September is the time of the year when the California Department of Education releases its yearly Academic Performance Index (API) scores. Here are the 2009 Growth API Scores for Santa Clara County and San Mateo County. 

We see an overall steady increase in scores compared to last year’s growth API scores.

A few notables in the following Silicon Valley Santa Clara County school districts:

Berryessa Union Elementary School District: Ruskin Elementary School continues to lead the pack and breaks the 900 barrier with a general improvement in most of the schools in the district

Cupertino Union School District: Continues to have a plethora of high achieving schools (Murdock-Portal and William Faria Elementary School and Joaquin Miller Middle School)

Fremont Union High School District: Monta Vista High increase it’s lead over Lynbrook High School from four to nine points.

Los Gatos Union Elementary: Significant increase across the board for most elementary schools

Moreland Elementary School: Leroy Anderson Elementary takes one of the largest increases in scores by an increase of 136 points to 810

Palo Alto Unified: Herbert Hoover and Duveneck Elementary Schools continue to lead the way

Santa Clara Unified: Overall Santa Clara schools had good improvement with notable Rivermark’s Don Callejon as well as Westwood and Briarwood Elementary jumping nearly 40 points.

Sunnyvale School District: Cherry Chase increases 28 points to an impressive while Cumberland drops 26 points to 905

Check out our previous post to find out what’s the difference between Growth and Base API scores and how they are calculated.

73.  Monta Vista High, Cupertino
74.  Henry M. Gunn High, Palo Alto
80.  Saratoga High, Saratoga

These awards were based on how well-prepared students are for college as measured by Advanced Placement (AP) tests. 

California, as a state, did very well in the rankings, placing #4 out of all rated states — this means that out of all the high schools rated by US News and World Report, California has a higher percentage of silver and gold medal recipients than all but three states, based on the same criteria above. 

Of California’s 1,999 high schools rated, 126 (6.3%) received silver or gold.  The number one state, Massachusetts had 338 high schools rated and 29 (8.6%) silver and gold medalists.

US News’ rating by AP score is different from California’s standardized testing and Academic Performance Index (API), which focuses on California’s own standardized tests.  It’s no surprise that Bay Area high schools Monta Vista, Gunn and Saratoga each have API scores that are some of the best in California, exceeding 900 (out of 1000).

We sent agent and Silicon Valley Real Estate Blog writer Alex Wang to talk about the details of a recent transaction he was a part of and he recounts how the demand for good schools pushed that sale to go faster and for a higher sales price.  And you can see what he had to say starting at 01:30 of the KRON 4 report below:

You can also see the report through its direct link.

"…the site offers many well-written articles on a variety of relevant subjects, from school API scores to new developments built or approved in a particular neighborhood."

"…a great source of information for South Bay first-time buyers."

Our own Alex Wang is featured in their Residential Market Report on page 40, "Boom and Bust Still Exist Side by Side".  In an interesting anecdote about the lending crisis, he offers a story of a self-employed client with a $200,000 annual income who had to endure a complete third-party audit before his loan could close.

Here are some details of the event they’d like to publicize:

5:00 p.m. “? 7:00 p.m.
Wednesday, July 2, 2008

Berryessa Branch Library
Community Room
3355 Noble Avenue
San José, CA 95132

Attendance is free and open to the public.

Please RSVP by email at Honda.RSVP (at) mail.house.gov

For more information please contact Christine Pham or Chris Schwarz in the Campbell office at 408-558-8085.

Most home buyers and sellers in Silicon Valley understand that ordinarily, home purchases are contingent upon or "subject to" their approval of the property’s condition and upon getting the desired loan. Under the broad umbrella of property condition and financing, though, there are other relevant or supporting issues, and consumers may not be aware of them.

For instance, with a loan or finance contingency, there are several key steps to go through in order to be assured that the lending institution will extend the loan as planned.

A pre-approval means that the buyer has turned in bank statements, pay stubs, copies of recent income tax forms, debt information, and so on – and all of it has been submitted to a lender (not just the person taking the loan application, who has conditionally approved it). With that approval, the lender then should require only a ratified purchase agreement, a preliminary title report, and a satisfactory appraisal.  Actually, though, there’s a little more to it than that. What other issues could there be?

