Silicon Valley Real Estate Blog - 1SiliconValley.com

I hope you all had a great holiday season and New Years!  Looking back, it seems that 2007 was the year of the mortgage for real estate here in Northern California.  A screenshot from the New York Times mortgage rate chart illustrates how buyers (and sellers) were impacted by the dynamics of the mortgage industry this year.

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.

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Dec.31.2007 [ Filed under: Silicon Valley News, Market Updates ] 2 Comments »

There’s an opportunity here for my clients looking for a good elementary school district.  For single-family homes, the news is almost exactly the same as last year.  There were six sales in 2006 and five this year in Redwood Shores.  Small statistical sample. 

The median number has dropped 7.8% year-over-year in October from $1,192,000 to $1,100,000; the average stayed almost the same going from $1,145,500 to $1,145,000, with eight new listings in both periods and an inventory of 14 and 13 in those respective years.  The news, though, is in townhomes and condominiums.

In Redwood Shores, there were only three were closed in October 2007 (compared to 15 the year before) with inventory levels similar to 2005 and 2006.  The percent of list received went from just above asking to 93.36% this year. 

It’s sometimes difficult to be the first wave to adjust to a different landscape and changing market conditions, no matter how much data is available.  In this case, the initial valuation of these three townhomes was unrealistic, so the percent of list received is lower than it might have been if information about the shifting landscape were already digested.

There are good elementary schools in Redwood Shores.  Sandpiper Elementary, part of the Belmont-Redwood Shores Elementary School District, improved upon its elite test scores last year with a 17 point increase to 923.  When I last called Sandpiper just after the start of the school year, they were on the border of being over-subscribed, but were still able to take new students.

Obviously, it’s important to confirm availability before making a purchasing decision.  The Belmont-Redwood Shores district has two other schools over 900 API to choose from if there’s a wait list at Sandpiper (Central Elementary and Fox Elementary), and the others two come in at 875 (Cipriani Elementary) and 823 (Nesbit Elementary).

[ Median Home 2007, 2006 | Market Snapshot | How Much Home Can I Get? ]

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Nov.07.2007 [ Filed under: Market Updates ] Comment Here »

There’s an interesting opportunity in Menlo Park when you take into account that the city has multiple personalities.  I want to illustrate this using the median home chart below and a couple facts.  First, if you look at the homes that are available, there are just as many single-family houses available between $400K and $800K as there are between $1.5M and $2.5M. 

Second, the ones at the low end of the range are closer to Redwood City and East Palo Alto, and use Redwood City and Ravenswood Elementary School Districts, respectively.  The more expensive ones are closer to Atherton and Palo Alto and are part of the Menlo Park Elementary School District — and its 907 district API score — or the Las Lomitas Elementary School District — and its two schools with a 948 district API score.

So, with that in mind, the median value of homes in Menlo Park can be somewhat of a tug-of-war.  For September 2007, there were two transactions for low-income housing which closed at about $330,000 each.  If you threw those two out, the median single-family home in Menlo Park was $1,220,000.  That’s a realistic 6% decrease year-over-year.

It’s important to look beyond what the numbers are and understand the story behind them.  In this case, there’s been some softness in Menlo Park given increasing CDOM numbers, from 19 to 38 year-over-year.  (The average CDOM over 10 years is 34.)  But, from on the ground experience, there wasn’t anything to indicate a decrease as dramatic as the median value chart would indicate.

[ Median Home 2007, 2006 | Market Snapshot | How Much Home Can I Get? ]

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Oct.14.2007 [ Filed under: Menlo Park, Market Updates ] 1 Comment »

Available supply in the Los Altos market hasn’t been as low since 2000, when the median number for single-family homes jumped an astronomical 48.9% year-over-year.  That year, the number of closed transactions to new listings was almost 2-to-1 (48 closed to 25 new).  The headline number this year is that closed sales are the lowest in a decade, but so was the available inventory.  Relative demand for what’s available has been strong enough to draw notable increases in two key statistics.

Only one condo in Los Altos was sold this August and only a handful more in each of the previous years, so their trends and statistics may have a high variance.  In single-family homes, though, it wasn’t just the fact that the percent of list received jumped from just under full value to 104.31%.  The median listing value also increased 4% year-over-year, meaning homes weren’t just selling for more, they were starting higher too.  The median transaction increased year-over-year as well, from $1,650,000 to $1,782,000 (8%).

For July and August numbers in particular, schools play a large role in housing demand and Los Altos schools are some of the best in Silicon Valley.  I’ve worked with people who’ve made the argument that, assuming that schools are the critical factor in their home-buying decision, paying a premium on a home is preferable to sending their kids to lesser schools, or private schools.  To them, private schools may not be as good socially: the kids who they go to school with may not always live nearby or have as varied backgrounds.  Premiums aren’t necessarily the most financially-conservative route, but choices involving children don’t always need to be.

[ Median Home 2007, 2006 | Market Snapshot | How Much Home Can I Get? ]

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Sep.20.2007 [ Filed under: Market Updates, Los Altos ] Comment Here »

It was a case of home owners sitting out the market.  New listings of single-family homes in Sunnyvale were at a 10-year low in August, dropping from 107 in August 2006, to 79 this year.  In fact, total inventory levels also dropped slightly, from 130 single-family homes to 127 over the same period.

Sunnyvale’s average number of new listings during the month over the last ten years is 105 and it’s an illustration of why real estate is local.  National news headlines from around the country correctly talk about aggregate numbers that are lower because of deflating markets — and many Silicon Valley home owners here who might have considered listing their homes, but could afford to wait, sat out.

