It is a strong seller’s market in the Alum Rock area of San Jose right now: inventory is shrinking and prices are rising after hitting bottom a few months ago. Prices are still way off year over year, but for the last 4 months or so, prices have been rising in this part of Silicon Valley, and it’s quite dramatic.

As of a few days ago in this area of San Jose, there were 203 single family homes for sale and there were 114 that sold/closed in the last month. To get the “months of inventory” or absorption rate we just divide the 203 by the 114 and we get about 1.8 months of inventory, which makes it a very strong sellers market. 

(Because it’s so affordable, first time homebuyers are flocking to Alum Rock in droves. Unfortunately, they are sometimes outbid by all-cash investors and left frustrated as homes get multiple offers and prices skyrocket out of reach.)

The absorption rate can be measured in days, weeks, months (or years) of inventory.  Below is a chart reflecting the days of inventory relative to the last 18 months or so.  As you can see, the absorption rate has been shrinking very, very dramatically (as prices have fallen through the floor).

The market is a sellers market because homes are selling fast (fast, not at a great price for the sellers). They are selling fast because of one main reason: prices are slashed to “bargain basement” prices, and this has happened because the vast majority of sales are foreclosure related: they are short sales and bank owned property sales

A subset of that market are the few “normal sales”. When I take them apart, there are 66 for sale and 18 that have closed in the last 30 days, which is a 3.6 month supply of inventory - still a seller’s market, but not as strong. (Under 6 months is a sellers market, over 6 months is a buyers market.)

What about pricing?

How much more will a home that’s a “normal sale” sell for as opposed to a foreclosed home (REO) or a short sale?

Let’s take the example of a home that’s about 2000 SF and see how it plays out.

Regular sales $319 per SF

Of the homes “for sale” in Alum Rock, of homes about 2000 SF there are:

27 in all
7 bank owned
13 short sales
7 normal sales

Of the homes “under contract” in Alum Rock, of similarly sized homes there were:

66 for sale
15 are bank owned
44 are short sales
7 are normal sales

66 sold in all
53 were bank owned
10 were short sales   (note that a high percentage of short sales SELL but do not CLOSE)
3 were normal sales

Buyers: if you buy a short sale or an REO, there will be “issues” but there will be discounts.  Sellers: if you want to sell a home in Alum Rock, you must be very competitive, whether your home is a normal sale (about 5-10% of the inventory only) or a short sale.  If your home is not a distressed sale, you can sell for more – but not oodles more – than the rock bottom pricing that the bank owned or short sale homes will fetch.

Additionally, there’s a difference from one price point to the next. Below, please see the list price by quartile for the most recent week in the 95127 zip code of San Jose. NB how much better the market is performing here in the high end price range. The higher the price, the more the upswing.  Why? Fewer defaults!

If you want to buy or sell a home in the Alum Rock District of San Jose or anywhere in Silicon Valley, please know that to get the right price, it’s imperative to dig down to the local level and specific home type and not rely on general stats. There is wide variation from one subdivision to the next, let along areas with views, no views, small homes, big homes, etc.

Please contact me for assistance in analysing your market and how to make the most of it. And please visit my Alum Rock statistics and trends section of my RE Report.

How is the real estate market doing in the Almaden Valley area of San Jose? We can look at a few key indicators (median list price, average days on market, and inventory levels) to get a pulse on the current market in the San Jose, 95120, area. Graphs below are from Altos Research; I am a subscriber so may present these to you here. Data used is list pricing. (To see the most recent reports using closed Almaden sales numbers from November, please view my Almaden Valley Real Estate Report, which is from another provider and is another of my subscriptions to get the best data possible for my clients and readers.)

From the solds last month and in prior months, we know that overall, the Almaden real estate market has been deepening in the buyer’s favor. Prices have been slipping, days on the market are lengthening, and list price to sale price ratios have wavered a bit.

