Silicon Valley Real Estate Blog - 1SiliconValley.com

The stratification of the Silicon Valley residential real estate market continues.  On one end, the average townhome in the city of San Jose is just harder to sell than it was last year and, not surprisingly, it's much harder to sell than the year before.  In fact, San Jose accounts for half of all closed townhome and condo sales in Silicon Valley's Santa Clara County but for three-quarters of the drop in closed sales between May 2006 and 2007.

That decrease in San Jose, from 288 to 204 closed townhome and condominium sales year-over-year, represents the lion's share of the Santa Clara County drop from 481 to 363.  The reason for the drop in San Jose, however, is different than the reason closed sales are dropping or holding steady in other cities around Silicon Valley.

On the other end of the spectrum is what's happening with single-family homes.  Silicon Valley market cycles being what they are, the half of a percent dip ($4,000) in the median price of single-family homes in Santa Clara County from April to May this year was expected, particularly after the large run-up over the past few months.  On average, there's been a one percent dip in single-family home prices in Silicon Valley between April and May over the last ten years. 

But what isn't obvious in home prices is the drop in new single-family home listings from May 2006 to May 2007.  New listings are down across-the-board in every city in Santa Clara County except for Campbell.  Across the entire county, new listings dropped 13.6%, from 2466 to 2130.

The single-family home and multi-interest development markets are behaving very differently.  One stratum presents an opportunity for investors and first-time home buyers who are willing to compromise.  The other is a good indicator of the hot markets in Silicon Valley.

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Jun.09.2007 [ Filed under: Market Updates ] 1 Comment »

My clients often ask, "What time of year is the best time to buy a house?" because they know that I won’t reflexively say, "Now."  To me, buying real estate is a very personal, individual decision based solely and specifically on your own needs and wants. 

I believe it’s best to answer with more questions.  What they are depends on the people.  A question about their family.  About their timeframes.  About their job and how much they like it.  About their credit.  About their perfect world and what they envision in it.  This investment on my part in understanding what makes my clients tick is essential to the way I ensure clients are deliriously happy.  Anyone can look up properties. 

The question becomes, how do your needs and wants fit in with what the market has traditionally done since 1998?  And does that mean it’s the right time for you to buy a house?

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May.14.2007 [ Filed under: Market Updates ] Comment Here »

An increase in the median.  A 20% increase in housing inventory with a 17% drop in home sales would bring bad news for the Silicon Valley housing market.  Simple economics says that a big increase in supply combined with a big decrease in demand means dramatically lower prices — just ask anyone who tries to sell you a Mother's Day card on May 14th this year, right? 

Between April 2006 and April 2007 in Santa Clara County, there was an increase in inventory of single-family homes from 3231 to 3900 and a decrease in single-family home sales from 1066 to 886.  The numbers for townhomes and condos are even more dramatic with an increase in inventory from 1053 to 1436 (36%) and a decrease in home sales from 469 to 363 (27%).  What happened to median home prices in Santa Clara County?  Well…

Does that mean that a 12% year-over-year increase in median single-family home prices and a 10% increase in townhome and condominium prices in Santa Clara County are both undeserved?

In San Mateo County, the same thing happened with not nearly as much drama.  Inventories were up in both single-family homes (1180 to 1348, an increase of 14%) and common interest developments (440 to 471, an increase of 7%).  And home sales were down in both: 415 to 388 (6.5%) and 164 to 135 (17.7%), respectively.

The median price of condominiums and townhouses in San Mateo County was up 3.5%.  It looks flat on the graph, especially compared to the way Silicon Valley real estate prices have gone over the years, but folks in a lot of markets would be pretty happy with that sort of price increase.  The median for single-family homes in this part of Silicon Valley is up 8.4%.

So, what on earth is going on?  It's a different story between Santa Clara County where I'm tracking a small anomaly and San Mateo County where there are signs of change relative to the frenzy of the past few years.  What do the number of new listings have to do with it?

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May.07.2007 [ Filed under: Market Updates ] 4 Comments »

One is a city of older homes, spacious and elegant away from the 101, morphing into urban sensibilities and upcoming renewal to relatively dense population moving eastward.  San Mateo neighborhoods show the contrast of organic growth — how personalities, zoning, and economics combine to create the feel of an area that changes (or doesn't) over time.

The other is Atlantis reclaimed from the Bay, bringing with it an enviable landscape: curving streets and arched bridgeways glide through the greenery, which itself is beautifully manicured to meticulous perfection.  The Foster City atmosphere creates an impressive Epcot Center-like portrait, with Roman order and discipline — ask anyone who's slow rolled through a stop sign on the suburban side of Edgewater Blvd. 

The two cities share a common bonds that stretch well beyond just the numbers 94404 and the 101 artery.  The first is, while neither is in the traditional boundaries of Silicon Valley, you'd have a hard time convincing the people who live there that they're not Silicon Valley residents.   

They also share Hillsdale High School, a newly designated California Distinguished School in 2007.  It's no wonder that Foster City has in recent years decided to focus more on economic development than building a high school of its own.

But when you look at the graph of Foster City median home prices, there's something wrong with the picture.  It's subtle, but my clients depend on me to see these things.  The question is whether it's an opportunity or an obstacle for them. 

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Apr.27.2007 [ Filed under: San Mateo, Foster City, Market Updates ] Comment Here »

Yesterday we looked at Cupertino home prices, how there were opportunities in the townhome and condo market, and how the premiums over the Santa Clara County average are at a 10-year low.

But for people looking for their own freestanding single-family home with a nice backyard and a safe neighborhood, the numbers say there's another opportunity to be had, in Cupertino's neighboring city, Sunnyvale.