• if loan rates change substantially and the buyer has not "locked" the loan, it may not be guaranteed
• if there’s a delay in the close of escrow (rain forcing a delay in fumigating the property, for instance) and the buyer’s loan lock rate expires, the lender may not grant the loan
• many lenders require an "outside appraisal review" and if it doesn’t get through that step unscathed, the buyer may not get the loan
• natural disasters such as fire or earthquake can cause lenders to pull the loan until the property is reinspected and/or reappraised

So buyers and sellers will want a little more information than simply "the buyer is preapproved". Here’s what they need to know.

The Contingency Details

It’s important to know if the loan rate is locked and for how long. Also it’s imperative to understand if there will be an outside appraisal review, if it is delayed, what the lender will do about that (they can always take it to another company, but may be reluctant to do so). 

A few lenders may be discounting all appraisals by a set percentage – so that is another question to ask. Broadly, it is helpful to ask with the financing "what are the conditions?" and get a list from the lender. Hopefully, it is a short list!

Some sellers are having to part with their homes under a hardship and must attempt a short sale (in which the bank agrees to take less than is owed on the property). They have a seller’s contingency that the offer’s acceptance is contingent upon bank approval. When offers are written, a definite time period exists for that to happen – buyers may allow 3 or 4 weeks or more.

But what happens if the bank does not respond in time (which is often the case)? There’s no sale and the buyers and sellers are "out of contract". If the bank later approves the short sale and the buyers agree to move forward, it may still lead to a closing. In most cases, though, the bank responds so slowly that the home is no longer worth what the buyer previously offered or worse, the bank never responds at all.

Property Condition

Similarly, with the property condition contingency, there are underlying issues besides just how the home does with the inspections. These supporting issues are key for Silicon Valley homebuyers to understand! In California, not only is the structure of the property and the land to be acceptable, but so do other related elements that may impact the buyer’s sense of value for the property.

These may include things such as local school scores, the crime rate of the area, the presence of natural hazards such as being on an earthquake fault or being in a flood plain, the noise from local businesses or transit, and so on.

For homes belonging to a homeowner’s association, it may also include the HOA documents with revelations about the financial stability of the association, the reserve account, neighborhood nuisances that are discovered by reading the newsletters and minutes of the meetings, etc. Having the house and yard in great condition does not mean that the buyer cannot find a reason to get out of the transaction based on the property condition contingency. The issues included are far broader than what is contained within the property lines.

Buyers should know that at some point, they will be selling.

You are not just buying a condo or a house – you are buying a neighborhood, with all that the area has to offer, good and bad. Visit it several different times on different days of the week to see how it looks and sounds. You don’t want too many cars on the street, but of course if it’s SuperBowl Sunday or Independence Day and it’s just a party, there’s probably nothing to worry about.

Do your due dilligence in person, online, and with the disclosures and reports. Ask questions and persue answers from the experts until you are satisfied that you truly understand the condition of the home and area. Don’t sign blindly, even when the disclosures may look like boilerplate - make sure you understand what you are given so that you are not surprised about the property or area later.

Sellers should address area issues as well as those that come up in their home or yard.

Are there abandoned cars on your street? Do the roads have potholes? Is there a problem with the property line, a loud neighbor, or tree branches growing over a fence? Is tagging or graffitti an issue? Whatever annoys you as a homeowner is likely to annoy the buyer or prospective buyer of your home.  Best to do what you can to address and resolve these issues as the occur so that when you go to sell, you can disclose them as past issues and not ongoing nuisances.

An important mistake for sellers to avoid is making a late disclosure. If the buyer has removed all contingencies and the seller later provides a new, important disclosure, it may provide the buyer a new 3 day "right of recission" (a new opportunity to back out of the transaction). Do the disclosures early on and make sure the buyer receives them as soon as is practical so that there’s not a chance that a new escape clause is inadvertantly given to the buyer. 

Buyers don’t want this either – a new disclosure may come at a time that is too inopportune to back out (moving truck in the driveway, old home sold, or?) so they could be in a bad position of having to close escrow and then seek some sort of justice after closing. That would not be a happy event for buyer or seller.

For everyone involved in real estate transactions, there can be layers of issues to understand. Part of the challenge can be knowing which questions to ask.

With the loan or financing contingency, it seems to be a changing landscape due to the mortgage crisis, but asking the lender what hurdles still need to be cleared or what conditions exist is probably a good start.

With the property condition contingency, there are many sub-areas such as the title documents, the disclosures, the ability to get homeowner’s insurance, and many other subjects. Because of the broad nature of that contingency, buyers do not have a difficult time getting out of a purchase agreement prior to the removal of the property condition contingency.

