average DOMs (days on market).  Sellers are still wishing to “test the market” by bringing their homes on at higher prices than previous sales and pendings.  However, this pricing strategy has proved to be risky, given that many buyers' expectations are that they will still need to offer over the asking.  As a result of this type of pricing strategy agents are seeing a “self-fulfilling prophecy” with these homes having little to no activity. These homes end up stagnant and linger on the market, eventually having to lower their price to generate activity. To the contrary, there has been strong activity with properties in move in condition and priced to sell.  These homes are still receiving multiple offers that typically achieve a sales price that is over asking.  This was the case with one of our recent listings, which had 24 offers.  In short, we have experienced a slowdown of homes coming on the market over the recent weeks.  And those that are coming on, when priced to induce offers, are being absorbed quickly.

The Los Gatos market under $2.5 million continues to be extremely competitive.  The market over $2.5 million is a tad slower but great properties over $2.5 continue to sell. 

The San Jose Almaden market had an average number of sales for the month with 40, which is down from 44 in August and flat with the 39 sold in 2015.  Prices were up with the median sales price at $1,320,000 for the month, up 7.8% from the previous month and 3.5% higher than the previous year.  Blossom Valley had a strong month in units sold with 94 closings, up from 88 last month and 86 last year.  The median home price of $751,250, up 4% from last month and last year at this time.  

Cambrian had a big jump from last month with 86 closings, 20 more than August and 4 more than 2015.  The median sales price was $937,500, up 3.9% from last month but down 1% from September of 2015.  

Santa Teresa had a lower number of units sold at 27, down 6 from last month and down 13 units from September of 2015.  The median sales price of $750,000, down 4.5% from last month but up a whopping 11% from September of last year. 

Willow Glen got a surge of new listing inventory this past week, going from the low 60’s count to 83 active listings. Agents are reporting slower traffic at open houses, particularly if the property has been on the market more than 2 weeks. However, some properties are still selling quickly with multiple offers, but typically the offers are at or just slightly above the list price.

Thanks for reading! 
Francis


Silicon Valley real estate specialist
Detailed, local trends etc...
Current mortgage rates

Coming soon: Shredding and E-waste day, organized by
Coldwell Banker in Los Altos Oct.29, 2016
Please contact me for more details.              

News from the trenches .... in the Silicon Valley.

Taking the pulse of the local offices, and managers and agents in the local cities.  It does not get more "down to earth" and "raw" than that!   ;-)

SF Peninsula – Listing inventory is steadily increasing in the Burlingame area, and so are sales, according to our local manager. Across the hill in Half Moon Bay, there has been a continuous increase in inventory. Our local manager provided this update for the area of Half Moon Bay, El Granada, Montara, Moss Beach, and Pescadero market update: The average listing price is $1,428,716, highest listing price is $3,388,888, and the lowest listing price is $699,000. Pending Average listing price is $1,372,445, highest listing price is $1,988,000, and the lowest listing price is $785,000. Sold average listing price is $1,062,552, the sold price is $1,071,980, days on the market is 14 days. ...  Our Menlo Park manager said the local market is steady but cautious. No throwing money at houses now like caution to the wind. She adds that sellers are more likely to look at a pre-emptive offer now realizing that we could be close to the ‘top of the market’ if anyone can really see that without it being behind them.  Our Redwood City-San Carlos manager reports lots and lots of frustration out there for everyone (sellers, buyers, agents). It’s a definite alteration in the market (which was needed). Only the ideal homes with the ideal location and the ideal price are selling quickly. All the rest are remaining on the market with very little, if any, showings. The San Mateo market has slowed down, our local manager says. Our Woodside-Portola Valley manager says that
Woodside continues to be a good/bad market. It is a month to month thing. Big buyers are out there but always waiting for the RIGHT house. The market is feeling cautious, she notes.

Silicon Valley – Our Cupertino manager says homes are staying on the market longer and need to be priced right. Open houses are spotty. That can be a good thing because agents have more chances to engage visitors in conversation, and perhaps get new clients. She adds that the luxury segment has been slowing. In the Los Gatos area, competition remains heavy for entry-level homes listed under $2,000,000. More inventory is hitting the market in the $2,000,000 plus range. Our San Jose-Almaden manager says we’re starting to see an increase number of active listings as well as a lower number of homes pending in Santa Clara County. The available inventory is actually higher than the number of available in 2014. Not surprising were the lower number of units sold for May. There were 35 properties sold in Almaden for the month which is down 25% from last month and 18% from the previous year. Blossom Valley was slightly better with a total of 101 homes sold for the month which is down 8.5% from the previous year. Cambrian was almost flat, with 78 properties selling for the month which is just down 2.5% for the previous month and year. Santa Teresa had 27 homes sold which is down 16% from the same time last year. Willow Glen had a sleepy Memorial Day week. Sales were slow and not many new listings came to the market. The following week things started moving again we had one of our better sales weeks and listing inventory is back up to 92 units. We are still hovering at 3-4 year highs for active listing inventory. The local market seems to be driven mainly by price point. Anything under or around the $850,000 price point is drawing lots of attention and still attracting multiple offers well over list price.

