San Jose’s Cambrian, or Cambrian Park, area is a very hot seller’s market.  Multiple offers are not uncommon, especially in the Union School District, where schools are trending upward.  My Cambrian Park Real Estate Report has just been published with the updated numbers from the closed sales in April. Please click on the link to see much more information there.

Prices are up nicely year over year! Inventory is crazy low – just 35 homes for sale in April compared to 57 in March and 84 in April 2011. Days on market is far lower too. All around, it is a deepening seller’s market.

Even stronger is the Cambrian condo market, which is skyrocketing!!!  Please see the Cambrian Condominium & Townhouse Real Estate Report for all of the numbers, but I’ll include a quick summary below.

Here again, notice the ratio of active to pending homes, the sale vs list price (over 100%), and most of all, the tremendous rise in both the average and median sales price.  Few homes closed escrow in February, so it is possible that these numbers are a little exaggerated.  We will know more in a month – if it’s a trend or if this is a fluke.

Now let’s work with Altos Research’s graphs and get a feel for the Cambrian realty market in “real time”.  These use list prices, whereas my REReport uses sold data.

First, the statistics by quartile for houses in San Jose 95118:

Next, the stats and trends by price quartile for houses in San Jose 95124: (more…)

How common are “all cash” transactions for Silicon Valley real estate right now?  Throughout Santa Clara County, they were 25% of all sales, up from 20% in October 2011,  among houses, duet homes, condominiums and townhouses (class 1 and class 2, does not include mobile homes, 2-4plex or apartment buildings or raw land).   What’s trending? Lots, including more cash offers.

Some areas and some types of sales are more frequently all cash than others.  Here are a few quick stats for the last month (last 30 days from today – numbers from MLSListings, crunched by me – disclaimer on good intentions but no guarantee). Also, please note that this is for CLOSED SALES. As of this writing, we are seeing a huge uptick in multiple offers in all price ranges in many parts of the valley, and it seems that many are all cash or very large cash downpayments.

• Santa Clara County: 25% all cash
• San Jose (entire city): 27% all cash
• San Jose short sales: 27% all cash (down from 33% in Oct 2011)
• San Jose bank owned or REO sales: 39% all cash (38% Oct 2011)
• Short sales & REOs were 52% of all sales in San Jose in last 30 days (was 48% Oct 2011)
• Of SJ homes listed at $300,000 or less: 44% all cash (was 48% Oct 2011)
• Of SJ homes listed at/under $500,000: 33% were all cash (didn’t track in October 2011)
• Los Gatos: 9% all cash
• Saratoga: 8% all cash
• Almaden Valley area of San Jose: 10% all cash

Some of these sales will have no financing and the new owners will occupy the home.  Particularly in lower priced homes, though, these are investor buyers who will be renting out the property.  This is often the case with the lower price distressed properties in particular.  In higher priced homes, some new owners will put financing on the property after close of escrow.

With the crazy new demands that keep coming at us from banks and new requirements being imposed on appraisers, now more than ever, cash is king.  That doesn’t mean that the cash buyer will get a deep discount, but there will be a slight one in most cases and certainly preferential treatment that will create a great advantage in multiple offer situations.

Learn more about buying and selling Silicon Valley real estate with cash offers:

Cash offers: what do you need to know if buying “all cash”?

Q & A: Making an Offer

What’s My Silicon Valley Home Worth? Estimating the Probable Buyer’s Value  (financing impacts market value)

A Silicon Valley home seller’s joy and buyer’s nightmare, multiple offers are back and exceedingly common in San Jose and nearby areas right now.  It has been true for many months that the most affordable houses in Santa Clara County, especially those under $450,000, are often selling with several purchase contracts on them (about 25% of which are investors, and many of those are “all cash“).  One Sereno Group real estate agent shared that their client was up against a whopping 37 other offers last week for a house in the entry level pricing tier!

What’s new, then? The price points.  Today we are experiencing the same situation in homes between $1 million and $2 million (though fewer offers) and sometimes higher still.  A few days ago I was involved with bids on a Saratoga house priced a little under $2,000,000 and it ended up getting 5 offers.  This wasn’t a turnkey property with a Section 1 pest clearance, but rather a nice house with “good bones” that needed work.

Why are we seeing so many multiple offers, and in such a broad range of pricing, in Silicon Valley?

Feeding the frenzy are the low, rock bottom interest rates (for most real estate consumers in lower or mid range pricing), lower home prices than a year ago – resulting in increased demand – combined with a dire shortage of inventory, or lack of supply. (Some sellers are waiting until later this year, when they think that they can make more from the sale of their home, too.)  If that weren’t enough, we have money pouring into the valley due to the initial public offerings of companies like Zynga in Los Gatos and LinkedIn and Google in Mountain View plus Facebook in Menlo Park.  And don’t forget Apple, in Cupertino, which is now trading at over $500 per share!  Even for companies which are either not yet public or there’s a waiting period for selling stock, there are means of cashing out some value via private exchanges or borrowing on options.  Some tell me that this has been the case for a year! (more…)

Right now I’m working with a number of very frustrated home buyers.  Silicon Valley real estate inventory is painfully low, and in the lower price ranges especially, that means multiple offers are fairly common.  FHA home buyers, in particular, are getting out bid and out negotiated by all cash buyers, many of whom are investors.

