Benford Real Estate, Silicon Valley, Santa Clara County

Bucking the usual annual trend of an increase in homes for sale heading into summer, the Santa Clara County housing inventory remained virtually unchanged from April to May. Some media outlets are reporting that foreclosure proceedings have slowed as banks and institutional lenders adjust their procedures following the robo-signing scandal. This may be having an impact on the local inventory, whereas a decrease in the percentage of mortgages in default, (meaning fewer homes are going into foreclosure in the first place) also is a factor.

Perhaps more remarkable though is the spike in pended sales in May, which went up to over 2000 for the first time in more than a year. If those deals stay together and close in June and July, without any inventory to replace the sales, there will be some upward pressure on prices, especially with continuously record-low interest rates.

The Valley Breakdown – Click image to enlarge

Santa Clara County Listings, Pended Sales, and Closed Sales: Houses, Townhouses, and Condominiums Combined

Vital Signs: (Santa Clara County houses, townhouses, and condos, as of May 2011)
Total Active Listings: 3,688
Average asking price of unsold homes: $885,000 (remember, luxury homes in higher price ranges take longer to sell and skew this number)
Average sales price of sold homes: $662,000
Median sales price of sold homes: $518,000
Average percentage of original asking price obtained by successful sellers: 96%
Average number of cumulative days on market: 71
Closed sales, year-to-date: 6,100
Listings expired during May 2011: 122
Average 1-year appreciation: -0.2%
Months of supply by the end of May, based on closed sales: 2.7 (slight sellers’ market)
Average 30-year fixed interest rate as of June 10, 2011: 4.49%, 0.7 points

It came a little later than in most years, but in April we finally saw an uptick in the inventory of homes for sale in Santa Clara County, a trend we usually see starting in February or March and carrying through June or July. But this is a market that hasn’t followed the typical trends this year, and as a result both buyers and sellers have had trouble reading it. Talk to several sellers, and many of them will lament having to reduce their prices just to compete with foreclosures and distressed properties. Clearly buyers have the advantage right? Not necessarily: many buyers are having their purchase offers either outbid by competing offers, or outright rejected by equity sellers who can afford to hold on. So to whom does this market belong? Right now it belongs to those who are putting their best foot forward in negotiations to consummate a deal: the buyers who are willing to pay the price, and the sellers who are willing to accept the price. It seems we’ve been spending more time lately working to get the two parties to agree, but at the end of the day, the numbers show a flow of transactions steadier than most people know.

The Valley Breakdown – click image to enlarge

Various regions of Silicon Valley. Monte Sereno included with Los Gatos; Los Altos Hills included with Los Altos

Santa Clara County Listings, Pended Sales, and Closed Sales: Houses, Townhouses, and Condominiums Combined

Vital Signs: (Santa Clara County houses, townhouses, and condos, as of April 2011)
Total Active Listings: 3,680
Average asking price of unsold homes: $882,000 (remember, luxury homes in higher price ranges take longer to sell and skew this number)
Average sales price of sold homes: $690,000
Median sales price of sold homes: $518,000
Average percentage of original asking price obtained by successful sellers: 97%
Average number of cumulative days on market: 80
Closed sales, year-to-date: 4,652
Listings expired during April 2011: 115
Average 1-year appreciation: 2.7%
Months of supply by the end of April, based on closed sales: 2.7 (slight sellers’ market)
Average 30-year fixed interest rate as of May 13, 2011: 4.63%, 0.7 points

In March we typically see the number of homes for sale begin to rise, continuing through April and May and leveling off around June. This March, the number of homes for sale in Santa Clara County remained nearly unchanged from February, although pending sales and closed sales both increased by nearly 40% (see graph below). It seems that sellers, wary of an uncertain market, are delaying their decisions to put homes on the market, whereas buyers, wary of the possibility of rising interest rates, are continuing to enter the market. As a result, we only had 2.5 months of inventory at the end of March, a clear sellers’ market, although it may not feel like it. Buyers, although aware of the opportunities, are being patient and prudent in order to get the most value for their purchase.

