Months of Inventory or Absorption Rate for Cupertino Real Estate

Cupertino is a red hot sellers’ market, but primarily or the most in the lower price ranges.  The higher the price of the home goes, generally speaking, the cooler the market gets.  Part of this is because Cupertino is not considered a luxury market.  Luxury homes are far more likely to be found in Los Altos and Saratoga than in Cupertino. Even so, there are areas, primarily in the foothills and west of Foothill Blvd., where high end homes can be found.

Yesterday afternoon I ran the “months of inventory” by price point in the city of Cupertino.  The absorption rate, or MOI, will tell us how long it would take for the current inventory to be totally absorbed by the market of buyers if no other homes came on the market.  The shorter the MOI is, the hotter the market is.  (Houses and duet homes only, not condos or town houses.)Have a look:

Houses up to $500,000: n/a (there aren’t any)
$500,000 to $999,999:    .2 Month of Inventory or MOI (2/10 of a month)
$1 million to $1,499,999: . 61 MOI
$1,500,000 to $1,999,999:   2.75 MOI
$2 million to $2,499,999:  infinite (3 homes for sale, none closed in last 30 days)
$2.5 million to $2,999,999: 1 MOI
$3 million and up:  n/a

It’s a little bit of a fluke that the 2.5—3 million group was “1”. There was one sale and it was just barely over the line – it sold for $2,505,000.  Had it slipped just a little bit, the group prior would have had 3 months of inventory (1 closing for 3 listings currently active). The trend is pretty clear: the higher the price, the longer homes take to be absorbed into the market.  We can fairly think of this segment as 3 months of inventory, which isn’t bad at all but is not “red hot”.

Hottest of the hot are houses listed for sale at under $1,000,000 in the city of Cupertino – they are flying off the market at .2 months of inventory, or about 1 week!  It cools as prices rise.

Cupertino Median List Prices Compared to Neighboring Saratoga, Sunnyvale and Los Altos

We know that the median sales price in Cupertino has been climbing steadily since March 1st (reflecting sales beginning in early February). How does it compare to nearby areas?

Los Altos is selling for the most of these 4 areas, but list prices are now falling. Saratoga was dippping but now rising again. Sunnyvale has been somewhat flat recently but improving. But Cupertino’s prices are making the steepest improvement. Perhaps these low prices are the drivers for the crazy hot market activity. (more…)

Today we’re looking at the real estate market for houses in some of the “west valley” communities along the base of the Santa Cruz Mountains – areas where schools are good, crime is low, residents enjoy scenic views of the hills (or of the valley from the hills, depending on the location) and overall, a highly educated population not too far from Highway 85.

Of the four municipalities, three are really very similar to each other in several regards.  Cupertino has the largest population – about 58,000 people – but Los Altos, Los Gatos and Saratoga are all similarly sized, somewhere between 27,000 and 30,000 residents.  The latter three also enjoy a traditional “downtown” area which is popular with pedestrians, bicyclists and motorists alike. (Monte Sereno has 4,000 residents, which is so small that the statistics are very easily thrown from month to month, so it is omitted in this quick study.)  Of the four, Cupertino, then, is the least similar due to size and lack of a central downtown area.

We’ll take a quick look at these areas now in terms of the real estate market trends and statistics for each area, considering just “class 1″ (houses and duet homes).  The charts used below are from Altos Research, to which I have a subscription, and they will be automatically updated each week.

(1) Median List Price (per Altos Research):

Los Altos and Saratoga are neck and neck for most expensive areas in which to purchase a house. Over the last year, though, Los Altos has seen a rise in the median list price. There has been a corresponding rise in demand with the success of several local companies in the region (Apple, Google, Microsoft, LinkedIn, Facebook), some of which have gone public and others of which are on the verge of doing so. Los Altos is more convenient to most of these.

Los Gatos, which is a little more affordable than Saratoga and Los Altos, has seen a very noticeable increase in pricing also, while Cupertino’s prices have declined a little.

