What’s going on with the Silicon Valley real estate market? Is it as crazy as ever with multiple offers, overbids, and few or no contingencies?
In many cases, yes – especially in the more affordable price points in areas with good schools and shorter commutes. Those areas are the ones most in demand. And as before, comparing the three counties (San Mateo, Santa Clara, and Santa Cruz), San Mateo is the most expensive and overall it becomes less expensive in Santa Clara County, then less expensive still in Santa Cruz County. Alameda County has a little of Silicon Valley, but that area is in a totally different MLS system so is not part of this analysis.
What does it cost to buy a house in Silicon Valley?
In Santa Clara County (home to Palo Alto, Cupertino, Sunnyvale, Mountain View, San Jose, and my own Los Gatos), the average sale price is about $1,150,000 and the median sale price has been bouncing around in the $900s range for the last few month.
In San Mateo County (home to Redwood Shores, Foster City, Menlo Park, San Mateo), the average sale price is in the range of $1.4 to 1.5 million for houses recently sold. The median is a little lower, closer to $1.2 million.
In Santa Cruz County (Santa Cruz, Scotts Valley, Aptos, Capitola, Soquel), it’s more affordable. The average sale price of houses recently has been in the 800s, and the median sale price has been right about $700,000.
How is the year over year appreciation in these different parts of Silicon Valley?
Naturally, it’s easier to buy near Santa Cruz than in San Jose, but the demand tends to remain stronger in the areas with the jobs as opposed to the coastal communities, so appreciation is usually stronger in the areas where it’s hardest to purchase. That seems to be true in a very similar way in San Mateo County, too – yes, it’s less costly to buy in Half Moon Bay, and in an up market it’s great, but in a down market it will not fare as well as Belmont, San Mateo etc.
Santa Clara County
Santa Clara County – prices up over 2014 by 6-8% appx
- Median home prices increased by 7.9% year-over-year to $917,000 from $849,975.
- The average home sales price rose by 6.4% year-over-year to $1,157,360 from $1,088,090.
- Personal note: appreciation in this range is fairly sustainable, as compared to the appreciation in 2014, which was closer to 20%. Double digit appreciation is usually a little worrisome since it often is not sustainable.
San Mateo County
San Mateo County – prices up from last year
- Median home prices increased by 21.9% year-over-year to $1,170,000 from $960,000.
- The average home sales price rose by 3.7% year-over-year to $1,482,950 from $1,429,870.
Santa Cruz County
Santa Cruz County – prices off year over year
- Median home prices fell by 0.4% year-over-year to $700,000 from $702,500.
- The average home sales price dropped by 10.4% year-over-year to $801,516 from $894,204.
Within all of these market areas, there are hotter and cooler locations, school districts, price points, etc. Often there are work arounds to maximize the sale or purchase of a property. For instance, some homes have a pool that eats up the whole yard. That might make a home difficult to sell, so perhaps you can buy it without competing against so many offers – and then remove the pool later. Often the “fixes” are not as costly as you may think.
Want to buy or sell in Silicon Valley? Please reach out to me. I’d love to chat with you about it and see if we might work together.
First there is disbelief or denial. “It cannot be that bad – people are exaggerating.” That’s followed quickly by “I thought it was bad where I used to live!”
Then there may be outrage (anger is too mild a word): “Why would anyone pay that to live there?”
Next, a little bargaining: “What’s the work around? Are there any bank owned homes? How about something older – I don’t mind a 15 year old house…” (To us, that’s a young house, by the way.) “What about buying a lot and building?” Or the commute negotiation “I thought I had to be within 15 minutes, but I could go 30.” A typical commute might be 30 minutes in the morning, but 45 in the evening. Many people have worse than typical, though, as they want a bigger, nicer home, better schools, quieter location, etc.
Depression soon follows suit. This may be accompanied by “We just cannot do it” or “We are not willing to do that” (until they see that rents are $4000 for a smallish house in an only OK area and $6000 per month for a decent sized home in a good area.)
Acceptance comes at last. It may lead people to decide to go all in, bite the bullet, and buy locally. It may lead them to move way out of the immediate area and embrace an hourlong commute – or to take the Apple or Google bus to work, if applicable. It could lead them to move to Seattle, Orange County or somewhere a little less overwhelming in terms of housing costs.
Sometimes people think they are at “acceptance” as they write offers which are habitually 5-15% too low. In reality, they are actually still in the “bargaining” phase, hoping for a good deal amidst our raging seller’s market. That doesn’t usually happen, so writing a lot of unsuccessful offers frequently leads to depression (and sometimes blaming their agent for their offers not going through, even when it’s clear at closing that their offer price or terms were the issue).
How fast can you get to acceptance and write a realistic purchase offer? For people who could have bought 12 months ago but are still shopping now, that wait has cost them about 10% of their home price in many cases. For those looking 2 years, it’s easily double that, and in some cases prices are up a full 30%. That’s like setting a match to your entire down payment.
