The Silicon Valley market recently seemed to be on the skids from late spring through summer. The question was whether the decline in average and median sales prices was “seasonally normal” or if it was the beginning of a correction. Depending on which way you look at the data (or which data you used), you might come up with a different conclusion. What I did not expect at this point was an uptick in the market.
Today I did a quick study of pricing in Santa Clara County and San Mateo County. To my surprise, it appears that the closed sale prices so far in October are noticeably higher than in August – perhaps the sliding prices are sliding no more? Do we have an uptick in the market? We’ll have to watch and see. There are obviously very few sales so early in the month, but no matter which angle I tried, I did keep getting the same result: higher median and average sale prices in Santa Clara County and San Mateo County for single family homes. It was also strong for the condo / townhome market in Santa Clara County, but there’s a little dip for San Mateo County so far this month.
Here are some charts that I created from MLSListings, using the stats tools, today.
First, Santa Clara County single family homes, average sale price and median sale price. The uptick in sale prices is clear.
Santa Clara County – Average and Median Sale Prices over time – single family homes only
Next, the same criteria, but for San Mateo County, which also shows rising average and median sale prices :
What can you get for your housing budget? What are you able to afford to buy in Silicon Valley?
Below, please find a simple chart which provides a pretty good sense of what homes actually cost – not what they are listed for, but where they sell, here in the Valley of Heart’s Delight.
Often when people relocate to the San Jose area, they are interested in communities with good schools, like Cupertino, Saratoga, Los Altos, and Los Gatos. It can be a real shock to the system to find out that buying power isn’t what was hoped.
This data is courtesy of Sereno Group – thought it would be helpful to folks relocating here as a snapshot on the Silicon Valley real estate market Disclaimer: in many of these cities, there are different school districts within a city’s borders, and they are their own “markets”. Consider this as general information only.
How is the Silicon Valley real estate market? It’s more of the same this month, with too-low levels of available inventory of homes for sale in Silicon Valley. At this point, the low inventory is a chronic problem for everyone. Inventory is up from the beginning of the year, but no where near “normal”, as you can see in the data below.
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 2001 (the earliest year I can pull from the MLS) to today in Santa Clara County – June is highlighted in a pale yellow to make it easy to find and compare the same month over the last 17 years.
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 2001. 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 multiple offers, high overbids, and selling with no contingencies for inspection, loan, or appraisal. It’s more difficult, but not impossible, for anyone trying to purchase with less than 20% down in multiple offer situations. The key is to have extra money, beyond that 10%, for a potential appraisal deficit.
Here’s how the numbers look for various Silicon Valley communities. You can see all the info for them at popehandy.rereport.com or view the PDF newsletter by clicking the link or the image below.
One of the tools I use in my Silicon Valley real estate practice is Altos Research. My subscription, which generates reports on mls data of homes for sale weekly, covers all the zip codes of Santa Clara County. The market reports by zip code can be a real wealth of information for home buyers trying to figure out how much home they can get for their money as the report breaks down each zip code area listings by price quartiles and provides the average home and lot size, among other items, in each bracket.
Here’s one part of this week’s report for single family homes in 95032
Profile of homes for sale by price quartile in 95032 (Los Gatos CA)
This is a really helpful way to grasp qucikly how much it will likely cost to get you into a certain sized home. It also provides a sense whether your particular price point is near the bottom or top of the market – or if it’s possible at all. Want to buy a home here but the budget is $1 million or less? The data above reveals that this is unlikely in a house. But perhaps a condo or townhouse might work.
Next, please notice the days on market by pricing tier. It’s a lot hotter of a market in the lowest priced houses than it is in the highest.
It also helps home sellers to understand what part of their local market is hot or cold (if any).
There are many other elements included in the report. The main summary of “how’s the market?” is found in the upper right corner. Below is the example from the same Los Gatos 95032 report cited above:
Altos Research Report for Los Gatos 95032
The Altos data is strictly by town or zip code, so school districts won’t be covered – and here they are a major driver on home values. Even so, this is a great starting point and a way to get the big picture painlessly.
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The report is free to you – please sign up below to get the market reports by zip code emailed to you automatically each week. Yo
But wait, there’s MORE! Two monthly newsletter options, too!!
I also offer a couple of monthly newsletter than you can sign up to receive. The Silicon Valley RE Report comes out between the 5th and 10th of each month, and that site automatically generates an update for particular addresses or areas, depending on what someone signs up for. If interested, go to http://popehandy.rereport.com/market_reports and navigate to the report you want (by city, the county, or part of San Jose, for instance) and sign up to receive updates by clicking on the “Subscribe to report” button.
Additionally, once a month I send out a personalized newsletter via Mail Chimp that includes some data from the RE Report as well as other information, such as stats I’ve pulled directly from the MLS or what I’m hearing about market conditions at office meetings, or changes to the purchase contract or disclosure paperwork, etc. You can see a sample with my May 5, 2018 newsletter and also view the past mailings (upper left side “Past Issues”) & sign up if you like to get these each month. The sign up button is on the upper left side and simply says “subscribe”. There will be a little overlap with the RE Report, but it will provide info that isn’t available on that site.
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.
It’s a hot seller’s market in Silicon Valley, but it’s also a time of great job growth here! Each week I get calls or emails from people considering job offers in Cupertino, Palo Alto, Mountain View, Sunnyvale, Menlo Park, San Jose and nearby. Many of these recruits are interested in areas with superior public schools.
What’s the cost of buying a house of about 2,000 square feet with 3-5 bedrooms and great schools? A few communities with better education are these: Los Gatos, Saratoga, Cupertino, Palo Alto. We’ll consider these to provide a sense of prices in similar areas.
Here’s a quick look at what single family homes have been selling for over the last three months:
- Los Gatos: mostly $1,200,000 to $2,200,000 depending on the school district, averaging about $1,700,000
- Saratoga: mostly $1,400,000 to $2,300,000 depending on the school district, averaging about $1,900,000
- Cupertino: mostly $1,700,000 to $2,100,000 depending on the school district, averaging about $1,950,000
- Palo Alto: mostly $2,000,000 to $3,300,000 depending on the school district, averaging about $2,650,000
If you are new to Santa Clara County, you may be wondering if this is correct. It is…
Please continue reading here:
How do prices compare between Los Gatos, Saratoga, Cupertino and Palo Alto?