Benford Real Estate, Silicon Valley, Santa Clara County

Wishing all of you a Happy Holiday season! Just wanted to give you the latest market update on Santa Clara County before Christmas.

At the end of November there were 6250 houses, townhomes, and condos on the market, the lowest number since February although slightly higher than November 2007. There were 800 closed sales in November, also a little higher than this time last year. Yes, indeed, there were more sales! This is most likely due to increased affordability. The median home price, among single family homes, townhomes, and condos, in the county, was $466,000 in November, down 37.8% from a year ago. It’s certainly a great time to be in the market to buy a house, with 7.8 months of inventory county-wide.

Here’s a look at local markets. Numbers in parentheses represent months of inventory based on closed sales. The higher the number, the more it is considered a “buyer’s market.” The lower the number the more of a “seller’s market.”

Balanced Markets: Palo Alto (4.7); Mountain View (5.1)

Buyer’s Markets: Santa Clara (6.1); Blossom Valley (6.2); Cambrian (6.3); Alum Rock (6.5); Sunnyvale (6.7); South San Jose (7.2); Cupertino (7.4); Central San Jose (8.0); Evergreen (8.3); Milpitas (8.3); Berryessa (8.4); Almaden Valley (8.6); Willow Glen (8.9); Morgan Hill/Gilroy/San Martin (9.0); Los Altos (9.9); Campbell (10.2)

Significant Buyer’s Markets: Santa Teresa (12.4); Los Gatos Mountains (13.0); Los Gatos/Monte Sereno (17.1); Saratoga (24.0); Los Altos Hills (24.0)

For all the talk about the financial crisis, October was a pretty stable month for the Santa Clara County housing market. It’s still a bit of a buyer’s market at 6.7 months of inventory. The number of homes for sale at the end of the month was down slightly to 6666, from 6724 at the end of September. The number of pending sales was virtually unchanged, and the number of closed sales was exactly 1000, down noticeably from September’s 1130. This may be in part due to longer escrow periods related to pre-foreclosure or foreclosed homes, and in part due to sales falling through for financing reasons or simply because the buyers are changing their minds.

Remarkably, even though high-priced parts of the valley that were significant sellers’ markets at the beginning of 2008 have slowed down, lower-priced parts of the valley that were significant buyers’ markets have picked up slightly. This is probably because conforming loan interest rates have remained relatively low while jumbo loan interest rates have increased significantly. The county as a whole is still less of a buyers’ market than at this same time a year ago.

Here’s a look at the local markets within Santa Clara County. Figures represent months of inventory based on closed sales during the month of October 2008, using data from MLSListings, Inc. The lower the number, the more favorable the market is to sellers; the higher the number, the more favorable the market is to buyers.

Balanced Markets: Cupertino (3.4); Mountain View (4.3); San Jose-Cambrian (4.5); Sunnyvale (4.8); Palo Alto (5.0); San Jose-Blossom Valley (5.3); Los Altos (5.4); San Jose-Berryessa (5.5); San Jose-Santa Teresa (5.5)

Buyers’ Markets: Milpitas (6.2); Campbell (6.2); San Jose-South/Seven Trees/Edenvale (6.9); San Jose-Evergreen (7.1); San Jose-East/Alum Rock (7.4); San Jose-Almaden Valley (7.4); Saratoga (7.6); Santa Clara (7.8); San Jose-Willow Glen (7.8); San Jose-Central/Downtown/Burbank/Rose Garden (8.4); Morgan Hill/San Martin/Gilroy (9.7); Los Gatos (11.0)

Significant Buyers’ Markets: Los Altos Hills (17.0); Los Gatos Mountains (19.0)

All of Santa Clara County combined: 6.7 months of inventory

No, you probably won’t see that headline in the newspapers while all the media attention is focused on the turmoil in the credit market. But the facts are that in Santa Clara County, at the end of September there were about 6700 homes for sale (down 300 from August), and 1500 pended sales (up from August). There were about 1000 closed sales, which is down about 200 from August, but that makes it about 6.4 months of inventory, which is a better-selling market than the same time a year ago. What about next month? Nobody knows what will happen tomorrow, but we can tell you there are opportunities out there, and as long as you’re looking for them, we’ll give you the facts.