Median List Price for Almaden Valley Homes

The graph above reflects the list prices of real estate in Almaden Valley, which is an upscale district on the southestern side of the city of San Jose. Interestingly, while the list prices of single family homes is declining, the list prices of condos and townhomes has performed almost the opposite in the last twelve months and now appears to be level.

Among houses, is it any different from one price point to another?

 
The main difference in pricing by Almaden quartile appears to be one of degree. The highest priced homes appear to be coming down the most, and more affordable or entry-level houses in Almaden are slipping very slightly by comparison.

For Almaden condominiums and townhomes, prices appear to be far more chaotic, with much more volatility in the highest price Almaden townhomes and condos:

Average Days on Market for Almaden Valley Homes 

First we’ll have an overview of the houses and condos in the San Jose, 95120 zip code (Almaden Valley) and their average days on Market.

The condos and single family homes for sale in Almaden have followed mostly similar patterns over the last twelve months and now are both rising. This indicates that it is more difficult to sell a home. Single family homes remain on the market for an average of about 110 days, close to four months. Most of these are not selling, but are either taken off the market, or put back on with a new price and new MLS number.

Next let’s have a look at each class of property by quartile to see if it’s varied or similar.

Single Family Homes

The four quartiles or ranges of prices in Almaden are all fairly similar in how they’ve been behaving except for the lowest price point among single family homes, which appears to have had a nearly steady incread of days on the market over the last year while higher priced points all had a dip (or a rally) over either the spring or summer).  Now, though, homes in the lowest two quartiles have levelled off, while it continues to worsen in the two upper price ranges. Hardest to sell are the highest priced houses in Almaden.

Condos and Townhomes in Almaden

While the list prices for Almaden townhouses and condos showed different patterns, the average days on the market for condos by quartile is simply a wild ride. Twelve months ago, the DOM for most price quartiles was close to 60 except for entry level condos, which were half as many days. In successive months, though, each price point behaved very independently of the others.

The two top quartiles are now selling faster then a year ago, but the entry level condos of the first two quartiles are now staying on the market far longer (and they are the bulk of the condo market).  Why? The condo market in Silicon Valley as a whole has been taking a beating while consumers choose foreclosure houses rather than condos.  Perhaps those living in upscale condos are not there because they can’t afford a house, but prefer the lifestyle that condo or townhouse living provides. Unfortunately, we don’t have that data to offer a definitive explanation.

Almaden Valley Inventory of Homes for Sale

Inventory is another key indicator on market performance.

The graph for inventory is less worrisome then days on the market. Inventory levels are close to flat among townhouses and condominums in Almaden Valley, while the numbers are clearly declining among houses there.

Again, let’s see if it’s the same in all price ranges or if there’s fluctuation. First, among Almaden houses for sale:

I redid this chart a few times to make sure there was not an error. It is oddly uniform across all price points.

And for townhomes and condos in Almaden:

Even within the otherwise somewhat disparate Almaden condo market, the inventory patterns are similar.

Overall, it remains a buyer’s market in Almaden Valley, and this is true for condos and houses and it is true in all price ranges.  Prices run from flat to falling, inventory is dropping (which may just be a seasonal fluctuation), days on market are lengthening.

Sellers need to make their home as perfect as possible. Buyers have never been pickier and the vast majority of buyers today do not want to buy a home and fix at all. Homes that need updating or remodeling either won’t sell or will sell for far less than you might expect. The greatest demand is for turnkey (read: perfect) homes with no issues (read: no busy roads, no high voltage power lines, nothing objectionable nearby).

Buyers, if you are one of the rare few who will buy and fix, the market is at your feet in many cases. Your main challenge will be in selling your current home, if you are a move-up buyer, or in securing financing if you do not have a large downpayment. The best bargains will come to those willing to buy and fix and to those with large cash downpayments where financing becomes much easier.

All of this market information is general. Your home may be unique due to things like views, construction, proximity to schools or golf courses, or any other number of factors. Please contact me for specific information relating to your home or one that you would like to purchase.