From 2000 to 2006, Sunnyvale ranked in the top 25 overall safest cities (out of 315) in America according to the private research firm Morgan Quinto.  No other city in Silicon Valley can claim that distinction (though it's also interesting to note that San Jose consistently places in the top 10 safest cities with a population of 500,000 or more.)

The challenge with Sunnyvale is that it doesn't have the hipness factor of Mountain View or the education credentials of Cupertino (even though their school districts overlap in many places). 

What it does have, though, is a first in the last decade: a year-over-year price drop that brings Sunnyvale homes in line with the Santa Clara County average.  That means no price premium to live in a Silicon Valley city that's consistently rated as one of the safest in America.

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Apr.24.2007 [ Filed under: Sunnyvale, Market Updates ] Comment Here »

[You can find more recent information in the article Cupertino Housing Market Update - July 2007.] 

Flat and down.  Those are words you might not expect in the real estate market of a city with some of Silicon Valley's most renowned schools.  And it's a reputation Cupertino added to with three of its high schools, as part of the Fremont Union School District, earning the coveted California Distinguished School Award in 2007.  With good schools, come good real estate prices — so the saying goes.

It was definitely a red hot market in Cupertino for the past couple years.  In 2005, the average townhome/condominium stayed on the market for a "blink and you'll miss it" time of 9 days.  In 2006, the days-on-market (DOM) number "doubled" to 17.  This March, it was a relatively high 41.  (There are a lot of real estate agents around the country who would still envy that number.)

Looking at the chart, it's a fact that, relative to the Santa Clara County average, Cupertino townhome and condominium prices got ahead of themselves in 2006, right?  After all, that number was ahead of the average by 43%. 

Not exactly. 

What if I said that last year's market number isn't nearly as bad as it's been and the March 2007 number is a steal?

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Apr.23.2007 [ Filed under: Cupertino, Market Updates ] Comment Here »

I mentioned in my Silicon Valley Housing Market Update - April 2007, that the recent 9.2% increase in single-family home prices year-over-year in Santa Clara County wasn't necessarily bad news for most buyers.  Then I left a cliffhanger for Sunday.

I've updated the article with the reasons why and where there are softer areas that Silicon Valley home buyers can look at.  More…

Apr.14.2007 [ Filed under: Market Updates ] Comment Here »

Blame Palo Alto, Mountain View and Saratoga.  One of the ways I try to help my clients make the most of their money is to look for statistics that are out of place. 

Sometimes a good Silicon Valley neighborhood has an increase in housing inventory, which causes prices there to soften up, other times you'll see an area become a better value when there's been recent (but correctable) bad news.  There are a myriad of opportunities to find good deals or spot areas where you may have to overpay to play.

When I ran the numbers for Santa Clara County this month, I had a picture in my head of what the graph should look like.  After all, since non-real estate folks depend on both my knowledge and intuition, I tour hundreds of houses, both with clients and for my own research, in a year.  It's my responsibility.

The picture basically looked like this, the San Mateo County graph which has a slight lull after the insanity of 2005 and a modest increase from March 2006 to 2007 — which in this case is 3.5% for single-family homes. 

Lower priced homes (ones below the Silicon Valley aggregate median) go more quickly and increase in price faster because more people here can afford them.  Because of that, the large increase in the price of townhomes and condominiums in San Mateo, a gain of 7.3% year-over-year, was expected.  I'd sent out letters to prospects in February about this.

Like in San Mateo County, the median price of condos and townhomes in Santa Clara County's part of Silicon Valley also increased considerably: 8.2% year-over-year.  No surprise, a lot of people are competing to buy affordable properties.  

What I didn't expect, though, was the magnitude of the increase in single-family home prices year-over-year in Santa Clara County: 9.2%.  This isn't bad news for most buyers and there are softer areas that Silicon Valley home buyers can take advantage of.

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Apr.13.2007 [ Filed under: Silicon Valley News, Market Updates ] Comment Here »

The California Department of Education (CDE) has released the updated 2006 Academic Performance Index (API) scores for California schools, including data for San Mateo County and Santa Clara County.  The API is a statewide benchmark based on standardized achievement tests which is primarily used to rank schools relative to one another and relative to schools with similar demographics.  Here's an example of what the statistics look like.

We'll take a look at how school rankings and Silicon Valley real estate prices are related, but first let's look at how to read the information. 

Number of Students.  In the first column, you'll find the number of students whose results were included from that school.  It's pretty close to the total number of students, less any excluded students.  The rules for excluding students are listed in the API Base Documentation Information Guide found on the CDE API page.  Surprisingly, the number of students has little to do with how well the school did in its API scores (almost, see epilogue).

Base API, Statewide Rank, Similar Schools Rank.  The Base API score is like an SAT score except it's from 200 to 1000.  Higher is better.  To make comparing schools easier, the CDE provides a statewide rank from 1 to 10 (ten is best) and a similar schools rank that rates schools (again from 1 to 10, ten being best) that have similar demographics and characteristics.  Apples-to-apples in a way.

Growth Target, API Target.  The growth target is the number of points California wants the school to improve in the next year.  That added with the current base API score equals the API target.  The CDE doesn't set a target for schools above the current statewide performance target of 800.

Silicon Valley School District Scores

I've assembled information from the CDE site and the Palo Alto Daily News to provide a table of school district API averages for Silicon Valley and Bay Area elementary and middle schools.

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Mar.31.2007 [ Filed under: Schools, Home Buyers, Cupertino, Sunnyvale, Palo Alto, Menlo Park, Mountain View, San Mateo, Foster City, Market Updates ] 3 Comments »