The Valley Breakdown – click image to enlarge

Various regions of Silicon Valley. Monte Sereno included with Los Gatos; Los Altos Hills included with Los Altos

Santa Clara County Listings, Pended Sales, and Closed Sales: Houses, Townhouses, and Condominiums Combined

Vital Signs: (Santa Clara County houses, townhouses, and condos, as of March 2011)
Total Active Listings: 3,426
Average asking price of unsold homes: $864,000
Average sales price of sold homes: $652,000
Median sales price of sold homes: $482,000
Average percentage of original asking price obtained by successful sellers: 95%
Average number of cumulative days on market: 83
Closed sales, year-to-date: 3231
Listings expired during March 2011: 136
Average 1-year appreciation: 1.2%
Months of supply by the end of March, based on closed sales: 2.5 (sellers’ market)
Average 30-year fixed interest rate as of April 8, 2011: 4.87%, 0.7 points

Just when we thought interest rates were headed back up above 5% for good, they came back down in the last few weeks! When investors get nervous about the stock market (such as after the crisis in Libya or the earthquake and tsunami in Japan), they tend to put their money into bonds, which pushes down the cost of borrowing. We can’t control the turmoil! But we can make the best of what’s given us, and right now, that’s more opportunities for home buyers to finance a purchase – in the end that’s good news for our sellers, too.

In other news, the San Jose Mercury News reported last week that the number of resale transactions last month was “nearly flat.” While we can’t argue with the numbers, we prefer to use the term “stable,” and this is good news!

Santa Clara County Listings, Pended Sales, and Closed Sales: Houses, Townhouses, and Condominiums Combined

Vital Signs: (Santa Clara County houses, townhouses, and condos, as of February 2011)
Total Active Listings: 3,477
Average asking price of unsold homes: $812,000
Average (not median) sales price of sold homes: $573,000
Average percentage of original asking price obtained by successful sellers: 95%
Average number of cumulative days on market: 92
Closed sales, year-to-date: 1829
Listings expired during February 2011: 128
Average 1-year appreciation: -8.2%
Months of supply by the end of February, based on closed sales: 3.7 (balanced market)
Average 30-year fixed interest rate as of March 18, 2011: 4.76%, 0.7 points

Hot Zip Codes (Great for Sellers!)
1. 94303 (Palo Alto – North/Bayshore); 1.4 months of inventory; median price $790,000
2. 95119 (San Jose – South/Santa Teresa); 1.8 months of inventory; median price $441,000
3. 95122 (San Jose – East/Hillview); 2 months of inventory; median price $255,000
Cool Zip Codes (Great for Buyers!)
1. 95030 (Central Los Gatos/Monte Sereno); 12.2 months of inventory; median price $1,615,000
2. 95008 (Campbell); 11.8 months of inventory; median price $540,000
3. 95037 (Morgan Hill); 9.4 months of inventory; median price $476,000

We’ve been holding our breath wondering how long the average 30-year fixed-rate mortgage rate would stay below 5%, but that time has come. According to the California Association of REALTORS®, as of February 11, the average stood at 5.05%. We might see a rush of buyers trying to lock in their rates before they go up any further, but it is important to remember two things: 1) Historically speaking, anything below 6%, let alone 5%, is a fantastic rate; 2) Real estate is a long term investment, so one should not over-analyze the precise timing of a purchase.

Having said that, we have begun to work with several new buyer clients this year so far, perhaps an indication that overall sales will be strong in the coming months. Although closed sales in Santa Clara County were down quite a bit in January, pending sales shot up, so it appears that many buyers and sellers deferred contract activity until after the holiday season.

Santa Clara County Listings, Pended Sales, and Closed Sales: Houses, Townhouses, and Condominiums Combined

Vital Signs: (Santa Clara County houses, townhouses, and condos, as of January 2011)
Total Active Listings: 3,460
Average asking price of unsold homes: $762,000
Average (not median) sales price of sold homes: $586,000
Average percentage of original asking price obtained by successful sellers: 94%
Average number of cumulative days on market: 92
Closed sales, year-to-date: 813
Listings expired during January 2011: 336
Average 1-year appreciation: 0.9%
Months of supply by the end of January, based on closed sales: 4.3 (balanced market)
Average 30-year fixed interest rate as of February 11, 2011: 5.05%, fees not included

Snapshots, January 2011
Top 3 sellers’ markets in Santa Clara County by zip code:
1. 94303* (Palo Alto): 1.0 months of inventory
2. 94085 (Sunnyvale-North): 1.5
3. 95130 (San Jose-San Tomas): 1.6
Top 3 buyers’ markets:
1. 95033 (Los Gatos Mountains): 17.0
2. 94043 (Mountain View-North): 11.0
3. 95054 (Santa Clara-Agnew): 9.3
3 most expensive zip codes
1. 94022 (Los Altos/Los Altos Hills-North): $1,520,000
2. 94024 (Los Altos/Los Altos Hills): $1,500,000
3. 95070 (Saratoga): $1,300,000
3 least expensive zip codes
1. 95112 (San Jose-Central): $245,000
2. 95116 (San Jose-East/Central): $273,000
3. 95110 (San Jose-Central): $295,000

*94303 includes parts of Palo Alto (Santa Clara County) and East Palo Alto (San Mateo County). In these statistics, only the Santa Clara County portion is included.