Here’s a look at the local markets within Santa Clara County. Figures represent months of inventory based on closed sales during the month of September 2008, using data from MLSListings, Inc. The lower the number, the more favorable the market is to sellers; the higher the number, the more favorable the market is to buyers.

Balanced Markets: Sunnyvale (3.1); Cupertino (3.5); Palo Alto (4.1); Mountain View (4.2); Los Altos (4.2); San Jose-Cambrian (4.4); San Jose-Santa Teresa (4.7); San Jose-Blossom Valley (5.5); Santa Clara (5.6); Saratoga (5.8)

Buyers’ Markets: Campbell (6.0); San Jose-Berryessa (6.1); San Jose-Central (6.9); Los Gatos (7.2); San Jose-Almaden Valley (7.4); San Jose-Alum Rock (7.5); Milpitas (7.8); San Jose-South (7.8); Morgan Hill/Gilroy (8.6); San Jose-Evergreen (8.7); San Jose-Willow Glen (9.1)

Notable Buyers’ Markets: Los Gatos Mountains (16.0); Los Altos Hills (16.0)

Charts and graphs (Click to enlarge)

Ken Sotelo, a mortgage banker with Private Mortgage Advisors, supplied us with this very enlightening graph depicting the rise and fall of mortgage interest rates over the last four decades. Current events in the banking industry may feel depressing - that is, until we remember how high interest rates were in the early 1980’s! 18.5%?? As they say, the grass is always greener on the other side. In every market there is opportunity to be found by those who seek it. This one is no exception. (Click on the image to enlarge it).

You’ve probably heard the news regarding Fannie Mae and Freddie Mac: both of these government-sponsored enterprises were placed into conservatorship by the Department of the Treasury. This allows the Federal Housing Finance Agency to take up to an 80% stake in each of them. If needed, the government can add capital to both enterprises to maintain their financial well-being. While the long-term effects of this remain to be seen, for now it seems to have resulted in increased consumer confidence and lower interest rates.

In the local real estate market, recent trends have continued through the month of August: the number of pending sales in Santa Clara County increased to 1642, while the inventory dropped to just over 7000. Closed sales were down just a bit at 1146, but because of the number of pending sales, we are optimistic that the market will continue moving toward equilibrium and soon start to recover. Significantly, none of the local markets we track within the county had more than a year’s worth of inventory, a condition which we have not seen since 2007.

Here’s a look at the local markets within Santa Clara County. Figures represent months of inventory based on closed sales during the month of August 2008, using data from MLSListings, Inc. The lower the number, the more favorable the market is to sellers; the higher the number, the more favorable the market is to buyers.

Sellers’ Markets: Cupertino (2.1); Palo Alto (2.4); Los Altos (2.4); Mountain View (2.9)

Balanced Markets: Sunnyvale (3.1); San Jose-Cambrian (3.8); Milpitas (3.9); San Jose-Almaden Valley (4.0); Santa Clara (4.5); Saratoga (4.8); San Jose-Santa Teresa (5.1); San Jose-Berryessa (5.8); Los Altos Hills (6.0)

Buyers’ Markets: San Jose-Blossom Valley (6.1); Los Gatos (6.1); San Jose-Willow Glen (6.8); Campbell (6.8); San Jose-Evergreen (7.0); San Jose-Central (7.5); Morgan Hill/Gilroy (8.8); Los Gatos Mountains (9.6); San Jose-South (10.4); San Jose-Alum Rock (11.5)

Countywide: 6.0 months of inventory

July appears to have maintained a stable environment for the Santa Clara County real estate market. There was a slight decline in the number of closed sales, but this was counterbalanced by a slight increase in the number of pending sales. The overall number of homes on the market remained virtually unchanged. The median price of closed sales was down to $645,000, and the supply of homes countywide was about 6.4 months’ worth of inventory, meaning that for now the market is still slightly favoring buyers.