(1A) Median list price of the bottom quartile of all four:

(1B) And, very interestingly, same data but for the top quartile – the luxury market:

Here we see Los Altos clearly overtaking Saratoga! And also that Cupertino’s pricing is significantly lower than Los Gatos in this tier, and also that it has lost a lot of ground in the second half of 2011.  (more…)

San Jose is the largest city in Santa Clara County (or Silicon Valley) with about one million residents.  The districts or areas within San Jose vary tremendously in many ways, including their respective real estate markets.

Today we’ll have a comparative look at the median list prices in the housing market in three areas & zip codes of San Jose: Almaden Valley (95120), Cambrian Park (95124) and Willow Glen (95125).  First, how these three areas line up against each other and against San Jose as a whole in terms of the median list prices of homes for sale in the last year.

Please note: the charts below are “live” html and the commentary is appropriate as of today, July 30, 2010.  The charts will continue to change and be updated,though, so it’s possible that a year from now the commentary may seem disjointed.  Now you’ll know why!

First, a glance at Almaden, Willow Glen, Cambrian and San Jose genererally.  Overall, it looks like the higher priced homes are having the most trouble.  A closer look, though, shows that although Almaden is pricier than Willow Glen, Willow Glen’s median list price has gone down far more than Almaden’s.  My guess is that the school districts are having a large influence here – the schools in Almaden range from good to great, whereas in Willow Glen most of the zip code has only average schools.

San Jose as a whole, by price quartile is next.

The lowest priced homes have been inching up over the year. The second price point from the bottom seems to be about even with a year ago, the second from the top is down and the most expensive homes are down by about 5%.

Next, let’s focus on the Almaden Valley area of town by price quartile also:

What a change from San Jose as a whole – all of these price points are down from a year ago. (Buyers, take note: it’s easier to buy a home when you see these conditions.)  The price points are high, so Almaden is behaving like other more expensive areas of San Jose.  Next, Cambrian Park…
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The real estate news is so mixed it’s mind boggling, whether it’s a national perspective, one specific to California, the San Francisco Bay Area, the “south Bay”, Silicon Valley or even San Jose in particular.  It is anything but a uniform, monolithic market. Even so, it’s good to look at the big picture along side the hyper local level, and that’s what we’ll do today.

Today’s San Jose Mercury News featured a front page article by Sue McAllister (an excellent reporter) on Santa Clara County housing values.  She shares that Zillow says that we’ve hit bottom here in Santa Clara County.  That is certainly good news to home owners accross Silicon Valley!  And I don’t disagree that countywide, we’re definitely looking up right now.  No guarantees for the future, but Zillow says that the threat of a second or double dip no longer seems likely. Whew!

Unfortunately, there’s another real risk to this recovery and it’s not the “shadow industry”. This time it’s homeowners walking away because they’re underwater (not because they can’t afford to stay, but because they choose not to).  Sixty Minutes did a segment on this phenomena of home owners walking away last night., which you can watch via this link.
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Are real estate prices rising in Silicon Valley? In many places and certainly in the lowest price ranges, housing prices are going up. I see this especially in entry level homes for sale but also in the most affordable homes in expensive areas too.

In Monte Sereno, Los Gatos, and in the Los Gatos mountain communities it’s often a little different than the rest of the valley, so rather than generalize, let’s see for ourselves. Today I’ll use the charts from Altos Research (by permission – I have a subscription) to illustrate the pricing situation in these areas over the last 90 days among single family homes (houses rather than condos or townhouses). This post will include a series of graphs. The first chart does a great job of indicating affordability - that is, which areas/zips are more easy or difficult to afford.

Here are two snapshots of the median list price of Monte Sereno 95030, Los Gatos 95030, Los Gatos 95032, and Los Gatos mountains 95033. First, one with the 3 LG zip codes combined:

Then with them separated out by zip:

The most expensive homes in Monte Sereno appear to be the softest part of the market.

A quick word about how “mild” the changes may seem, whether up or down – this is purely a function of the graph having a very broad price range. If we separate it out to just Monte Sereno or Los Gatos alone, it looks more startling:

If we do JUST Los Gatos 95030:
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