A friend recently remarked, “I love your monthly blogs – they always say how things aren’t that bad!” It’s true that we are always looking for the silver lining to counter the often over-dramatic news headlines. But we won’t ignore the fact that there are plenty of folks stuck in their mortgages, often with payments they can’t afford. This holiday season will be an especially stressful time for people in this situation. That’s why Erin has received special training in distressed property sales, and Jeffrey is currently doing the same. Sometimes people are too embarrassed or frightened to look for help, but ignoring the problem is the worst thing they can do. If you know someone in this situation, they need to know they’re not alone, and they need to know we can provide the compassion and help they need. So let them know!

Having said that, we’ll leave you with this silver lining: In Silicon Valley there’s still enough demand to get these homes sold. Unbelievably low interest rates have come up in the last month, but are still below 5% on average. And the average sales price in Santa Clara County, after rising for most of the year, has leveled off to $641,000. Buyers with enough cash and income to qualify will have an economic advantage if they’re in the market in the near future. Times may be tough, but things aren’t all bad after all.

Happy Holidays to everyone!

Santa Clara County Listings, Pended Sales, and Closed Sales: Houses, Townhouses, and Condominiums Combined

Vital Signs: (Santa Clara County houses, townhouses, and condos, as of November 2010)
Total Active Listings: 3,945
Average asking price of unsold homes: $825,000
Average (not median) sales price of sold homes: $641,000
Average percentage of original asking price obtained by successful sellers: 95%
Average number of cumulative days on market: 69
Closed sales, year-to-date: 13,224
Listings expired during November 2010: 246
Average 1-year appreciation: -1.8%
Months of supply by the end of November, based on closed sales: 4 (balanced market)
Average 30-year fixed interest rate as of December 10, 2010: 4.61%, fees not included

Snapshots, November 2010
Top 3 sellers’ markets in Santa Clara County by zip code:
1. 94303* (Palo Alto): 1.0 months of inventory
2. 94306 (Palo Alto): 1.2
3. 95129 (San Jose-West): 2.0
Top 3 buyers’ markets:
1. 95117 (San Jose-West): 18.3
2. 95033 (Los Gatos Mountains): 12.0
3. 95030 (Los Gatos/Monte Sereno): 10.0
3 most expensive zip codes
1. 94022 (Los Altos/Los Altos Hills-North): $1,615,000
2. 94301 (Palo Alto-Downtown): $1,350,000
3. 94024 (Los Altos/Los Altos Hills): $1,345,000
3 least expensive zip codes
1. 95116 (San Jose-East/Central): $254,000
2. 95110 (San Jose-Central): $278,000
3. 95135 (San Jose-Evergreen Hills): $284,000**

*94303 includes parts of Palo Alto (Santa Clara County) and East Palo Alto (San Mateo County). In these statistics, only the Santa Clara County portion is included.
**The 95135 zip code includes a high inventory of condos restricted to those aged 55 and over, which artificially eliminates the demand from younger buyers, thus reducing the price. These condos represented a large portion of sales in this zip code in the month of November.

As is typical for fall and winter months, there was a drop in homes for sale in Santa Clara County in the month of October. Meanwhile, a spike in pended sales from 1,397 in September to 1,736 in October was likely driven by interest rates around 4.25%, providing a boost to our market activity which had been easing across the board in the last few months. Months of supply tapered off to 4.1, a healthy number that provides a level playing field for both buyers and sellers in the South Bay.

Santa Clara County Listings, Pended Sales, and Closed Sales: Houses, Townhouses, and Condominiums Combined

Vital Signs: (Santa Clara County houses, townhouses, and condos, as of October 2010)
Total Active Listings: 4,420
Average asking price of unsold homes: $848,000
Average (not median) sales price of sold homes: $697,000
Average percentage of original asking price obtained by successful sellers: 95%
Average number of cumulative days on market: 71
Closed sales, year-to-date: 12,165
Listings expired during October 2010: 266
Average 1-year appreciation: 12.4%
Months of supply by the end of October, based on closed sales: 4.1 (balanced market)
Average 30-year fixed interest rate as of November 4, 2010: 4.24%, fees not included