Here’s a look at the local markets within Santa Clara County. Figures represent months of inventory based on closed sales during the month of July 2008, using data from MLSListings, Inc. The lower the number, the more favorable the market is to sellers; the higher the number, the more favorable the market is to buyers.

Sellers’ Markets: Palo Alto (1.7); Cupertino (2.2); Mountain View (2.9)

Balanced Markets: Sunnyvale (3.3); Los Altos (3.4); San Jose-Almaden Valley (4.5); Santa Clara (4.6); Campbell (4.7); San Jose-Santa Teresa (5.1); San Jose-Cambrian (5.1); Saratoga (5.6); Milpitas (5.9)

Buyers’ Markets: Los Altos Hills (6.3); San Jose-Blossom Valley (6.4); San Jose-Berryessa (6.6); San Jose-Willow Glen (6.7); Los Gatos (7.1); San Jose-Evergreen (7.4); San Jose-Central (10.4); Morgan Hill/Gilroy (11.1); San Jose-South (12.0)

Significant Buyers’ Markets: San Jose-Alum Rock (14.7); Los Gatos Mountains (20.3)

Countywide: 6.4 months of inventory (slight buyers’ market)

The Santa Clara County housing market reached a turning point in June, as the number of homes for sale declined after increasing monthly since December. It is typical for the housing inventory to peak during the summer. While this is a modest decline from 7417 to 7219, it reminds us that the supply of housing is not infinite. Meanwhile, the number of closed sales dipped marginally but pending sales continue to increase in pace. Sellers still need to market and price their homes competitively, but buyers who are waiting for further market declines before making a purchase face an increasing risk of missing the bottom of the market. Nobody knows exactly when property values will begin climbing again, but missing the mark by a few months is insignificant compared to the long-term appreciation seen over periods of 10 or more years!

Here’s a look at the local markets within Santa Clara County. Figures represent months of inventory based on closed sales during the month of June 2008, using data from MLSListings, Inc. The lower the number, the more favorable the market is to sellers; the higher the number, the more favorable the market is to buyers.

Sellers’ Markets: Palo Alto (1.4); Los Altos (1.8); Cupertino (2.3); Mountain View (3.0)

Balanced Markets: Sunnyvale (3.5); San Jose-Almaden Valley (3.7); Santa Clara (4.6); Los Gatos (5.0); San Jose-Willow Glen (5.5); San Jose-Cambrian (5.5); Campbell (5.7); San Jose-Santa Teresa (5.7); Los Altos Hills (6.0)

Buyers’ Markets: San Jose-Blossom Valley (6.7); Saratoga (6.8); San Jose-Berryessa (7.1); Los Gatos Mountains (7.6); San Jose-Evergreen (8.7); Morgan Hill/Gilroy (9.3); Milpitas (9.4); San Jose-Central (9.7)

Significant Buyers’ Markets: San Jose-Alum Rock (14.9); San Jose-South (16.6)

Countywide: 6.6 months of inventory (slight buyers’ market)

Recently, the California Association of Realtors reported a major increase in the percentage of households which could afford to buy an entry level home. Well, we’ve got some more news: When affordability is on the rise, sales follow! Last month, we reported that buyers were out shopping in April as evidenced by the decline in months of inventory based on pending sales. This month, we’re pleased to report that many of those buyers are now homeowners, as there were 1136 closed sales in Santa Clara County in May, a 24% increase from the month before! The pending sales were up too, at 1552, the greatest number seen in over a year. At the same time, the number of homes on the market remained virtually the same, taking some of the pressure off home sellers.

