Today’s San Jose Mercury News ran an article, “Santa Clara County’s high-end houses hit in foreclosure crisis“. This is not a huge surprise to local Realtors, who know that there are some luxury home communities in the Bay Area that have been badly hit with excessive numbers of foreclosures (Alamo comes to mind) and we’ve been seeing the numbers of distressed homes in upper price points begin to rise. (Cyberhomes reports that the numbers of delinquencies has fallen for the third quarter in a row nationwide.)
How bad is it in Los Gatos or Monte Sereno?
Our multiple listing service allows members to search property records by foreclosure status. This morning I did a quick check for Los Gatos (95030 and 95032) and Monte Sereno (95030) for homes in pre-foreclosure. Here’s what I found for homes (houses, condos, townhouses) in which there has been filed a notice of default (NOD), meaning they are in pre-foreclosure:
Monte Sereno – 3 homes Los Gatos 95030 – 14 homes Los Gatos 95032 – 35 homes
What we do not know is how many others are behind on their payments but there’s no NOD filed yet. In some cases, home owners can be many, many months behind and for various reasons their lenders don’t file the NOD. Cyberhomes used to have a market forcast report which could be purchased for a few dollars, and I had wanted to offer that link here, but the page is “not found”, so perhaps they stopped offering that service. What was good about it is that it revealed which areas had more loans with missed payments – the step prior to the NODs being filed. Sounded like a very useful tool. If I find that Cyberhomes is still making these reports available, I’ll update that post and provide the link here.
The Los Gatos & Monte Sereno real estate market has been improving in recent months. Below please find the numbers of Monte Sereno & Los Gatos homes for sale right now, both houses and duet homes as well as condominiums and townhouses, followed by the months of inventory for each set. Six months is a “balanced” market. Fewer is a seller’s market and more is a buyer’s market. The months of inventory (or absorption rate) is one of the best ways to gage the market conditions overall.
As you can see, in general the market is “balanced” for houses and condos alike, both hovering close to six months, and is a seller’s market for distressed properties (short sales and bank owned homes). The bargain prices found with short sales and REOs makes them the hot ticket of the market in general. Short sale and bank owned condominiums or townhomes for sale are the sweet spotof the Los Gatos & Monte Sereno realty market right now with just 1 -2 months of inventory.
Right now in Los Gatos, there are 154 houses (or duet homes) available or for sale in 95030 and 95032. Of them, 4 are short sale listings and 3 are REOs (real estate owned by the bank, or “bank owned”). That doesn’t sound too dramatic, does it?
But short sale listings are priced significantly lower than normal Los Gatos homes for sale, so they sell faster. (Not all of them will close escrow, but that’s for another post.) The numbers are much higher as a percentage of the homes under contract or sale pending. Of the pending sales, there ar 61 single family homes under contract in all, 14 of which are short sales (23%) and none is bank owned.
The numbers become more dramatic when the school district or price point is broken out. A larger percentage of short sales is found among lower priced homes in the Union or Moreland School District areas of Los Gatos rather than more expensive properties which are “in the schools”. Some areas have been more hard hit than others. Tonight I ran the numbers for the faithful readers of this blog and I hope you find it interesting – I did!
First, pending short sales of houses on the market in the Los Gatos School District. The ratio is appx 22.22% of all pending sales are short sales in this part of Los Gatos. (DOM = “days on market”)
Now, houses in Los Gatos which are in either Union or Moreland Schools. Here, the ratio is a little higher – 24% of all sales are short sales. Unfortunately for the folks in the Loma VIsta, El Gato and Linda neighborhoods, a disproportionate number of short sales are in this area, and that’s putting downward pressure on pricing there.
What about short sales of condos and townhouses in Los Gatos? We’ll again have a look by school district (something most news sites never factor in….).
In the Los Gatos School District area of Los Gatos, the short sales account for 30% of the pending sales of condominiums and townhomes for sale. This is a significantly higher percentage than the homes! It is probably due to pricing – the more affordable homes are the hardest hit with short sales, so entry level housing in Los Gatos (i.e., the least expensive homes in town) are impacted the most. This part of town is more expensive than that of the Union or Moreland Schools, so let’s see how it compares to that.
Finally, Los Gatos condominiums and townhomes which are under contract and are short sales in the Union School District or Moreland School District areas of Los Gatos. In this part of town, there are 8 condos or townhouses which are sale pending, and four of them are short sales – so a whopping 50% of the pending sales of townhouses and condos in this part of Los Gatos are short sales!
Although there are some more expensive sale pending Los Gatos homes for sale which are short sales, the majority of short sales are in the more affordable price ranges, so the Leigh High School or Westmont High School (Union & Moreland Schools) areas of town are much more impacted by short sales than the pricer areas of Los Gatos “in the schools”.