If you want to be a successful home buyer in this crazy Silicon Valley real estate market, you will need to get onboard quickly, because the longer you take to get to acceptance, the more expensive your final home will cost when the market isappreciating, as it has been for about 3 years now. Time is money and nowhere is that more true than in the San Jose, Silicon Valley, or South Bay real estate market.
Looking for more Silicon Valley real estate resources? Here are a few of my other sites, blogs, and market stats tooks:
popehandy.rereport.com – real estate statics for San Mateo County, Santa Clara County, and Santa Cruz County
popehandy.com – Silicon Valley real estate, Los Gatos real estate, info on many areas of the realty market in Santa Clara and San Mateo counties
SanJoseRealEstateLosGatosHomes.com – Santa Clara County real estate, special focus on San Jose areas of Almaden & Cambrian and also Los Gatos with info on the real estate market, neighborhoods, and more
LiveInLosGatosBlog – Los Gatos real estate, neighborhoods, events, businesses, parks. Many photos and neighborhood or subdivision profiles.
- San Mateo County $2884
- Santa Clara County $2552
- The San Francisco Bay Area as a whole (all 9 counties) $2451
- Alameda County $2172
- Contra Costa County $1825
These numbers are the median for the whole county in question – so in Santa Clara County, it will be a lot more if you are in Cupertino or Palo Alto or Los Gatos as opposed to the Alum Rock area of San Jose or Morgan Hill or Gilroy.
Houses are worse still. Small homes may be found for $2500 to $3000 in many areas. Places with better schools may run $4000 to $6000 per month for a home with better schools. Want the best? It’s likely to be $7000 – $8000 for a good sized, comfortable (do not read “elegant”) house with better schools – or more.
Update on August 25: I’m hearing that 1 bedroom apartments in Cupertino are running at around $2300 per month and a 2 bedroom at around $3000 per month.
Read the article in the Merc:
Bay Area rental crisis squeezing out middle class
Visiting Silicon Valley for job interview and considering a relocation: how to get a feel for where to live?
A few times a month I get phone calls from people considering a relocation to Silicon Valley. In most cases, a trip out to Palo Alto, Mountain View, Sunnyvale, Cupertino, San Jose, Menlo Park or somewhere else in the South Bay or Peninsula is planned. These questions always arise:
What should we see when visiting Silicon Valley?
What neighborhoods should we consider or tour while there?
First: know which part of Silicon Valley where the possible employer is located
Silicon Valley covers a lot of ground – most of 2 counties (Santa Clara County and San Mateo County) and snippets of a couple more, which the Silicon Valley sprawl now inching north toward San Francisco. The first thing to know is where the potential job is located. There’s a huge difference between Oracle in Redwood Shores, Apple in Cupertino or Cisco in North San Jose, let alone some of the more far reaching Silicon Valley areas like Scotts Valley, South San Jose (at the intersection of Hwy 85 and 101), over in Los Gatos (Netflix) or inching up the east Bay in Fremont or Hayward.
Second: know your commute tolerance and have your priorities organized
Everyone would like to live close to work (under a half hour commute) but if you are juggling multiple priorities such as having a house & yard for kids, needing good public schools, and bringing it in at less than $2 million, you may have to sort out which of the important priorities is the very most important and go from there. For many, the commute gets longer in order to provide the other things (a house not a condo or apartment, better schools, lower price). Most people say that they would like a commute of 30 minutes or less. Often they end up with a longer one after seeing a few areas and properties. Continue reading
Although normally I prefer to take photos than be featured in them or in videos, many of my Realtor friends from across the country have been telling me that our blog readers would like to see us on video (and not just read our typed words). So I’m caving in – and saying hello! Hope you enjoy this 4 minute video, shot from my home office in Los Gatos.
- Palo Alto (very costly)
- Cupertino (less expensive for the school scores compared to other areas up to #5 on this list)
- Saratoga (very expensive)
- Los Altos & Los Altos Hills
- Los Gatos & Monte Sereno (95030 & 95032)
- Parts of San Jose in Cambrian 95124 and Almaden 95120 (very good value)
- The Los Gatos Mountains (zip code 95033)
- Parts of Fremont (Mission San Jose area)
Comparing real estate market conditions in Almaden, Los Gatos, Saratoga, Cupertino, Sunnyvale and Los Altos
For people relocating to Silicon Valley, often there’s not just one city, town or area which seems like a good fit. Sometimes it may come down to what your money can buy or how difficult it is to purchase in one area versus another. This is frequently the case with the “West Valley” areas where schools are good and the neighborhoods are tidy.
There are two statistics which are especially helpful in understanding the Santa Clara County real estate market. One is the “days on market” or DOM. The shorter this is, the hotter the market – and the harder it is to purchase. The second is the sale price to list price ratio, which hints at the existence of multiple offers, overbids, and buyers giving away all of their rights.
Today, then, we’ll have a look at these, starting with Almaden, the southernmost area, and working our way north along the coastal range. The charts below are all for single family homes (houses and duet homes, not condos or townhomes).
