It’s an old question – should you find your Realtor first or your lender first? I would like to suggest that you find your Realtor first, and then ask your real estate agent for a list of reputable, trusted loan agents or lenders.
Because as with all professionals, lenders (and Realtors) are not created equally.
You will probably spend a LOT more time with your Realtor in viewing homes, reviewing disclosures, writing the contract, meeting inspectors, and so on – so I do suggest that you begin by very carefully choosing the right real estate licensee or broker for yourself. A good Realtor can probably give you between 3 and 10 names of trusted, reputable, reliable, knowledgeable lenders. From there you can interview and choose someone.
It is extremely important that your lender be good at what he or she does. A bad lender – and there are many of them – could cost you the sale, but definitely will create undue stress, will waste your time and ultimately cost you money. This is no exaggeration.
In our hot Silicon Valley real estate market, when there are multiple offers, many listing agents will phone the buyer’s lender to see how solid the buyers are and how decent the lender seems to be. The better loan agents will answer the phone when called – because they are anticipating the call. The lesser ones are not paying attention and don’t pick up. That small decision, one way or the other, can be critical! A few years back, I spoke with a high powered agent out of Saratoga who told me of this very scenario. She concluded “the lender who didn’t take my call cost the buyer the sale.” Yes, it matters that much.
A poorly organized loan agent may misplace documentation, causing you to miss work so that you can get it to him or her again in a rush (under pressure of the loan contingency removal date). I have known buyers to lose time from work due to the ineptitude of a loan agent (but not one that I suggested).
All deadlines must be agreed to by buyers and sellers in writing, no exceptions. Can you imagine what it’s like to ask your lender how many days will be needed for the loan contingency, only to have to extend it not once, but a few times, because it’s just not done yet? A lousy lender will make this happen. Sometimes they are submitting loan packages based on old guidelines rather than current ones. You and I won’t be involved at that microscopic level – but if the lender messes up, we’ll hear about it later.
In the worst case scenarios, a really terrible mortgage banker or broker will cause so many delays that you close escrow late, causing you, the buyer, to pay some of the seller’s coverage costs. If the rates go up during all of the delays, you may pay a higher interest rate too.
That’s the gloom and doom of it.
In my real estate practice, often about half of my clients come to me with their own lender. Although this is not ideal (it’s better if the Realtor and lender go into it with a good working relationship), often it works out OK. But sometimes it’s a train wreck. This doesn’t happen, at least not in my experience, if you get a lender I’ve already vetted. Or if you’re working with another great Silicon Valley Realtor, one that he or she has screened. I would not suggest someone incompetent or who will screw up the transaction – of that you can be sure! I want you to buy your home as much as you do, and I want it to be as smooth and hassle free as possible. A bad lender can put all of that in jeopardy, though.
As I was going through old blog posts, I found this brief installment from April 17th, 2014. Often I write that the current hot sellers market in the Bay is “prolonged,” “steady,” or “persistent,” but seeing these two headlines from over 3 years ago really shows just how unyielding it has been. It is highly unusual to be in such a strong, drawn-out market, but there’s no clear indicator that things will change anytime soon, either. Buyers and renters might find some relief now that autumn is here in hopes that it brings the usual seasonal cooling.
Find the original post immediately below. – Update October 22nd, 2017
Here are the headlines from the San Jose Mercury News in mid April 2014:
Rental article: Bay Area apartment rents set record 4/16/14
Excerpt: Bay Area apartment rents are rising at nearly double-digit annual rates and have reached record levels, according to a report released Tuesday, prompting some analysts to warn that the region’s economic boom could be choked off by the relentless rise….. Among the Bay Area’s three largest cities, San Jose had an average asking rent of $2,066 during this year’s January-March quarter, up 10.3 percent from the same period last year, RealFacts reported. Oakland had an average rental rate of $2,187, up 12.3 percent, while San Francisco posted an average of $3,057, up 9.5 percent.
