After several long, painful years of being “under water” in Silicon Valley, your home now is in the black, that is, you’ve got equity.  You’ve been wanting to move up, or downsize, or relocate – but couldn’t really budge until now.  With the new market conditions, and the freedom to now sell, the question now is whether or not that’s what you want to do.

There’s not an easy answer or a one-size-fits-all response for this, because there are so many variables.

• If you are moving within Silicon Valley, it’s important to also consider the market for the next home – is it easier or harder to buy a property there? You ideally do not want to sell one place and find yourself unable to buy the next one!
• If you are making this the last house you’ll own, and are moving to a rental retirement community, it’s much less complicated.  Your main goal may be to sell before the next correction happens so that you get the most possible for your property without risking a market downturn.  Right now it’s good in most of the San Jose area. Will it continue?
• If you’re selling an investment property or a rental home, it’s a different kind of math problem.  You’ll want to know what the net income and return on investment will be for the condo or house you’re selling vs the one you’d like to buy.  Some markets are ultra hot right now (Menlo Park, Palo Alto, Mountain View, Sunnyvale, Cupertino) and it can be difficult to purchase there, but the rental rates are very high since these are work hubs.  It will be challenging to sell in Morgan Hill or Gilroy and buy in Palo Alto or west San Jose with Cupertino Schools

In many cases, making the decision to sell one home and buy another for any reason (schools, commute, downsizing) will involve analyzing from several angles.  Sometimes it makes sense to pay more but to have a much improved quality of life.  Or it may make sense to get a lesser home in a better school district because you place a premium on education.  In many cases, it’s not about the money, it’s about your goals.   Because it’s a multi-faceted question, often it takes a year or two or more to make the decision after becoming “un stuck” with the reappearance of equity.

But that’s a good problem to have!

How is the Monte Sereno real estate market? Because the city is small, with just about 4000 residents, there usually are few homes listed for sale or selling, and with small numbers we can get seeming volatility.  Additionally, some of the properties carry hefty price tags, so reductions in those can really fiddle with the stats overall.  Here are the quick statistics for the closed sales in the last complete month to give a sense of how things are going. Sales data comes from my Monte Sereno Real Estate Report .

Given that the supply of homes to study is tiny, what can we tell from this data?  Listings are way up – as is the case for the county as a whole.  The sale price to list price ratio slipped a little but the median and average sale price is up both month over month and year over year.

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What do you need to know if you are shopping for a home in Silicon Valley right now?

First, you need to understand that possibly more than in any other time, it’s a deep seller’s market, meaning you most likely will be competing against multiple offers. Homes for sale are not as abundant as normal, and there are a lot of buyers trying to purchase a house or condo in the San Jose area.  Not enough supply, too much demand equals multiple offers and rising prices.  (You can check the current Santa Clara County real estate market statistics at popehandy.rereport.com.)

Secondly,if you want a chance at buying a property in Santa Clara or San Mateo Counties, you must have a great “offer package”.  It is imperative that you have a solid down payment, 20% is a minimum but most often it takes 25% or more to convince sellers that they should take your offer over the others.  Cash is king and you may get out bid by an all cash offer, especially if it’s also a non contingent offer.

If you include any contingencies for inspections, loan and appraisal, they will have to be fairly short to compete in multiple offers.  A 17 day loan contingency is a pretty sure fire way to get eliminated from multiple bids. When there are 10 or more offers, frequently at least 1 or 2 will be “all cash” and just as many have no contingencies.  Biggest obstacle to overcome is the appraisal contingency.  Because prices are rising so fast, many homes won’t appraise – and sellers know it, and therefore won’t take your offer if you have an appraisal contingency in place. Read the rest of this entry »

The Los Gatos real estate market continues to improve but the home buying conditions are much easier here than in nearby areas such as Cupertino, Almaden, and Cambrian.  Here are the current numbers, per my Los Gatos real estate report (click on the link for full information).