A hot stat: There were 6.5 months of inventory based on closed sales at the end of May, down from a peak of 11.7 in January. We consider a buyers’ market to be anything above 6. Nobody knows when we’ve hit bottom until it’s already happened. But since pending sales have been increasing, it may not be too long before Santa Clara County is out of the slump.

Here’s a look at the local markets within Santa Clara County. Figures represent months of inventory based on closed sales during the month of May 2008, using data from MLSListings, Inc. The lower the number, the more favorable the market is to sellers; the higher the number, the more favorable the market is to buyers.

Sellers’ Markets: Cupertino (1.7); Los Altos (1.9); Palo Alto (1.9); Mountain View (2.2); Sunnyvale (3.0)

Balanced Markets: Los Altos Hills (3.3); Saratoga (3.9); San Jose-Almaden Valley (4.1); San Jose-Cambrian (4.3); Los Gatos (4.8); Santa Clara (5.1); Campbell (5.5); San Jose-Santa Teresa (6.0)

Buyers’ Markets: San Jose-Willow Glen (6.8); San Jose-Berryessa (7.2); San Jose-Blossom Valley (7.4); Milpitas (7.9); San Jose-Evergreen (8.2); San Jose-Central (11.2)

Significant Buyers’ Markets: Morgan Hill/Gilroy (13.4); Los Gatos Mountains (17.5); San Jose-Alum Rock (18.1); San Jose-South (19.7)

Click on images below to view graphs and charts.

Combined single family and townhouse/condominium inventory in Santa Clara County broke the 7000 mark in April. Fortunately the number of pending sales has also been increasing. In April, 1363 sales contracts were signed and reported to the MLSListings, Inc. listing service, the most in any month since June of 2007. The number of closed sales remained pretty flat, probably because transactions, once opened, are taking longer to close. But the good news is that there are buyers out there shopping, so those sales will be closing eventually.

A recent headline in the San Jose Mercury News proclaimed “Record-low number of Santa Clara County homes sold in March.” The truth is, the number of sales opened last month according to MLSlistings.com was 1107 - the highest number for any month since July of 2007! Furthermore, it is the third straight monthly increase in sales, and nearly double the amount from December of 2007. Is the Mercury lying? Technically, no. The article was referring to the number of sales during any month of March, of any year - not the number of sales ever in a month. The news media tend to look at the glass as half-empty, and yes, the effect can be very deceptive. Our friends in the press need to make a living just like everyone else, and let’s face it - dramatic, negative news sells. But the Benford and Benford Team are here to give you the cold, hard facts and to remind you not to get stressed out by the headlines. Oh, by the way - the monthly supply of inventory based on closed sales dropped to 9.0 months countywide, down from the January peak of 11.7. Dramatic? No, but this signifies an improvement in the marketplace. The Merc didn’t tell you that, did it?

Here’s a look at Santa Clara County markets as they performed in the month of March. Monthly inventory is based on closed sales and active listings according to MLSlistings.com. The higher the number, the slower the sales. A healthy market has between 3 and 6 months of inventory.

Sellers’ Markets: Palo Alto (1.9 months of inventory); Cupertino (2.3); Mountain View (2.7)
Balanced Markets: Los Altos (3.5 months of inventory); Saratoga (3.8); Sunnyvale (4.1); San Jose-Cambrian (4.7); Campbell (5.2)
Buyers’ Markets: Los Gatos/Monte Sereno (6.3 months of inventory); San Jose-Willow Glen (6.5); San Jose-Almaden Valley (6.7); Santa Clara (6.7); San Jose-Berryessa (8.5); San Jose-Blossom Valley (9.4); San Jose-Central (10.6)
Significant Buyers’ Markets: San Jose-Evergreen (12.7 months of inventory); Los Altos Hills (13.7); San Jose-Santa Teresa (13.8); Milpitas (16.6); Morgan Hill/Gilroy (20.9); Los Gatos Mountains (22.0); San Jose-South (36.9); San Jose-Alum Rock (46.7)

Countywide: 9.0 months of inventory - buyers’ market