Home buying article: Bay Area home prices jump year over year
Excerpt: March marked more than 20 consecutive months of year-over-year price gains for single-family homes in the East Bay, South Bay and Peninsula, according to real estate information service DataQuick, which released a report on March sales Wednesday…. The San Diego-based company said that prices were up 29.2 percent from the previous March in Alameda County to $575,000. In Contra Costa County, prices rose 22.8 percent to $425,000. Santa Clara County gained 20.3 percent to $800,000, and San Mateo County was up 13.2 percent to $860,000.
Whether you buy or rent, prices have been rising dramatically. When factoring in what housing will cost, include the trajectory of appreciation per month.
Perhaps you love – even need – a good view in order to feel happy with your new home in a new place. We don’t have a lot of water views in Silicon Valley, though there are some of the San Francisco Bay in places. What’s easier to find are views of the hills or views of the valley from the views. What do these Silicon Valley view homes cost?
Naturally a lot of the answer has to do with location, home size, condition of the property, and land value. In general, it’s difficult to find a house with valley views for less than $2 million unless the property needs a lot of remodeling, repairs, and updating OR is in a very remote location.
Right now, I have a gorgeous Los Gatos view home for sale in the Belgatos area. It is in great condition and features 4 bedrooms, 3 bathrooms, and about 3,000 SF of living space close to Belgatos Park in east Los Gatos, which is a “close in” location, not out in the boondocks. It’s a remodeled, single story house, stunning condition with a pool and spa, and the list price is $2,288,000. (You can check it out here: 211 Westhill Drive, Los Gatos CA 95030.) Los Gatos is a bargain by Silicon Valley standards. If you haven’t spent much time there, I’d invite you to check it out!
Take that same house and move it to Saratoga with Saratoga, and the price would be substantially more expensive, and more still in Los Altos. Silicon Valley view homes vary in condition, size, parcel size, and many other factors. In most cases, the properties which are move-in ready will run between $2,000,000 at the low end to $5,000,000. Supersized estates and land may well cost more. We see homes in Santa Clara County priced up to $20 million at times, and on The Peninsula with much higher ceilings.
Whether you’re a long-term renter, temporary renter looking for a furnished rental, or a landlord, you’re probably wondering how the Silicon Valley’s apartment rental market is today and where it’s heading. Most real estate agents in this area do not deal with rentals, so rental housing is not typically something we track super closely. That being said, the same things that affect the residential resale market frequently effect the apartment rental market as well. So, without the help from my usual sources, such as the MLS (Multiple Listing Services), let’s look at what people are saying about the current trends.
Silicon Valley’s apartment rental market in the news
This February, bizjournals.com published three helpful articles, all written by Janice Bitters on the Silicon Valley’s apartment rental market. In these, she provides insight to investors with predictions for the market with some reflection on current and past trends. What to these articles express? That there has been high demand and rising rents for years, similar to the housing market. What she gleans from industry trends is that builders and landlords have been working very hard to fulfill the demand for luxury apartments, and that new developments in the high-end sector have begun to meet demand. With demand in the higher price point diminishing, she says, builders and landlords no longer have the same incentive to create rentals in this sector, and investors do not want to pursue the mid- to low-end rental market. Despite there still being a clear demand in lower-cost apartments, developers are unlikely to pursue that sector right now due to the high cost of land and construction.
To attract renters to the luxury units, landlords are offering concessions such as free month to rent. This suggests that, in the higher price point of the rental market, it’s cooled down and has swung towards the favor of renters after being hot for a long time. In housing terms, we would call this a shift from a seller’s market (the market is in the seller’s favor) to a buyer’s market (the market is in the buyer’s favor). It’s true that with residential home sales, it’s also cooler in the luxury tier (over $3 million) than more moderately priced homes for sale. Here are the articles where you can learn much more about the rental market:
(Check out the graph in this last article!)