Snapshots, September 2010
Top 3 sellers’ markets in Santa Clara County by zip code:
1. 94303* (Palo Alto): 1.4 months of inventory
2. 94306 (Palo Alto): 2.2
3. 95132 (San Jose-Berryessa): 2.5
Top 3 buyers’ markets:
1. 95046 (San Martin): 22.0
2. 95033 (Los Gatos Mountains): 13.0
3. 95128 (San Jose-Winchester/Burbank): 11.1
3 most expensive zip codes
1. 94022 (Los Altos/Los Altos Hills-North): $1,780,000
2. 95030 (Los Gatos/Monte Sereno): $1,730,000
3. 94301 (Palo Alto-Downtown): $1,659,000
3 least expensive zip codes
1. 95110 (San Jose-Central): $235,000
2. 95111 (San Jose-Edenvale/Seven Trees): $280,000
3. 95116 (San Jose-East/Central): $285,000

*94303 includes parts of Palo Alto (Santa Clara County) and East Palo Alto (San Mateo County). In these statistics, only the Santa Clara County portion is included.

More and more homes came up for sale in September in Santa Clara County, while closed sales fell a little bit more, bringing the inventory up to a ripe 4.7 months’ supply. While still low in the grand scheme of things, it’s a much higher number than what the market has seen most of this year, meaning once again that sellers have to work a little harder and buyers will enjoy more selection and better bargains this fall.

Here’s an interesting factoid our current buyers are enjoying immensely: the average interest rate on 30-year fixed-rate home loans has dropped every month since the expiration of the first-time home-buyer tax credit for those not in contract by April 30th.

April 1: 5.08%
May 6: 5.00%
June 4: 4.79%
July 1: 4.58%
August 5: 4.49%
September 8: 4.32%
October 14: 4.19%

For a $500,000 loan, that’s a savings of approximately $100 a month – for 30 years. So don’t feel like you’ve missed the boat if you’re still shopping!

Santa Clara County Listings, Pended Sales, and Closed Sales: Houses, Townhouses, and Condominiums Combined

Vital Signs: (Santa Clara County houses, townhouses, and condos, as of September 2010)
Total Active Listings: 4,749
Average asking price of unsold homes: $851,000
Average (not median) sales price of sold homes: $678,000
Average percentage of original asking price obtained by successful sellers: 96%
Average number of cumulative days on market: 67
Closed sales, year-to-date: 10,988
Listings expired during September 2010: 211
Average 1-year appreciation: 12.2%
Months of supply by the end of September, based on closed sales: 4.7 (balanced market)
Average 30-year fixed interest rate as of October 14, 2010: 4.19%, fees not included

Snapshots, September 2010
Top 3 sellers’ markets in Santa Clara County by zip code:
Tied for 1st: 94087 (Sunnyvale) and 95129 (San Jose-West): 2.5 months of inventory
Tied for 3rd: 94303* (Palo Alto) and 95135 (San Jose-Evergreen Hills): 2.6
Top 3 buyers’ markets:
1. 95126 (San Jose-Rose Garden/Central): 11.7
2. 95033 (Los Gatos Mountains): 10.9
3. 95030 (Los Gatos/Monte Sereno): 8.2
3 most expensive zip codes
1. 94022 (Los Altos/Los Altos Hills-North): $2,150,000
2. 95070 (Saratoga): $1,730,000
3. 94301 (Palo Alto-Downtown): $1,500,000
3 least expensive zip codes
1. 95122 (San Jose-East/Hillview): $248,000
2. 95110 (San Jose-Central): $275,000
3. 95133 (San Jose-Berryessa): $285,000

*94303 includes parts of Palo Alto (Santa Clara County) and East Palo Alto (San Mateo County). In these statistics, only the Santa Clara County portion is included.

August in Santa Clara County was the eighth straight month of climbing housing inventory, up to a total of 4,613 houses, townhouses, and condos available for sale by the end of the month. But unlike earlier in the year, the number of closed sales in recent months has not been climbing: 1,100 in August, compared to 1,350 in July and 1,397 in June. However, pending sales have been following the opposite pattern: 1,660 in August, up from 1,552 in July and 1,481 in June. How could pending sales be going up while closed sales go down? Probably due to the influence of short sales, which take months to close once pending, and are frequently cancelled due to their length; and transactions falling through due to low appraisals, which we’ve seen on a number of our transactions this year (and more often than not, have successfully disputed).