But ultimately, real estate is about location, supply, and demand.  And while supplies were down, demand was actually both "normal" and "up".  The ratio of closed transactions to new listings in August 2007 was 73%.  The 10-year average is 74% and it was 58% last year.  How did that increase manifest itself?  Besides a fourth consecutive year of over-asking closing prices in single-family homes, have a look at the difference in the cost of Median Homes year-over-year.

[ Median Home 2007, 2006 | Market Snapshot | How Much Home Can I Get? ]

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Sep.07.2007 [ Filed under: Sunnyvale, Market Updates ] Comment Here »

Higher interest rates for jumbo mortgages is a story for another day, but it does color how home owners should read what I’m about to write.  In July, Mountain View experienced a 14% jump in the median for single-family homes from 2006 to 2007.  There was also the fact that the percent of list received went from almost full value (99.28%) to 104.4%.

Like many other places in Silicon Valley, like Sunnyvale and Cupertino with their Eichlers and San Mateo with its older homes near downtown, among others, Mountain View has its share of older homes.  Many of these homes come on larger lots that give ambitious owners room for expansion.  One of this month’s Median Homes illustrates that potential.

Mountain View is a unique environment because of the money from one local company in particular and it was a competitive summer season — as you’ll see, though, not every property experienced the same level of interest.

[ Median Home 2007, 2006 | Market Snapshot | How Much Home Can I Get? ]

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Aug.29.2007 [ Filed under: Mountain View, Market Updates ] 2 Comments »

My previous market updates have focused on analysis of year-over-year statistics, particularly with respect to medians around Silicon Valley cities.  The numbers are useful, but what I really want to provide my clients with is an intuition of how far that money goes and what the snapshot of today’s market looks like.

With that goal in mind, I’ve added some information to my market updates.  I think, as of today at least, that this site is the only place you’ll find this information.

The first addition I call "The Median Home", literally the home that is the statistical median for that period in that area.  (Sometimes there will be more than one.)  I’ll also add representative homes and multi-family interests that cover the spectrum of completed sales in that city.  Condominium complexes and many communities have their own micro-climates which I also cover individually in my Neighborhood Notes.

The second addition I call the "Active CDOM".  DOM is days-on-market and I have some opinions about its usefulness.  The CDOM, or continuious days-on-market, is an improvement which takes into account "rolling back the odometer".  The Active CDOM is a snapshot of how long the properties currently for sale have been on the market (as opposed to the ones that sold).  When compared to the CDOM, it gives a rough indication of the quality of the properties on the market.  

Aug.29.2007 [ Filed under: Market Updates ] 1 Comment »

It's not world famous for it's homes or real estate.  Folks outside Silicon Valley know it as the birthplace of the iPhone.  Apple, Symantec, and a very large portion of HP — to name a few — call it home.  To locals, Cupertino is synonymous with the school system.  The Cupertino Union School District has 24 elementary and middle schools, 19 of which are ranked by the California Department of Education as 10 out of 10 statewide. 

And that doesn't account for the elite Monta Vista High School, as well as Lynbrook High School or Homestead High School (as part of the Fremont Union High School District shared with Sunnyvale and other cities) which all rate 10 out of 10 statewide as well.

The real estate in the Cupertino part of Silicon Valley commands a premium over other cities in the area.  The darker lines on the chart show what the median price of condos and townhomes, and single-family homes in Cupertino.  The faded lines show what the median home prices are in Santa Clara County as a whole. 

The difference between the two types of lines is the premium you pay in housing prices to live in Cupertino.  How much is that premium and how has it changed over the last decade?

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Jul.26.2007 [ Filed under: Cupertino, Market Updates ] Comment Here »

It's all about proximity.  This month, I took a look at the semi-annual statistics aggregated for the first-half of the year so that my clients can get a good look at the overall trends, as opposed to the bumps in the road.

The story isn't about the median prices, which are charted further down in this article; what's interesting is the consolidation of pricing power around the center of Silicon Valley.  I alluded to this increase last month, but the half-year figures distinctly highlight this strength, with the epicenter squarely in Mountain View.

In the first-half of 2006, an average single-family home sale would command 101.98% of the list price — about 2% over the asking price — but in the first-half of 2007, that percentage jumped to 104.56%.  The increase in Mountain View's neighbors Palo Alto, Los Altos and Sunnyvale, is less drastic, but still pronounced, as illustrated below. 

In fact, inventory of single-family homes in Mountain View and Los Altos is at its lowest point in ten years, with Mountain View equaling the low it reached in 2005 (lower than any other point since 1998).

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Jul.23.2007 [ Filed under: Silicon Valley News, Market Updates ] 2 Comments »

It was as if they were made of gold.  You know a school district cares when they track every registration form that leaves their office for planning and budgeting purposes.  The result?  Saratoga Unified School District's API score of 952 out of 1000 is second in Silicon Valley only to Los Altos, which edges out its southeastern cousin at 960.

And it's that time of year, when parents who want or have to make a move are packing their kids into the trusty family automobile and hauling them to find Silicon Valley real estate in the right school districts.  Saratoga is seeing no shortage of activity with 40 closed sales in May 2007 compared with similar numbers of 37 and 35 in the two preceding years.

That doesn't seem like news until you combine the slight increase in sales with the dramatic decline in new listings year-over-year.  With only 48 new listings in May 2007 — a 10-year low where the average is 80.6 over that period — there's been a 16.6% increase in Saratoga median home prices from May 2006 to 2007.  But the market isn't completely stacked towards the seller in all market segments.

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Jun.29.2007 [ Filed under: Market Updates, Saratoga ] 2 Comments »