Unfortunately, after a cool and wet winter market, rent growth rates exceeded last year this summer, making it a continued, hot market for landlords. According to Apartment List (an excellent resource for tracking the rental market by city), San Jose rent is up 2% from last year and up 0.5% from last month, with the median rent for a one bedroom at $2,060, and at $2,580 for a two bed unit. Comparatively, Apartment List states that San Francisco is the highest cost California city for rentals with the median price for a two bedroom at $3,060, which has remained stable since last year. They also compare the median two bed rental across other major cities in the lower 48 states, which show that San Jose in both growth and median price is higher than New York city. Needless to say, on their Renter Confidence Survey, San Jose rated F for Affordability (meanwhile garnering and A and an A- in jobs and weather respectively).
Sunnyvale rentals, like the purchase market, is higher than San Jose by a few hundred dollars (Apartment List states the medians as $2,230 for 1 bed and $2,800 for a two bed unit), and are up 3.1% since last year. A Santa Clara apartment will cost you more than San Jose (the whole city, there are higher and lower rent areas), but less than Sunnyvale. Campbell may be your best bet for a reasonable rent, decreasing 1.3% since last year, and the only one with a median rent under $2,000. Mountain View has seen huge yearly rent growth at a current 4.9%. Compare that to the national average of 2.9% and the California average of 4.2%. Despite the yearly growth, rentals are slightly more affordable here than in Santa Clara (the median is only about $30 less).
Apartment List does not analyze every city and town, nor do they study the difference between neighborhoods, such as comparing South San Jose with Willow Glen, but where they do give insight helps to show the major trends happening around the bay area. Check out Apartment List for more detailed analysis, and the most up-to-date information on the market. Also check out their Rentonomics page with more articles on renting.
Is there a solution to the lack of low-cost apartment rentals?
Analysts all believe there will be some market turnaround in the not too far future, but there are a few answers to where it may come from. CNBC published an article on the housing shortage dealing with high tech companies. Large industry leaders such as Google, Facebook, and Twitter continue to hire, bringing people into the area more quickly than developers are building, and forcing up the prices in both housing and rental markets. Employees have asked these companies to help, and some are responding. Google and Facebook have both come up with plans to construct affordable housing.
For years, California law has stated that a certain amount of affordable housing must be available in each community. Unfortunately, many communities are ignoring both the law and the need for such developments. If every community were to develop what the law required, the market would be much more balanced. Yet again, it’s the investors that are controlling the development, and it will not likely happen soon.
How hard could relocating from San Francisco to Silicon Valley be? It’s the same time zone, the same “San Francisco Bay Area” region, and depending on which part of Silicon Valley you target, the drive time could be all of 20 minutes – or perhaps well over an hour.
Relocating from San Francisco to Silicon Valley can be a little bit of a culture shock, which is surprising given the close proximity of the two areas. What’s so different?
(1) Most noticeably, the scenery is different.
You won’t be seeing the Golden Gate Bridge, facing frighteningly steep hills, or catching a view of the Pacific Ocean from the Cliff House when you’re in Silicon Valley. Nob Hill, the Wharf, Ghirardelli Square, Union Square, Market Street, Mission Dolores, the SOMA district and so many other colorful parts of the city will be places you visit on weekends rather than drop in on some evening for supper. The scenic beauty of San Francisco may be the thing you will miss the most if you move out of that fabled city.
Beauty isn’t absent from Silicon Valley, though! There are views of the San Francisco Bay in many places (Foster City and Redwood Shores especially). Scenic vistas of the beautiful Santa Cruz Mountains can be enjoyed from many locations in the South Bay, especially Los Altos, Cupertino, Saratoga, Los Gatos, and the Almaden Valley in San Jose. Part of Silicon Valley reaches into North San Jose, Milpitas, and Fremont, where views of the eastern foothills can be quite lovely, too. Some of these communities have a high elevation and can see the bay as well as the valley.If you are relocating from San Francisco to Silicon Valley, you’ll want to be outdoors more and enjoy the many open spaces available to you. Parks and hiking areas abound on the Peninsula and in Santa Clara County. For example, you’ve probably driven past Crystal Springs Reservoir many times- but did you know that you can hike there? Santa Clara County has a network of trails following various creeks. The Los Gatos Creek Trail (with some adjacent percolation ponds) runs from Lexington Reservoir down into the valley, stopping at Meridian Avenue. There are also trails around parts of the bay – and eventually trails should ring the whole SF Bay Area, but that may take quite awhile.