(c) Mary-Pope Handy for the Silicon Valley Real Estate Blog, 1SiliconValley.com

Recommended Reading:

• Considering One HOA Versus Another
• Why the Perfect House Wasn’t So Perfect
• Preparing Your Finances for Buying a Home
• API Scores: Base vs. Growth

There are two other metrics in the report, statewide rank and similar schools rank, both ratings from 1 to 10.  Each number represents a decile, with 10 being the top 10% of all schools in that category.

This metric compares schools that have similar characteristics, based on ethnicity, socioeconomic status, teacher credentials, and (about a dozen) other factors.  So which number matters more: the state or similar schools rank?

By far, the state number.  Let’s look at some of the Cupertino Union figures for examples. 

The third column is the state ranking and the fourth is for similar schools: Blue Hills is 10/8, Collins is 10/7, and DeVargas is 8/2.  Eisenhower and Muir (not shown) are both 10/2 with API scores of 906 and 894 respectively.

The difference in API between 10/8 and 10/7 is only 10 points, but the difference between a 10/2 and 8/2 is about 60 points.  The reason is because schools that are alike tend to have similar performance.  When you group those schools together and rank them, some turn out to be the best of the group and others the lowest-rated of the group.  

So if a 10/10 school is the best of the best, should parents be worried about a 10/2 school like Eisenhower or Muir elementary?  There is room for improvement, but a 10 means the school is in the top 10% of all schools in California.  At that level, I’d be more focused on what programs, classes and activities a school has to offer than beating other quality schools in standardized tests.

The exclusiveness to this area is because of the very convenient location to downtown.  It is only a ˝ mile walk to the heart of where all the action is; downtown restaurants, unique shops, night clubs, coffee shops, and independent book stores are just a few of the niceties.  And if you get in now to one of these homes you won’t have to fight the parking situation of the ever-so-popular Mountain View Art and Wines Festival, coming September 7-8, 2008.

The builder of Wild Orchid development is Castle Companies, which is a family owned and operated builder in Northern California .  They have been around since 1966 and are recently building communities as far north as Yolo County , Napa Valley , down the East Bay and now into the Peninsula , which brings us to the Wild Orchid community.  The naming of these communities is as unique as each setting where these new developments are being built. 

Details on the Wild Orchid in Mountain View

The Wild Orchid development is nice, in the fact that there are only 2 floor plans to choose from:  Residence 1 which is a large 1844 square foot home with 3 bedroom 3.5 bathrooms and a 2-car garage.  Residence 2 has three elevation plans to choose from and range from 1,787-1,844 square feet; they are 3 bedroom, 2.5 bathrooms with a 2-car garage.  It is a small community of only 39 single family homes.

The detail and craftsmanship in these homes is beautiful.  As we know when we enter any model home, they are all shiny and glistening with new stainless appliances and marble floors, crown molding, stereo systems and beautifully stained hardwood floors.  The price point on these homes starts at $899K standard; however as I entered the model homes I noticed that all that gleam was an “?optional’ feature and will ultimately put a lot of weight on that $899K price tag.

The community is slowly being built in three phases.  The first phase of homes has a move-in date of July-August time frame; phase II will be ready in October, and phase III will be complete December, 2008.  So far, 1/3 of the homes are sold with a few others reserved.  The construction is coming along, but it appears that buyers are purchasing from the location map, sight unseen.  From talking with the sales manager at Wild Orchid, he told me that buyers that are inquiring and purchasing in the community are recently married, no children, young professionals that work in the surrounding area.  They are attracted to having an active lifestyle with the entertainment of night clubs and restaurants and coffee shops near-by.

Wild Orchid’s Location 

The site of these homes may be a little worrisome to buyers as it is located at a busy intersection, and adjacent to Landel School.  Some people don’t like the idea of living near schools because “?undesirable’ people tend to hang out in school parks after hours; however, Landel School is a great family public park, and there is a trailhead at the North corner of the school.  This is great for those that like to walk and hike; it is very popular with mommies that like to stroll with their babies and children. 

If you are interested in this new development and would like to be represented by an area specialist of this community, please contact me.  I have been through the community and the surrounding area, and this is truly a wonderful area to live, especially if you get excited about being close to a downtown area, and like the convenience of shops and restaurants.  Not to mention the convenience of CalTrain, freeways and the security of living amongst single family residences.  I enjoy working with prospective buyers looking at new developments in the Bay Area and I cooperate with many local developers; in addition, I have experience in the new home buying process, as I help to negotiate in the best interest of my client, and to make the home buying process as smooth and effortless as possible.