Almaden Valley is a district within the city of San Jose. Its boundaries roughly follow the 95120 zip code, though there are some parts of nearby zip codes which somewhat overlap into Almaden too. How’s the Almaden market? Red hot! Days on market is crazy low – a mere 16! And the average sale price is almost 104% of list price…and rising!
Almaden Valley, San Jose, 95120 days on market and sale price to list price ratio
In many areas of the U.S., real estate agents actively work the rental market. In those areas, owners are willing to pay a commission for the service, and houses and condos are listed in the local multiple listing service.
Not in Silicon Valley, though. Instead, it’s a land of “for rent by owner”. A few properties may be on the MLS (see link below), but hardly any. Far less than 5%.
There is most always a big shock when folks relocate to Silicon Valley and start to learn how far their money goes – or doesn’t go – here. This has been the case for a very long time, since long before I got into the business 20 years ago. Prior to to looking online, you may hear that it’s bad, but you don’t really know what people are talking about until you get into a car with a Realtor and go see what $500,000 or a million or more will buy you here.
And now, too add to the already high home prices, the real estate market is overheated due to a severe inventory shortage of homes for sale in the San Jose and “South Bay” areas, too. Most properties are selling over list price – and that was high to start with, particularly for out of state or global buyers.
In most parts of the U.S., a half a million dollars will buy you a great home. Here, not so much. A million dollars will buy you a nice home in a decent area, but it won’t be fancy, and you’re unlikely to have a large lot unless your commute is huge and you’re on the outskirts of the valley. It’s more than a million to have a really nicely remodeled home with great schools; that price point seems to start at about 1.2 million in most parts of the valley. Have a look at the median and average sales prices for houses in Santa Clara County – this will give you a sense of how the market has been behaving, but also of the cost to purchase homes generally.
The Silicon Valley real estate market is spread out over a few counties, primarily Santa Clara County but also much of San Mateo County and part of Alameda and Santa Cruz Counties. Santa Clara County is home to about 1.8 million residents, more than half of them in the big city of San Jose. The high tech companies such as Cisco, Apple, Google and more are spread out around the valley, and each neighborhood has a very different set of housing market conditions. Even so, we’ll take a broad view of the county today to give some general indicators on what you might expect when moving here.
As a whole, home prices in Santa Clara are rising due to a dire scarcity of listing inventory. On average, houses sold in December were overbid and the sales price to list price ratio was about 102%. Here are the numbers at a glance:
|Trends At a Glance||Dec 2012||Previous Month||Year-over Year|
|Median Price||$682,500||$685,000 (-0.4%)||$530,000 (+28.8%)|
|Average Price||$908,873||$885,921 (+2.6%)||$714,562 (+27.2%)|
|No. of Sales||899||903 (-0.4%)||903 (-0.4%)|
|Pending Properties||980||1,500 (-34.7%)||1,396 (-29.8%)|
|Foreclosures Sold||25||34 (-26.5%)||112 (-77.7%)|
|Short Sales Sold||154||138 (+11.6%)||229 (-32.8%)|
|Active Listings||534||782 (-31.7%)||2345 (-77.2%)|
|Active Foreclosures||22||27 (-18.5%)||173 (-87.3%)|
|Active Short Sales||39||52 (-25.0%)||980 (-96.0%)|
|Sales Price vs. List Price||102.6%||102.3% (+0.3%)||98.7% (+3.9%)|
|Days on Market||36||32 (+11.3%)||63 (-42.8%)|
Though there was a slight slippage in values from the prior month’s median sales prices, the average price was up 2.6%. More dramatically, though, prices were up 27-28% from the year before! Foreclosures and short sales are way down. Inventory is critically low, off 77% from a year earlier.
It is a very deep seller’s market in Santa Clara County. Some areas, such as Cupertino, are very difficult for buyers right now. Cupertino’s prices are already past the last peak pricing and have only about 2 weeks of inventory.
|Trends At a Glance||Dec 2012||Previous Month||Year-over Year|
|Median Price||$1,343,880||$1,325,000 (+1.4%)||$982,500 (+36.8%)|
|Average Price||$1,304,180||$1,373,820 (-5.1%)||$1,085,210 (+20.2%)|
|No. of Sales||26||27 (-3.7%)||24 (+8.3%)|
|Pending Properties||18||23 (-21.7%)||13 (+38.5%)|
|Foreclosures Sold||0||0 (N/A)||0 (N/A)|
|Short Sales Sold||0||0 (N/A)||0 (N/A)|
|Active Listings||13||26 (-50.0%)||31 (-58.1%)|
|Active Foreclosures||0||0 (N/A)||0 (N/A)|
|Active Short Sales||0||0 (N/A)||4 (-100.0%)|
|Sales Price vs. List Price||102.9%||104.4% (-1.4%)||96.4% (+6.7%)|
|Days on Market||31||33 (-5.8%)||52 (-40.7%)|
To get the full report with much more data and information for all areas within Santa Clara County, please see www.popehandy.rereport.com.