At Vasona Lake County Park in Los Gatos you can rent a paddle boat and roam the lake in style! Or how about sauntering on horseback in the low foothills of Saratoga at Garrod’s? A day at Filoli in Woodside is always good for the soul – lovely places to walk around both outdoors and in. (Really spectacular during the holidays, too.)
Got wine? You’ll get great views if you take in some wine tasting in Saratoga (several spots, also at Cooper-Garrod’s if you want to sip wine after riding horses) or Cupertino at Ridge Vineyards, too. There are dozens of wineries in Silicon Valley, including J Lohr near the San Jose airport.
Lovely sights are bountiful in The Valley. Continue reading
Shared housing is a way that many Silicon Valley employees work around the high cost of renting a home here. A bonus is that if you’re relocating to the San Jose – Cupertino – Palo Alto area or nearby, it’s that much easier to meet people in a communal living situation. For many, that means renting a house with a number of other people. In some cases, it translates renting a bedroom in a house where the only other residents are members of the same family. Either way, it helps to beat the high real estate costs, and may enable those who choose to live in a group setting to save faster to buy their own home.
To many, shared housing seems like a new concept, but I remember doing it when I was just out of college and teaching in the Los Angeles area, where rents seemed sky high to me at the time. When I returned to grad school, I did it again. Both experiences, though, convinced me that a longer commute and living along OR a shorter commute and living in a smaller space (a studio apartment) was a good trade off. Of course, this was in the 1980s, and we did not have web tools to help us to screen and find like minded roommates or house mates. I suspect it’s a lot better now.
Not having used any of these shared housing services, I cannot endorse any, but there are a number of sites to find house mates or communal living, and there are some companies which specialize in matching people to openings. If any of my readers can endorse a company or site, please let me know by email and I’ll update this article with that information. My word of caution, though: never send money by wire to someone you don’t know for an apartment or home you have not seen. There is a very serious problem with wire fraud, and you do not want to put your hard earned money at risk. Be safe out there!
Read more on the Silicon Valley real estate market:
Read about the various real estate markets by area within Silicon Valley: http://sanjoserealestatelosgatoshomes.com/
Get market stats for San Mateo County, Santa Clara County, and Santa Cruz County: http://popehandy.rereport.com
This website, Move2SiliconValley.com, provides an overview for people thinking of or planning to move to Silicon Valley. If you want to dig deeper and learn about individual Silicon Valley neighborhoods, I want to suggest that you visit some of my other websites and blogs for Silicon Valley real estate resources. Please have a look:
popehandy.com is my flagship site for Silicon Valley real estate – it includes area or neighborhood profiles for all the Silicon Valley communities (in all 4 counties) as well as information for Silicon Valley home sellers and more. Visit popehandy.com and click on “Communities” for a drop down menu listing the 4 counties and learn about the cities, towns, and areas that comprise the Silicon Valley area. (I run several sites and have many articles on them, and this is the one which covers the broadest territory.)
ValleyOfHeartsDelight.com is where I showcase my listings, and it’s the site for general real estate info in Santa Clara County and Santa Clara Valley, once known as the Valley Of Heart’s Delight. Most of Silicon Valley is in this area.
SanJoseRealEstateLosGatosHomes.com covers real estate in the town of Los Gatos and the nearby areas of San Jose, Campbell, Saratoga and more. I think it’s the best part of the Santa Clara Valley or Santa Clara County, but perhaps I’m biased. There are MANY posts with local market trends & statistics, updated monthly, for these areas plus Cupertino, Sunnyvale, Mountain View, Almaden Valley, Blossom Valley, Willow Glen, and so on – areas within Santa Clara County. (Google “real estate market” plus the city or area you’re interested in, and you likely will find an article on this site for your desired corner of the region.) Additionally, there are special research postings on the absorption rate in Los Gatos and Saratoga. Also you’ll find Silicon Valley neighborhoods described in depth, often at the subdivision level for areas such as Cambrian and Almaden. Check it out, it is a wealth of information!