It is my experience that in Los Altos / Mountain View / Palo Alto the market is a little slower like elsewhere, but still quite active: anything priced right is selling quite well, even if sometimes it is not right away (like the first week).  I think the consensus is that prices are going to be flatter unless the property is among the most desirable in its category (and not overpriced).
The least expensive house in Mountain View sold in April for $1,050,000.
The least expensive house in Palo Alto sold in February for $1,325,000  (with a lot of 2,875 sq.ft.).

Thanks for reading, and hoping each finds his/her own area in the above ;-)
Francis

Silicon Valley real estate specialist
Detailed, local trends etc...
Current mortgage rates

non-profit organization worth noting: Partners for New Generations.

Median Sales Price - Santa Clara Cnty - did not let up.

Piggy-backing on my September blog looking at the monthly median prices in the County of Santa Clara, I'd like to share what happened next.

At the time, I was speculating that prices may let up a bit, as is usually the case at the end of any given year.  Buyers looking during the last few months of the year could expect a break and have less competition.

My experience from the trenches, reflected in the updated graph below, is that there were a little fewer offerors on homes for sale, but prices certainly did not go down. The competition remained quite strong.  Overall prices stayed at the same level, at the minimum, and I mostly saw an increase in home values, especially in the entry-level category.

Often seen in the past 3 months were:
- Houses offered at a certain price, and if it did not sell for way over, their asking price changed upward,
- offers being shopped around, in some cases what felt like excessively,
- lower cash offers sometimes selected over higher offers needing a loan - (can make sense of course...),
- some of the latter cash contracts being cancelled  right before close of escrow - setting the clock back to zero on the sales process, and triggering plenty of legal questions marks for all.

Be sure to work with an experienced professional if you are thinking of selling, or buying a place in this tense environment.  It is sometimes hard to make sense of it and to navigate a prudent, legally safe line.

Thank you for reading,

Francis

Silicon Valley real estate specialist

Detailed, local trends etc...

Current mortgage rates

A worthy local non-profit to remember: Community Services Agency in Mountain View.

Home sale strategy: set a date for offers, or not?

Home sale strategy: set a date for offers, or not?

You have prepared carefully for the big day when your property goes on the market;  first it goes on MLS, then you have a Realtor tour, and an open house during the week end.  The critical “exposure” time has started, a full marketing campaign is in place, with paper advertising and internet advertising - the world is starting to learn about your house.

Should you hold off for offers until a certain date (hoping for multiple offers), or do you take offers as they come?


Holding off for offers is a good strategy, if the house is well priced: it ensures that the house has been seen enough, and that potential buyers have had the time to decide what they want to do, and look at all the disclosures and reports your agent carefully helped you prepare upfront.  When offers are reviewed, chances are they are well thought out, and you have a choice between solid offers.  Odds are higher the transaction will close without problems.

But the down side of this strategy is that some buyers are turned off by the process, and do not want to participate in a competition.  Also, if you hold off too long, other competing properties will come on the market and you will lose some potential buyers.  Finally, with this strategy comes the difficult choice to make if a “preemptive offer” is presented to you, often higher than the asking price.  If you take it you will never know what the other offers could have been (the ones that followed your instructions and waited for the “offer date”).  If you do not take it you could lose out on that high offer.

So the alternative is to “take offers as they come”.  But what do you do when one comes too fast, may be even higher than your asking price, and you have the feeling that “not enough people have seen the house”?  Could you have a higher offer by waiting for more people to have the time to see the property and work on an offer?  In real estate we say that the first offer is often the best one...  In a typical market it is often true (the subject of another blog), but the Bay Area market is not typical.

Several elements are in play here:

1/ the (pricing) strategy you prefer to use (low, average, high?)

2/ how active the market is at that precise moment.

3/ how easy it is to show your property,

4/ how desirable your property is (objectively),

5/ the quality of the information you get.  The tools your Realtor is using are going to be critically important, in order to assess the real interest your property generates.  You’ll want to know: - number of showings, - number of page views on the various web sites, - how many people are looking at the info online, - and what exactly they are looking at: some info, or all of the info available?