(c) Sara Greenwood for the Silicon Valley Real Estate Blog, 1SiliconValley.com 

Recommended Reading:

• Creating a Better Standard of Living for Your Family
• Consumer Rights When Purchasing New Homes
• The Beautifully-Staged Home: Nicely Remodeled or Cheaply Flipped
• Download the Silicon Valley Home Buyers Book 

What do you need to know when hiring inspectors in Silicon Valley?

There are specialized inspectors for particular elements of residential real estate, such as termite or pest inspectors, chimney inspectors, and others. Most of these are licensed by the state of California, and they are allowed to do repairs on the work they find needing.

But not home (or property) inspectors. There’s no license for doing home inspections in California. Is that good or bad? Part of that package is that they cannot do any repairs on defects they may detect. You can see why it’s good to separate finding problems from being paid to fix them. That’s the plus.  There is another side, though.

Finding the Right Home Inspector

The negative side to this is that in Silicon Valley or anywhere in California, anyone can call himself or herself a property inspector. As with many elements of real estate, just because it’s legal doesn’t mean it’s ideal. It certainly doesn’t mean you should be satisfied just because it’s allowed.

There are two voluntary trade groups for inspectors in California, both of which uphold a high standard of practice. One is CREIA, a state organization, the California Real Estate Inspection Association.

The other is ASHI, the American Society of Home Inspectors, a national group with exceedingly high standards (and two levels of membership, ASHI inspectors and "associates" who are on their way to being ASHI inspectors). ASHI inspectors have a higher standard of practice, are extremely experienced and keep current on the latest practices to provide consumers with the best information available.

My impression is that ASHI is a higher standard than CREIA, but either one would be a minimum pre-requesite for most agents.

What else should you be concerned with, as a consumer faced with hiring a home inspector?

• What is the inspector’s scope of the inspection? Usually, it’s limited to the visible areas – but check – it may vary from one inspector to the next. For instance, are sprinklers or fences included, or just items within the walls of the home? Ask. Obviousy, the inspector cannot see between the walls or inside the concrete of the foundation. All inspections are limited. Some inspectors limit a lot!

• What is the inspector’s insurance coverage? Ask about malpractice or "errors and ommissions" insurance. Some will limit liability to the cost of the inspection. Others will limit it to $1,000. Inspectors make mistakes, just like the rest of us. What happens if your inspector misses a $5,000 item? Ask.

• How high-tech is your inspector? Does he or she take digital photos to show you the areas you cannot easily see, such as under the house or in the attic? Does the inspector use a moisture meter or other devices to help detect issues that aren’t easily seen?

• How easy is the inspection to read? How comprehensive is it? Some inspectors will not just tell you how things look today, but what the anticipated lifespan is for that item (such as how much longer the roof will last). This can be enormously helpful information to have, but many inspectors don’t include it.

• How quickly will you get your report after the inspection? In real estate transactions, "time is of the essence". Getting an inspection within 24 hours can be a big plus!

Finally, how do you choose an inspector if you’ve got several names of ASHI or CREIA inspectors who all seem to be knowledgeable, experienced, communicative, and so on? As with many other aspects of real estate, referrals can be invaluable. Ask successful Silicon Valley Realtors whom they use. Ideally, you want to find the inspector that agents say they hire "for everyone", both buyers and sellers alike. Those are the inspectors that ought to be fair and honest, who don’t miss anything important but who also don’t create panic. Good inspectors can convey why something’s a problem, how it might be addressed, and put everything in context too.

It should be added that some of the other inspectors, those who are licensed to inspect roofs or chimneys or other elements of the home, may work on commission. Ask about this; clearly it’s a conflict of neutrality if the guy looking at your roof is paid more to find more that’s wrong! And again, ask successful, experienced agents for names of reputable inspectors in any of these industries.

(c) Mary Pope-Handy for the Silicon Valley Real Estate Blog, 1SiliconValley.com

Recommended Reading:

• The Beautifully-Staged Home: Nicely Remodeled or Cheaply Flipped
• Why Real Estate Contract Choice Matters in Silicon Valley
• Creating a Better Standard of Living for Your Family
• Why Some Houses Don’t Sell: A Buyer’s Perspective
• Tools for Protecting Yourself During a Home Purchase

Sara Greenwood, who works with Alex at Rainmaker Properties, is our new homes specialist.  As a lifelong resident of the Bay Area, she brings perspective to how our beloved area has evolved over the years.  Her intelligence, charm and capability are obvious to anyone who’s had the distinct pleasure of getting to know her.  