LiveInLosGatosBlog.com focuses on the town of Los Gatos, its neighborhoods, areas, districts, as well as events, parks, real estate for sale, the arts, schools, businesses, restaurants, and much more. A little more community and a little less real estate, but the BEST site for Los Gatos neighborhoods you’ll find anywhere. Los Gatos was once known as the “gem city” and is still a very beloved corner of Silicon Valley today, with historic neighborhoods and homes, gorgeous architecture, and a vibrant downtown. Before deciding where to live, be sure to investigate this scenic town snuggled at the base of the Santa Cruz Mountains – the gateway to the valley.
popehandy.ReReport.com is all about the statistics for Silicon Valley, including San Mateo County, Santa Clara County, and Santa Cruz County. Overall, it is very comprehensive. It features a way for you to track listings and sales near your own home, or one of interest, too.
Silicon Valley neighborhoods where I focus my real estate sales:
Obviously, 4 counties is a lot of ground to cover, and most Realtors don’t work that huge of an area in urban communities like ours. I have sold in all 4 counties, but the vast majority of my business is in Santa Clara County, where I live and where my office is located.
In general, I avoid taking on buyers in counties outside of Santa Clara County as it’s far with today’s traffic and with buyer clients it’s important to be super responsive and see new listings as soon as they are available. For that reason, I’d be happy to introduce you to a great buyer’s agent in those areas if that’s where you’d like to purchase a home. With listings it’s far fewer trips and I have more control of my time, so I’m happy to assist sellers in all of these counties.
How is the Silicon Valley real estate market? It’s more of the same this month, with worsening, too-low levels of available inventory of homes for sale in Silicon Valley. At this point, the low inventory is a problem for everyone. Home buyers in the county or on the Peninsula have little or nothing to purchase, and sellers feel trapped – they cannot sell their current home as there are bad odds that they would be able to purchase something else if they did sell. Unless they expect to leave the metro area, they are going to hold on tight in most cases.
Have a look at the inventory of houses on the market from 2003 (the earliest year I can pull from the MLS) to today in Santa Clara County – August is in bold to make it easy to find
The Silicon Valley real estate market – a look at inventory of available homes for sale:
The numbers really say it all. Even if you are new to the San Francisco Bay Area, you cannot help but notice the relative scarcity of homes for sale this month as opposed to last month or any other dating back to 2003. Therefore, it’s no surprise that solid homes here that are not in the luxury tier for their area (and are aggressively priced, beautifully staged, professionally photographed, and easy to view) are getting loads of multiple offers, high overbids, and selling with no contingencies for inspection, loan, or appraisal. It’s nearly impossible for anyone trying to purchase with less than 20% down in multiple offer situations. My advice for them is to try to target properties that have been on the market for awhile, as often the only thing “wrong” with them is a too-high price.
A couple of weeks ago, I had a sale in the Cambrian district of San Jose with San Jose Unified schools. That property received 12 offers, 8 of them with no contingencies of any kind, and more than half with more than 20% down (highest two were at 50% and 55% down). Sobering, isn’t it? Great if you are a seller, impossible feeling if you are a buyer.
How about the various parts of the county? The Silicon Valley real estate market varies from one area, price point, and school district to the next. The hottest of the hot markets are in the heart of the tech centers in prices under $2 million.
