Silicon Valley Real Estate

Here in the Valley of Hearts Delight, aka Silicon Valley, the market continues to be a buyers market with downward pressure on prices, longer days on market, and bigger gaps between list price and sales price. What is happening area wide or county wide is not always exactly what we find in smaller market areas. Some parts of Silicon Valley, and some price points, are doing quite well relatively, while others are falling through the floor.

What is happening with San Jose real estate? Let’s look at four San Jose districts, mostly in the west valley area, by their zip code (or main zip): Almaden Valley (95120), Willow Glen (95125), Cambrian Park (95124) and West San Jose (95129).

Below, please find the trends for the median list price of single family homes for sale in these four areas of San Jose:

For the most part, it appears that the west valley area of San Jose real estate is continuing to experience noticeable declines in list prices throughout these districts. Interestingly, Almaden Valley and West San Jose (zip 95129) both saw improvement in spring before returning to the downward trend. By comparison, how is San Jose as a whole (the entire city) looking?

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There’s a lot for those of us in Silicon Valley to be feeling stressed out about lately. Between the stock market’s wild ride and sinking home values in Santa Clara County (and around the country), it’s a little nerve-wracking. These times are especially upsetting if you’re a senior and plan to retire soon.  For years, people looked at their homes with the fond sense of “this is my retirement fund” - or at least a good part of it. Some of that value is now gone.

It’s also stressful for those of us who’ve put money into retirement funds or  college savings plans and need it soon. Here in California, the 529 College Savings Plan is an “index fund". That means it’s a combination of stocks, mutual funds, and bonds. In my house, we have one kid who’s a freshman in college and one who’s a senior in high school, and we’re seeing the 529 Plan shrink right when we need it.

The stock market, the financial crisis and the housing market are bigger than all of us. We are on the verge of a recession, if not already in one now. There’s a lot that’s beyond our control. But what CAN we do to maximize the current situation?

I cannot say what to do about the stock market, though my hunch is that when people advise “buy low", they are talking about today. I can say something about the housing market in the San Jose area, though, because I’ve got experience with it, both professionally and personally.  There are opportunities in this market for those who are able to act on them.

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Ths San Jose real estate market conditions vary wildly from one part of this sprawling city to the next. The high-end neighborhoods of Silver Creek, Almaden Valley, as well as parts of the Rosegarden and some hilly locations with views are all very different real estate markets then downtown San Jose, the Santa Teresa area, Burbank, or east San Jose. Even within each district, there are many smaller markets. Today we’ll have a look at the Cambrian Park real estate market.

How’s the real estate market in Cambrian Park?

There are some plusses for Cambrian Park, being up against some well-to-do areas (Los Gatos and Almaden Valley). The area is a middle-class to upper-middle class area and homes are generally well kept and schools range from good to great. All of these help keep values fairly strong in Cambrian.

Even so, prices are down and sales are down, just like the rest of Silicon Valley. However, it’s not as bad here as in many parts of Santa Clara County.

Houses in Cambrian Park have mostly enjoyed a good absorption rate of under 6 months for most of this year. It’s been a little rougher on the Cambrian condo market though. As with the rest of Silicon Valley condos, they just are not selling as well as houses, most likely because single family homes have come down so much in price that they are more affordable.

Overall, it is currently very close to a “balanced market” in Cambrian Park. That means it’s a reasonable time for both buyers and sellers right now.

Next let’s have a look at the data, statistics and trends for the housing market in Cambrian Park. How are realty values holding up?

Cambrian Park Houses - trends, data and statistics

Prices are down in the Cambrian district about 18% year over year. This is bad, but for all of the city of San Jose, that number is a bit over 32%!  It’s easily a $100,000 savings for buyers getting into the market now and is making Cambrian Park homes far more affordable then in recent history.  Interestingly, the days on market are better than a month ago and inventory is better than both last month and last year. Are we near the bottom? That could be the case.

Now let’s have a look at the same information for the Cambrian condo and townhouse market.

Cambrian Park Condominiums and Townhomes - trends, data and statistics

Condo prices are down, but sales are up, in Cambrian Park. Days on market are a hair better than last month but still significantly worse than last yaer. Inventory, though, is down 14% from a year ago. So again we have a lot of mixed signals on how this market is faring, except for pricing, which is decidedly down. It seems to have farther to go before it will bottom out. Looking back at the absorption rate graph for Cambrian Park Condos, you’ll see that lately, things have improved quite a bit for condominium sellers here.