Finally, I’d like to welcome my friend Mary Pope-Handy, winner of the prestigious Project Blogger contest, veteran real estate agent (since 1993 — second generation, no less) for Keller Williams, and the co-author of the book "Get the Best Deal When Selling Your Home in Silicon Valley".  She’s not only lifelong resident and an oracle of real estate knowledge, she’s also a fervent and passionate consumer advocate.

Please join me in welcoming this family of real estate experts to my blog.  We welcome your participation, news (non-spam, non-commercial), and inquiries into how we can help you achieve your goals and hope that you will strongly refer and continue to link to this blog as we continue to provide consumer-focused real estate expertise.  Thank you much, and welcome again!

Many expressed interest in the e-book.  If you are a real estate agent or attended the event, please email me directly instead of using the email form for sign-up.  And thank you again for being such great hosts.

This chart shows the change in jumbo mortgage interest rates during 2007.  Put in historical context, the jumbo interest rates over the summer didn’t approach the level of rates in, say, 1981, but since 2002, the housing market has benefited from mortgage rates that are historically low.

It wasn’t 2005 or 2006, though.  In May and July, some buyers discovered the home they were interested in just became about 5% more expensive at the same price because of another interest rate bump.  (A $1,000,000 P&I mortgage costs $5,996 per month at 6% and $6,321 at 6.5%.)  All the more reason to better understand how rate locks work.

Some homeowners with adjustable rates found themselves in a similar situation and ended up attempting a short sale.  Many neighborhoods were unaffected, others were peppered with short sales — where the available homes may or may not have real estate signs indicating a sale.

But many of the markets around Silicon Valley didn’t behave like one would expect from reading the news reports.  It’s the sales transaction information that tells the best story.

Data Points Across the 44 Cities in the Database for Santa Clara County and San Mateo County

1.  Of the 35 cities with a decrease in new listings year-over-year, all of the ones in Silicon Valley — there were 26, East Palo Alto and Milpitas were the exceptions — saw their median values increase.  (The cities outside Silicon Valley seeing decreases included outlying cities Gilroy, Morgan Hill and Loma Mar.)

2.  The were 9 cities that had an increase in new listings year-over-year.  Not surprisingly, this acceleration of inventory usually means a decrease in the median.  It is notable, though, that Santa Clara and Redwood City showed strength and bucked the trend.

3.  There wasn’t any real correlation between medians and homes "sitting" on the market.  San Mateo saw an 18% increase in CDOM (to 39 days) but had an increase of 8% in the median.  San Jose’s CDOM skyrocketed 29% (to 58 days) but the city as a whole had a median increase of 3.6%.  Mountain View and Palo Alto were on fire the entire year and saw their CDOM numbers decrease 29% and 9% respectively.

Silicon Valley’s Gains and Losses

Looking at the table, what stood out to me the most was where Menlo Park turned out.  I’ve written previously about how Menlo Park can be a mixed bag and how low-income housing has affected the median — and while Menlo Park isn’t the only city in Silicon Valley to have overnight parking restrictions, I’ve talked with a number of people who cite it as a reason why they wouldn’t buy a home there.

For the city that’s part Atherton, part Redwood City, part Palo Alto and part East Palo Alto, Menlo Park was the only one of these five cities to have both an increase in single-family home listings year-over-year and a drop in their median.  (Redwood City withstood its 9% increase in listings and still came away with a 4.12% gain.)

There was core strength in the 101 to 85 corridor of Palo Alto, Mountain View, Sunnyvale and Cupertino.  High-paying jobs and the perception of a bottomless market ironically helped fuel growth for 2007. 

The 30.6% drop in Palo Alto’s new listings cut supply rather dramatically.  And while Mountain View’s drop of 15.5% seems less dramatic in comparison, the average home sold took 22 days to sell.  The only number on my spreadsheet to come close to that speed is neighboring Sunnyvale, where the average is 28 days.  Sunnyvale, Palo Alto, and Mountain View all recorded sales prices at above 103% of list.

(c) Steve Leung, Realtor, for the Silicon Valley Real Estate Blog at 1SiliconValley.com