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…)

Multiple offers continue to be a common occurance in the Silicon Valley real estate scene right now.  When there are an abundance of home buyers for one property, it can be overwhelming for the seller.  Some home owners may want to issue a multiple counter offer to the best qualified, most serious bidders.  But not all do.  You should never count on it.

Sometimes property owners in the San Jose area simply accept the best offer.  If so, that’s the end of the story. It does happen.

Often, the highest price is not the offer with the best terms, even in a bidding war.  Home sellers want both, of course – the least risk with the most cash. (Sometimes there are other factors, too, such as a rent back, escrow length, or other issues beyond cash and risk.)  In those cases, frequently the Realtor or real estate sales person (the listing agent) will coach the seller to counter one or more of the better buyers (best prices and terms) to improve the final sale on both counts.   Some sellers don’t want to do this, though – it’s stressful, they are afraid that everyone will say no and they’ll be left with the property unsold.  Alternatively, then, they may counter only one offer – and tell the buyer’s agent that they are the only one, at least for now. If negotiations don’t work with the first buyer, the listing agent may go back to the others.

Meanwhile, everyone waits, everyone wonders what’s going on.  The longer it takes to hear back, usually the lower the odds are that their contract will be the successful one, or even one getting a counter offer.

Why didn’t I get a counter offer?  Why didn’t the seller at least give me a second chance? Buyers wonder this all the time.  Some buyers submit 5 or 10 offers, all unsuccessful, and they still wonder.  The harsh reality is simple: your offer wasn’t good enough.  Either your price or your terms (or supporting documents) didn’t cut it. Write your contract as if you only have one chance, because that’s the reality most of the time.

What is an exclusion in a real estate contract? What is an inclusion? Both of these refer to fixtures at the property which is for sale.

Generally speaking, a fixture is any item affixed or attached to the house, townhouse, condo or property which is installed with the intention that it be there permanently. For example, cabinets in the bathroom, kitchen or elsewhere are fixtures. So are lights mounted from the ceiling, built-in ovens, in-ground (not potted) rose bushes.  The exception to the rule is anything attached solely for earthquake safety.  This would be the case if you have a large hutch which you have bolted to the wall so that it doesn’t topple in the case of a big quake. In Silicon Valley, fixtures are normally included with the sale of the home.

Exclusions refer to fixtures which the seller does not want to include with the sale of the real property (real estate).  For instance, there may be a light fixture in the dining room which is a family heirloom and the seller does not want to leave it with the house.  It would be noted either in the MLS, with a note at the property or mentioned when the buyer’s agent calls the listing agent to ask about offer instructions. Other examples could be a special fireplace screen, curtains in one or more rooms (may match a bedspread or other decor), or even a rose bush in the garden that has sentimental value.

Inclusions refer to personal property (property which is not affixed) which the seller will leave even though it is not required since it’s not attached.  Commonly we see refrigerators, washers and dryers included, even when they are not attached.  Sometimes furniture may be negotiated also, such as patio dining set, a sofa or perhaps a very large dining table that won’t fit into the seller’s new house, but fits where it is perfectly.

It is important to note that if an inclusion is mentioned in the MLS, it still should be written into the purchase agreement if the buyer wants it (and this is written into the contract form as a reminder). Otherwise the seller is free to donate, share or sell those items.

When in doubt as to whether or not something is included or excluded from the sale, always ask before writing or accepting a contract to avoid unhappy surprises or conflicts later!

What’s the Silicon Valley real estate market doing? Silicon Valley is composed of many micro markets, and they may all behave independently of one another, but we are seeing some general trends.We’ll have a look at them today.  Things have really, really changed from six months ago. It’s very dramatic.

First, a city by city comparison of the numbers for the county and Campbell, Cupertino, Los Gatos, Saratoga, San Jose (as a whole), Sunnyvale, etc. This first chart is for houses in the cities and towns of Santa Clara County. On the first line, which is for the entire county, please notice the sales price to list price ration – it is over 100%.  This is perhaps the best indicator of the market heat we see here.  Also note how low inventory is for the county – from a year ago, it’s off 29.2% (and that year was low also).

Santa Clara County residential real estate statistics by city for single family homes March 2012

Perhaps not surprisingly, the sales price to list price ratio is highest in Palo Alto, where it was nearly 109%. Mountain View came in at 103%, Cupertino and Los Altos at 102%, Los Gatos, San Jose and Sunnyvale at a little over 100%.  Some areas, such as Monte Sereno, have so few sales that their numbers fluctuate wildly (in the case of Monte Sereno, best to look to similar areas of Los Gatos for the best sense of pricing, usually, as they share schools, parks, police etc.).