Next - buying and selling in San Jose’s Cambrian Park District - what to do, what not to do, now!

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Known for engineers and high tech or bio-tech, Silicon Valley is actually much more than tilt up buildings full of well educated, hard working people. There is a ton of scenic beauty here in this sub-tropical area with 300 sunny days each year. I hope you will enjoy this slide show I put together to help introduce you to “The Valley of Hearts Delight", now known as Silicon Valley. Below, please find images from San Jose (Almaden Valley, Cambrian Park and Willow Glen, and downtown Vendome areas), Campbell, Saratoga, Santa Clara and Los Gatos. Enjoy!

With so much dire news abounding, it’s easy to believe that there’s no good news in Silicon Valley real estate. That just isn’t the case, though. Every market is an opportunity for someone. It’s always better for one side (buyer/seller) and worse for the other. Right now, values are slipping, especially in the condo market, and people who own homes generally feel glum about that. But for those wanting to buy, this is a glimmer of hope that maybe they can buy a home in San Jose - maybe a condo or a house,  here rather than in the Central Valley. And with gas at $4 per gallon, living close to work is highly prized.

I. The Data for Sold Single Family Homes in Cambrian Park

But back to the local market in San Jose’s Cambrian Park district. What’s happening now in the housing market?  Here are a few facts about the solds in Cambrian for single family homes in August 2008 (charts care of my Real Estate Report, a subscription):

• Cambrian Park short sales are not rising dramatically - in fact, they seem to have leveled off or perhaps even reduced in number
• sales prices in Cambrian are down 2-4% from July to August (that said, August is often one of the softest months of the year)
• the median Cambrian Park sales price was down 7.2% in August from a year ago
• the average Cambrian sale price was down 12% in August from a year ago
• the Cambrian Park list price to sales price ratio in August was a healthy 98.2%, improved from July’s 97.7% but worse than a year ago’s 99.4%
• days on market in Cambrian was slightly improved with 45 in August, 46 in July but 27 a year ago

Let’s now have a look at some of these Cambrian Park single family home real estate facts in graphs that include not just this year, but recent history as well. First, the ratio between the list price and sales price. In a seller’s market, homes often sell at or over 100% of the asking price. Here you can see that the last time there was this type of peak in Cambrian Park was in about May of 2007. The ratio slipped consistently until February of this year, when it rose again until about May before beginning a decline. This type of slippage is not uncommon from sometime in spring through at least the end of the summer.

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Earlier today I updated my series on Silicon Valley short sales at my Live in Los Gatos blog, where I’ve been tracking the number of active listings in select parts of Santa Clara County which are offered for sale as short sales. Below please find the areas and dates I’ve charted:

To read the entire post, please continue on to Silicon Valley Short Sale Snapshot.

Do you want or need to sell your Silicon Valley home this year? If so, you ought to take the staging of your home very seriously. Often homeowners hire a Realtor (or other real estate licensee), ask for their advice on preparing the house and yard for sale, and then proceed to disregard all or most of the guidance given.

Why do would sellers hire an agent and then not take the professional advice offered?  Especially in THIS market? The result is frustrating for both the homeowner (who will not realize the best possible price) and for the agent (who cannot control the condition, but who is hampered in selling the home because of it).

To be candid, the odds are that you will not be able to sell your home in San Jose, Los Gatos, or Saratoga this year. Countywide, most homes are NOT selling. Actually, let’s look at the numbers for just a moment - you will see that it’s fairly sobering.

In the Cambrian Park area of San Jose (zip codes 95124, 95118 and a little of 95008), there are 241 single family homes and condos or townhomes for sale (the “active listings"). In that same district, just 109 are pending sales. This refects about a 45% chance of selling.

In Almaden Valley, an upscale collection of neighborhoods comprising the 95120 zip code area of San Jose, it’s much worse. There are 121 houses and townhouses or condominiums for sale, and a mere 34 which are under contract to sell. The odds here are 28% that you’ll sell.

For Los Gatos (95032 and 95030), it’s 203 available vs 50 pending. Down to 24% opportunity to sell.

Saratoga (95070) has 152 active listings and just 33 pendings, or a 21.7% sales success.

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