Mountain View continues to have the highest sale price to list price average, with a staggering 113%, and Sunnyvale is just behind at 111%. Only Los Altos Hills is coming in at under 100% for the sale price to list price ratio (it is a very high end community with 1 acre minimum parcels and often featuring extremely large houses). Saratoga and Los Gatos, also pricier, are on the softer end of the spectrum at less than 103%. That said, homes in the lowest price points in all those areas are still a hot item! Here’s a look at a glance at the Silicon Valley real estate market by area – more details are on the printable PDF newsletter:
Home buyers looking to purchase over $3 million (at least in most areas) will find it a good market for them to purchase. Selling under $2 million – again, in most areas – is fantastic for most properties. Who’s got it made? The move up luxury home buyer!
To get more details on the real estate market in Santa Clara County , San Mateo County, or Santa Cruz County, please visit http://popehandy.
If you are house hunting in Silicon Valley and new to the area, you may wonder when the usual open house times are. Unfortunately, open house times are not perfectly predictable as there is variation both from one brokerage or agent to the next and one region of the counties that comprise Silicon Valley to the next as well. As an example, in the Blossom Valley area of San Jose, condos or houses are frequently available for viewing between 1:30 and 4:30, but it’s not a rule – some listings may have a totally different schedule!
In general, most open houses will be available between 2 and 4 on weekend days if advertised as open (sometimes Saturday, sometimes Sunday, sometimes both. Open houses can run from 12-5, 2-4, 1-4, 1:30 – 4:30, 2-5 etc. If you arrive between 2 and 4 (not “at” 4), you are likely to find it open if it’s advertised as such. Some real estate agents may hold it open sooner or later, though. If a Realtor has a couple of properties that need to be held open for the public, one could be from 11-1 and the other from 3-5 or some such schedule.
The broker open house is usually not intended for the public, but for agents to show listings to other agents who are looking for their clients. Occasionally (more frequently now than before), the home is open to the public to view. Broker open home tours take place on weekday mornings, typically Wednesday, between approximately 9:30am and 12:30pm. If non real estate professionals (the public) are welcome, it will be advertised on our MLS, so check online or with your agent.
It is always best to check online at www.MLSListings.com for the most accurate schedule for open houses, which may be during weekday mornings, twilight tours, or weekend afternoons or mornings.
Finally, do not count on all properties listed for sale in Santa Clara or San Mateo Counties to necessarily be available for viewing at an open house. Some listing agents and some sellers prefer NO open houses, believing that any qualified buyer who’s serious will be working with a buyer’s agent and can make an appointment to see it privately. (This is yet another reason why every buyer should have his or her own real estate agent rather than planning to work with the listing agent when buying their next home.)
It can be really challenging for people moving to Silicon Valley to get a sense of pricing for home buying. So to compare “apples to apples,” let’s take a hypothetical case of a 4 bedroom, 2 bath home of approximately 2,000 SF house (appx 185 square meters) and see how the cost looks in one area versus another.
Today I compared several areas and cities using the same formula: homes of 1800 – 2200 SF, 3-5 bedrooms, 2-3 bathrooms, on lot sizes of 6000 SF to 10,000 SF that have sold within the last 90 days (120 days when there’s less inventory). Here’s how it shakes out in the “west valley areas” along the Highway 85 corridor. What areas are most affordable? One way of analyzing this is the “price per square foot” figure. How competitive is it? Have a look at the DOM or “Days on Market” figure. All of these days on market are short, but they range from low to heart-skipping fast. Please also note that while most of these numbers are working on a handful of sales, Saratoga had only one over the last 3 months that fit the criteria, so the data may not be as accurate in that row.
How much have prices changed? That really depends on where you live, or where you want to live. Below is a flashback to March 2017. Do you notice the difference in ordering? A couple of markets have switched places, Sunnyvale and Saratoga, but there’s not too much different. For the most part, rankings have changed very little.
This next chart was from last March.
In most cases, the most expensive and desirable places have either the best schools or shortest commute location. Had I ranked these for school scores, you’d find that Cambrian is fairly high up and a good “bang for the buck” location – though not a super short commute for folks who work in Mountain View (though not so bad for people working in Cupertino). None of these is especially close to North San Jose (Cisco).
What about a little longer term? What did this look like in 2013? Click through to see. Continue reading