How low is the inventory?  Let’s have a look at January’s inventory for houses & duet homes (“class 1″ or single family homes) over the last ten years in Santa Clara County (San Jose, Los Gatos, Campbell, etc.):

2012  1,382
2011  2,007
2010  2,426
2009  4,759
2008  4,872
2007  2,698
2006  2,202
2005  1,285
2004  1,612
2003  3,119

The average January inventory of available houses over the last 10 years is 2,636.  At 1,382, January 2012′s available inventory of houses for sale in the San Jose area was just 52% of normal.  (more…)

Cambrian Park, or more broadly, Cambrian, is a west San Jose neighborhood or district and is one of the more affordable, high-value areas in Silicon Valley. The schools are good, the crime is low, and the commute is not too bad. For people relocating to Santa Clara County, this is a place to know about since quality education and affordability are often high priorities!

What’s the compromise for the more reasonable prices of homes for sale? Well, Cambrian doesn’t have an interesting, upscale downtown area like Campbell, Los Gatos, Saratoga, or Willow Glen.

But it does have tons of shopping & restaurants and even a Farmer’s Market. It also enjoys a top notch hospital (Good Samaritan) and plenty of parks as well as a fantastic rec center with a large park adjacent to it, the Camden Community Center, which has tons of programs (including an after school program for youth), classes, and a fabulous pool.  (My family and I lived in Cambrian in the “Cambrian Gardens” neighborhood for 10 years and loved it – our kids made great use of the community center too.)

Altogether, there are about 75,000 to 80,000 residents in Cambrian, spread throughout the three zip codes of 95124, 95118 and a little tiny bit of 95008.

If there is a “central Cambrian Park”, it would have to be near the original Cambrian Park Shopping Center, which was the first actual mall in San Jose! That area is sometimes known as Cambrian Village.  People sometimes use the three names interchangeably: Cambrian, Cambrian Park, Cambrian Village.:

Where is Cambrian Park? Map of approximate Cambrian Boundaries:

View Cambrian Area of San Jose in a larger map

(more…)

The annual market report is out at popehandy.REReport.com and we can now learn how 2011 compared to 2010.  The median sales price for houses in Santa Clara County was off 5.3% overall.  But from one part of the valley to the next it varied wildly with 6 cities or areas finding themselves in positive territory while others were off by double digits.

In the image to the left, I’ve put into bold the cities where the median sales price of houses which sold and closed escrow in 2011 were ahead of 2010′s pricing.

What is it that makes Gilroy, Los Altos Hills, Los Gatos, Mountain View and Palo Alto “in the black”?

Most of these cities/towns are upscale, west valley communities.  But so are Saratoga, Cupertino, and Monte Sereno.

Gilroy was especially hard-hit with the housing downturn so perhaps in that case, it’s just coming back into more of a balance. (Then again, so was Morgan Hill and it’s still off by 12%.)

The LinkedIn IPO and others in the Palo Alto area drove prices up for some parts of the housing market nearby and it’s likely that this explains the positive growth for Palo Alto, Mountain View, and Los Altos Hills.  That said, it would seem that Los Altos, and perhaps even Sunnyvale would have seen stronger numbers on the same account.  Perhaps school scores are the key driver here.

Los Gatos, Saratoga and Monte Sereno often behave somewhat similarly as they are adjacent to one another and often attract similar home buyers who want good schools, a nice downtown area nearby and scenic beauty with the hills.  The annual numbers show Monte Sereno down 6.7%, Saratoga down 2% but Los Gatos up 6.4%.  With Monte Sereno, there are very few sales each month and each year (only about 4,000 residents), so there can be a wider swing without it necessarily being accurate. Saratoga and Los Gatos each have about 30,000 people who call these areas home, though, so the data is much more helpful.  Saratoga and Los Gatos both have multiple school districts, views, homes with better proximity to “downtown” and more variables – I think we’d have to dig a lot deeper to learn why these two neighboring markets are so diverse.  We might also have to look at multiple years of data to see if Saratoga spiked while LG slumped to explain the difference. (more…)

Recently I was speaking with a neighbor of mine in Los Gatos who’s a high powered lender with decades of experience all over Santa Clara County.  In the last year or two she’s been doing many more FHA backed loans, rather than conventional ones, as smart home buyers, especially first time home buyers, try to get into a house while both home prices and interest rates are at record lows.  This makes a lot of sense as it can take a long time to save 20% or more and in that time, both interest rates and real estate prices in Silicon Valley could go through the roof.  (If my kids were out of college and working, I’d be encouraging them to buy a home using FHA backed financing too.)

FHA backed mortgages do require a lot more work, though, so I extended my sympathy that she’s having to jump through so many hoops and that they are for much smaller sales prices (many areas of San Jose have dropped 35 – 40% since the market collapse).  Mortgage brokers often make about 1% of the value of the loan as their compensation, so I imagined this great loan officer spending twice as much time with FHA paperwork as on a normal loan, on a smaller priced property, resulting in “half the pay for twice the work”.

Apparently that’s not the case with FHA loans!

“It’s better for me when the buyer uses FHA”, she assured me.  Really?  “Instead of getting 1 point, we are often paid 2.5 points when we close an FHA loan.”   That didn’t seem unfair to me since there’s a lot more paperwork involved.  But consumers probably don’t realize that their banker or mortgage broker will be paid much more if the loan is FHA backed rather than conventional.

If you have saved enough money for a conventional loan product but your lender is pushing FHA, be doubly careful before deciding what to do. There are pros and cons to each loan product you buy (you are “buying” or “paying for” a loan).  Make sure that you aren’t getting FHA financing only because it is more profitable for your lender.