Next, the same type of data but for condominiums and townhouses rather than houses & duet homes:

Santa Clara County residential real estate statistics by city for condos & townhomes March 2012

The condo market has been taking a beating for years, but at long last, the sales price to list price ratio is now very close to 100% (99.9% for the county) and many areas are more than 100%: Campbell, Cupertino, Los Altos, Milpitas, Mountain View, and Palo Alto. Most of the rest of the county is at 99% with just a couple of exceptions.  What’s happening? The inventory here tells the story: county wide, it’s down 74% from last year.  In Campbell and Los Altos it’s off 75%.

Inventory is at record lows, buyer demand is way up: we have a strong sellers’ market with multiple offers and overbids

First, there’s extremely low inventory. In February there were just 1389 single family homes for sale in Santa Clara County.  A balanced market is somewhere around 3000 homes – so this is quite severe!  In fact, it’s the lowest amount of inventory for any February going back 10 years.  Here’s what it has looked like in other Februarys, per my Santa Clara County Real Estate Report (you can see these numbers yourselves): (more…)

The Oaktree Park neighborhood in San Jose is a scenic residential community with wide appeal to home buyers due to good Almaden schools, close proximity to large parks and is one of only a few areas in Almaden Valley which includes a cabaña and swim team.  Additionally, this area is very convenient as it’s  close to schools, shops and commute routes to downtown San Jose and much of Silicon Valley. It is a fairly intimate neighborhood with 156 homes.

Where is the Oaktree Park neighborhood?

The Oaktree Park subdivision is within the boundaries of Meridian Avenue, Redmond Avenue and Mcabbe Road on three sides and the Jeffrey Fontana Park on the north side.

The census bureau (and perhaps also the city of San Jose) has attributed names to some parts of Almaden and this neighborhood falls into the Crossgates section.  I do not believe that most residents refer to this area that way, though.  Perhaps more likely they’d call it part of the greater Fontana Park neighborhood.

Oaktree Park Neighborhood in San Jose (Almaden Valley area of SJ) - click on image above to go to live Google Map

What schools serve the Oaktree Park neighborhood in San Jose?

The public schools for Oaktree Park are within the San Jose Unified School District:

Los Alamitos Elementary School (API 916 in 2010)
Castillero Middle School (API 806 in 2010)
Pioneer High School (API 823 in 2010)

Los Alamitos Elementary and Holy Spirit Elementary (Catholic) are both just a couple of blocks from Oaktree Park.  Additonally there are 2 preschools really close too:  Precious Preschool and Shepherd of the Valley Lutheran Preschool.

For more information and links for schools, school districts, API scores and maps of boundaries lines for schools in the Almaden area of San Jose, please also read:

Schools, API Scores & Maps of School Boundaries in San Jose’s Almaden Valley

What are homes like in Oaktree Park?

Homes in Oaktree Park are single family dwellings – all detached houses (no townhouses or condominiums).  These are primarily ranch style or two story ranch style houses, built in the early 1970s  on lots of about 8000 to 9000 square feet, though a few are more than that.  Interior size runs between about 1600 square feet to about 3000 square feet (if added on). Prices may be in the mid 600s for a smaller home, needing work and a less desirable location (such as on a busy road or immediately adjacent to the high voltage power lines that run through the park) to perhaps a little over a million dollars for a beautifully updated or rebuilt larger home in an ideal location within the neighborhood.

Oaktree Park Neighborhood Home for Sale: 6064 Ostenberg Drive

This week I put a fabulously remodeled and expanded Oaktree Park neighborhood home on the market!  This exquisite house has an awesomely open floorplan with an amazing kitchen – a gourmet’s delight!  Have a look at the details! Open Sat/Sun, April 21-22, 2012 1-4pm. (more…)

Buyers who are getting slammed out of the Silicon Valley real estate market due to low inventory and multiple offers are extremely frustrated. In many cases, they write offer after offer, and each time not only are their bids rejected, but they never even get a counter offer.

You should not depend on getting a 2nd chance, of course.  Just because you write a contract on a San Jose area home does not mean that the seller needs to give you a counter offer.  Some agents and sellers don’t respond at all – not nice, but if you get dozens of offers, sometimes that does happen.  Sometimes they just take the best offer and run. Othertimes they only counter the best offer and forget the rest.

The question arises all the time: why isn’t my 20% down offer just as good as the 50% down or the All Cash offer? Isn’t 20% down good enough?

Cash is better because there’s less risk

Twenty percent down is “good enough” if there are no other offers. If it’s multiple offers, though, it’s probably not sufficient for most sellers provided that the all cash offers are written with realistic pricing. Right now, 25% of all sales in Santa Clara County are all cash, and sellers would far rather deal with an offer that includes no finance or appraisal contingencies.  For sellers, the fewer contingencies the better and no contingencies is ideal.  Particularly now, when we are seeing a very sudden and dramatic upswing in pricing, appraisal contingencies can kill an offer’s chances of success. With all cash, there is no appraisal at all – it’s a slam dunk on that front. (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)