The median and average sales prices are up noticeably month over month and also year over year on the average SP and also the median sale price.  Days on market are down at 34. Read the rest of this entry »

For people relocating to Silicon Valley, there can be some significant surprises (beyond the “sticker shock’” of our home prices in the San Jose area). Here are a few pointers to help you in your transition:

• The school district boundaries do not follow the boundaries for the city or town
  • For instance, in the Town of Los Gatos there are 3 school districts
  • Saratoga has seven school districts (four elementary and three high school districts). Being in Saratoga could mean having Cupertino Schools or Moreland Schools or Saratoga Schools or, if you’re in the mountains over the village, even Los Gatos Schools. Part of San Jose has San Jose Unified Schools, but in some areas its Union Schools, Alum Rock or other districts. The Cambrian Park area of San Jose, for instance, has 3 elementary school districts: Cambrian, Union and San Jose Unified.
  • The reason for this confusing situation is that the school district boundaries were drawn before all the cities and towns in Santa Clara County were clearly defined (or the boundaries expanded)
  • School performance scores are probably the # 1 driver behind the value of any given location. Many parents choose the home only after deciding upon either a school district or even a particular elementary, middle, or high school. (Read more about understanding school scores on my Silicon Valley relocation blog.)
• The mailing address city or town may not be the “actual location” of the property
  • This is a rare situation, but sometimes the mailing address will say ˜Los Gatos” when in fact the home is part of San Jose or Campbell or is an unincorporated area of the county. This has to do mostly with postal routes or with unincorporated areas using a mailing address for a long time and then being incorporated.
• We have “expansive clay soil” here and water is a big issue. (Please see related post on buying hillside homes in Silicon Valley.)
• Most of our housing is ranch style tract homes. Were sorry about that and apologize in advance for the visual assault that this creates. Developers went nuts in the post WWII boom and created massive urban sprawl, one of the only things that isn’t so delightful in the Valley of Hearts Delight.

A few non-real estate Silicon Valley surprises too:
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How’s the Saratoga California real estate market?

The Saratoga California housing market continues to be good overall.  The market is driven in large part by school districts and neighborhood schools, so a look at the hyper local level may reveal something different than this broad overview of the 95070 zip code – the entire city.

Here are the real estate sales statistics for closed sales last month among houses in the 95070 zip code (click on link to read the full Saratoga Real Estate Report for houses):

Prices are going up, but not at the insane rate of some places (such as Sunnyvale).
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Silicon Valley features a number of upscale communities that enjoy beautiful estate properties. These luxury homes are not simply large houses, but rather they boast qualities generally not seen in regular residential real estate.

What makes a house a “luxury home”?

A luxury property in Santa Clara County often includes a number of elements that set it apart, such as:

• price tag: these homes usually sell for more than three or five million dollars (and may be $10 or $20 million or more, though in some cases as low as $2 million – that largely depends on location)
• close to an acre or more of land
• house larger than 4000 or 5000 sf
• the inclusion of “out buildings” such as a guest cottage, gatehouse, etc.
• views (valley, hill, acreage) or special features of the land (waterfront, riverfront adjacent), a vineyard, or something else special and uniquely beautiful
• amenities such as a pool, tennis court, racquetball court, gym, sports court or facilities for enjoying other sports & exercise on site
• specialized hobby or relaxation rooms, as in a darkroom, library, workshop, conservatory, wine cellar & tasting room
• entertainment centers not commonly found in private homes, like a ballroom, dedicated home theater room for movie viewing, bowling alley, shooting range, or place to practice a golf swing; pool or billiards and “game room”, and ice cream parlor
• safety tools such as a video surveillance system, electronic gates
• neighborhood: it is very hard for an expensive house to be viewed as a luxury home if the surrounding properties are not also high end homes

The (main) house itself is qualitatively different too.

Kitchens tend to be the most important room for San Jose area home buyers of all price ranges, and this includes homes that cost upwards of ten million dollars. Usually, kitchens in these homes are designed with a very clear purpose in mind and are done beautifully, though recently in Los Gatos I saw a home listed for about ten million with a kitchen that needs to be completely remodeled. This is very unusual, though.

Most luxury homes features kitchens of one extreme or the other. On the one hand, it may be more industrial in nature if those cooking in it are primarily professional chefs, domestic employees or catering services rather than the homeowner. This is not the kitchen of glossy magazines, it’s not meant to impress anyone for all the maple cabinets, stainless steel appliances and granite countertops. This sort of kitchen is functional, not gorgeous, and it may have stainless steel countertops, for instance, alongside the giant gas range. Such a kitchen is usually separate from the living areas and the guests are not expected to visit this part of the home.

Far more commonly found in Silicon Valley is the other end of the spectrum, the kitchen where residents spend most of their time, and it’s meant to impress. Here we see high end materials and appliances in a room viewed as much as art as the meals created in it are. This type of kitchen is often the focal point of today’s upscale or luxury home. The home’s floorplan is “open” to the kitchen – often the kitchen and family room blend together as part of a Great Room. This is a kitchen designed for owners who cook, not those who have servants.
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