Still, the median price has fallen for the first time in 2010 (to $537,000), and the relative inventory has climbed to 4.2 months countywide. That’s the highest relative inventory we’ve had in over a year, and while it’s far from the 6 month point where we consider it a clear buyers’ market, buyers at the end of this summer are less likely to compete with multiple offers than they were at the beginning of the summer. Conversely, sellers will have to work just a little bit harder to make their homes stand out on the market.

Santa Clara County Listings, Pended Sales, and Closed Sales: Houses, Townhouses, and Condominiums Combined



Vital Signs: (Santa Clara County houses, townhouses, and condos, as of August 2010)
Total Active Listings: 4,613
Average asking price of unsold homes: $863,000
Average (not median) sales price of sold homes: $679,000
Average percentage of original asking price obtained by successful sellers: 96%
Average number of cumulative days on market: 58
Closed sales, year-to-date: 9,884
Listings expired during August 2010: 194
Average 1-year appreciation: 10.4%
Months of supply by the end of August, based on closed sales: 4.2 (balanced market)
Average 30-year fixed interest rate as of September 8, 2010: 4.32%, fees not included

Snapshots, August 2010
Top 3 sellers’ markets in Santa Clara County by zip code:
1. 95133 (San Jose-Berryessa): 1.7 months of inventory
2. 95119 (San Jose-Santa Teresa): 1.9
3. 95129 (San Jose-West): 2.1
Top 3 buyers’ markets:
1. 95046 (San Martin): 12.5
2. 95089 (Sunnyvale-North): 11.3
3. 95033 (Los Gatos Mountains): 10.0
3 most expensive zip codes
1. 94022 (Los Altos/Los Altos Hills-North): $1,825,000
2. 94024 (Los Altos/Los Altos Hills): $1,795,000
3. 95030 (Los Gatos/Monte Sereno): $1,635,000
3 least expensive zip codes
1. 95116 (San Jose-East/Central): $210,000
2. 95121 (San Jose-Evergreen): $263,000
3. 95133 (San Jose-Berryessa): $285,000

As of August 5, the average 30-year, fixed-rate, mortgage interest rate, according to the California Association of REALTORS®, was a razor thin 4.49%. For anyone who doesn’t follow interest rates, that’s a bit like getting gas for $1.50 per gallon: very rare, and very exciting for those who need to buy.

Locally, although median prices have been rising steadily for quite some time now, and continued to do so last month, there are signs they may stabilize in the near future, giving more encouragement for prospective buyers. For much of 2010, the inventory of unsold homes in Santa Clara County has been below 3 months, which is considered a sellers’ market with more demand than supply and hence upward pressure on prices. But at the end of July, Santa Clara County inventory (including townhomes and condos) was about 3.5 months. Between 3-6 months is considered a balanced market; above 6, a buyers’ market. That means more selection and negotiating power for buyers, and a little more competition for sellers. But overall, Silicon Valley is fortunate to have a real estate market that is thriving compared to many other parts of California and the United States.

Santa Clara County Median Sales Price: Houses, Townhouses, and Condos Combined

Vital Signs: (Santa Clara County houses, townhouses, and condos, as of July 2010)
Total Active Listings: 4,484
Average asking price of unsold homes: $888,000
Average (not median) sales price of sold homes: $711,000
Average percentage of original asking price obtained by successful sellers: 96%
Average number of cumulative days on market: 56
Closed sales, year-to-date: 8,712
Listings expired during July 2010: 179
Average 1-year appreciation: 14.3%
Months of supply by the end of July, based on closed sales: 3.5 (balanced market)
Average 30-year fixed interest rate as of August 5, 2010: 4.49%, fees not included

Snapshots, July 2010
Top 3 sellers’ markets in Santa Clara County by zip code:
1. 95119 (San Jose-Santa Teresa): 1.5 months of inventory
2. 94303 (Palo Alto*): 1.6
3. 94087 (Sunnyvale): 1.8
Top 3 buyers’ markets:
1. 95033 (Los Gatos Mountains): 21.5
2. 95112 (San Jose-Central): 9.6
3. 95046 (San Martin): 9.0
3 most expensive zip codes
1. 94301 (Palo Alto-Downtown): $2,065,000
2. 94022 (Los Altos/Los Altos Hills-North): $1,863,000
3. 95070 (Saratoga): $1,567,000
3 least expensive zip codes
1. 95110 (San Jose-Central): $285,000
2. 95122 (San Jose-East/Hillview): $300,000
3. 95116 (San Jose-East/Central): $306,000

*94303 includes parts of Palo Alto (Santa Clara County) and East Palo Alto (San Mateo County). In these statistics, only the Santa Clara County portion is included.