What I would like to stress here is that you must have this conversation with your Realtor ahead of time, and stick to your chosen course of action. One cannot really have it both ways.  If you set a date for offers, and take a pre-emptive offer, you may hurt yourself by never seeing the offers that played by the rule, and waited to come forth.  The thing is that you will never know - it is a gamble.  My experience has been that, in very active markets, it is better to hold off until about a week after the house has been in full marketing mode.  Taking an offer too fast may leave you with a lot of question marks about what other offers could have been a few days later.

Finally, it is critical that your Realtor follows closely any interested party, and answers questions as best as possible: better informed buyers, or agents, will bring you an offer, and one additional offer may mean a big difference in the final sales price.

Thank you for reading,

Francis

Silicon Valley real estate specialist
Detailed, local trends etc...
Current mortgage rates
A worthy local non-profit to remember: Community Services Agency in Mountain View.

Eye Candy.. Prime properties for sale.

This is the latest edition of our Coldwell Banker Previews International offerings. Most of the properties are pretty close to home, or even right there where we live.  Click on the cover to see the magazine.

Let me know if you have any question about one of these homes!

Francis Rolland
Previews Specialist

Silicon Valley real estate specialist
Detailed, local trends etc...
Current mortgage rates

Our next E-Waste & Shredding event is on:
Sat. Oct 25, 9am - 2pm (or until truck is full)
at: 161 S. San Antonio Rd
Los Altos, CA

Homeowners' tax deduction in danger?

... Reading the other day the headlines in the San Jose Mercury News: "Coveted tax break in peril?"

With the negotiations going on in Washington to avert the "fiscal cliff", we all know that there will be some combination of cost reduction measures and tax increase, whatever this combination will be.  But the tax deduction for homeowners regarding the interest paid on their loan is definitely in consideration.

For the main parts of the nation, this is not an issue, but for the Bay area, where according to this article, 40% of the purchase loans in the Counties of Santa Clara and San Mateo are for more than $500,000, it is a big deal.  13% of those loans were for more than $800,000, and 10% were for more than $900,000.

One way to find money is to reduce this interest deduction.  If the maximum mortgage cap is brought down from the present $1million to $500,000, over 10 years, it would raise $41.4 billion according to this article, which would look good to reduce the deficit of course. 

What would you do, if in the course of reducing the deficit, the politicians were to take away part of the mortgage deduction?  Most likely, if you own a house in the Bay Area, you have a significant mortgage attached to that house.  Would it affect you?  Would you agree with that?

Francis

Silicon Valley real estate

Current Mortgage rates

Non-profit organization worth noting: Partners for New Generations.

2011 vs 2012... 2012 wins.

2011 vs 2012...  

2012 has been a year marked by multiple offers, competitive bids, and rising prices. A seller’s market for sure.
The economy in the Valley is definitely a factor to this situation, as is the lack of inventory – too few homes for sale. There are some short sales and foreclosures, as expected and -alas- promised for the past 2 years. However they are absorbed by a strong pool of buyers, either individuals or investors, who believe in the health and future of real estate in the Silicon Valley.


There is definitely a different trend towards the end of the year, as compared with last year, as evidenced by these graphs that I just made – below we see what last year’s trend was towards the end of the year, and what it is pointing to right now, in 2012:

Thanks for reading!
Francis

Silicon Valley Real Estate

useful links

Current Mortgage rates

A non-profit worth of praise: Habitat for Humanity

Market Has Hit Bottom? hmmm.. yes.

A very good indication of where the market is heading in a given area is the level of inventory of homes available at a given time, and compare this to the past.

In the County of Santa Clara, where we have been hit hard by the downturn in the past year or so, the inventory of available homes (SFR's and condo/townhouses combined) as of 9/11/09 stands at 3,315; a year ago at the same time, it was 6,844, and in 2007, it was 6,542.

This level of inventory has not been that low since January of 2007.I believe this sets the stage for a very healthy market.We have seen in the past months an impressive number of foreclosures being bought from investors and home buyers alike, often in multiple offers situations.

It is important to remember too that the percentage of houses which sold for more than the listing price, in the County of Santa Clara, has been consistently above 30% for the past year, and stands now at 40.6%. (Sunday real estate section in the SJ Merc.). Who would think based on the news articles in the papers?

For instant insight and smart graphs on the market, County-wide, and area by area within the Cities, go to:
www.TrendsByFrancis.com

If you like this article, share it! Thank you for your time.
Francis