How important are short sales to your home’s value? It all depends on how prevelant they are in your area. One can be dismissed as a fluke, but if there are multiple short sales nearby, it will definitely harm home values, unfortunately.
For about two years, I’ve been periodically providing the readers of this blog information on distressed properties, mostly short sales but also bank owned homes (REOs) in and near Los Gatos. Today’s San Jose Mercury News has an article on the cover by Sue McAllister regarding the increasing number of short sales in Silicon Valley. Across Santa Clara County, short sales account for about one-third of the inventory. (Another “rough number”: countywide, our prices are down about 1/3 from the peak.)
What about Los Gatos? Is the trend here also for rising numbers of short sale homes on the market? Bargain hunting home buyers will correctly tell you that there just aren’t many Los Gatos homes for sale which are short sales. Some sellers will tell you that the short sales are hurting their home’s market value. Both are true.
Right now in Los Gatos (area “16”, zips 95032 and 95030), there are 181 houses, condos, duet homes and townhouses for sale. Of those, 7 are short sales and 2 are bank owned properties. (Six of the seven are priced at under $1,000,000, so the most affordable part of the market is being hit hardest by short sales. One of the listed homes is over $2,000,000. Four are in 95030, three in 95032. Three are houses, four are condos/townhomes.)
Let’s look only at the number of short sales in town over the last couple of years (not in relation to the total inventory, but as a stand-alone number). Here’s what I have for dates and short sales:
Inventory is lower than it was a couple of years ago, so it could be argued that the percentage of available homes which are short sales here is greater than it was. Also it could be argued that many more short sales are to come due to adjustable rate mortgages which are poised to reset. That may be true. A quick survey of the numbers, though, does not bear out the idea that short sales are rising in the town of Los Gatos – at least not right now. Perhaps that is because when they do come on the market, they are aggressively priced and go under contract fairly quickly. (Unfortunately they stay as pending sales a great long time, so their impact is significant on pricing.)
Interested in more areas? This morning I also posted an article on my Valley of Hearts Delight blog on this same topic (without the history) covering much of the West Valley: Monte Sereno, Saratoga, Almaden Valley, Cambrian Park, Campbell, Willow Glen, Santa Clara, Cupertino, the LG Mountains, Blossom Valley and all of San Jose. Please visit my Valley of Hearts Delight blog to read about them.
In the 95030 & 95032 zip codes and with a Los Gatos mailing address (so not necessarily the “incorporated” part that actually belongs to the town per se), for condos, townhomes, houses, and duet homes onlyhomes, right now there are
14 for sale or available (8 houses, 6 condos or townhomes) 16 sale pending 3 closed within the last 30 days (2 houses, 1 condo/TH)
Of the active listings, two of them have been on the market for close to a year.
Info on the Los Gatos short sales which are sold & closed recently:
Of the solds, 2 were houses and one was a townhome. The houses sold for appx 5% less than list, the condo sold for almost 5% over.
If someone were shopping specifically for a Los Gatos short sale, the months of inventory for this subset of the real estate market is currently 4.6 MOI – a seller’s market. And, like in the rest of the market, the good ones go relatively fast. If the home is well priced, nicely presented and appropriately marketed, there are good odds that the home will go under contract.
The average Days on Market of the solds is 50 (but that’s a bit unfair as their numbers were 114 for the townhome and 51 and 12 for the houses).
Average length of escrow (time between everyone agrees on the contract and when the home actually transfers ownership): about 3 1/2 months. (Most escrows close in about 30 days now, unless they’re FHA backed financing, in which case 45 is more typical.) This is the hardest part of the whole process – it is very long, with lots of extra steps and contingencies involved, which means there are loads more opportunities for something to go wrong.
What are the odds that a short sale listing will sell and also close escrow?
It used to be that very few short sales would ever make it to the closing table. A couple of years ago, it seemed that only 20% of short sales were ever closing. Things are improving, though. It takes a lot of time and effort, but more often than not, they are selling. (And this is good for everyone. Banks only make about 40 cents on the dollar on homes they take back in foreclosure, but they make about 65 cents on the dollar in a short sale. It’s all about loss mitigation.)
I ran the numbers and chased down the history on part of the Los Gatos short sale market this afternoon. (95030 and 95032, houses & duet homes only.)
For the period of January 1, 2009 to June 30, 2009, there were 20 different homes listed for sale as short sale listings in Los Gatos, 95030 or 95032. (Some were listed more than once, by different brokers perhaps, so this is just per address.) As of today, a year later, here’s the breakdown of what happened to those 20 properties:
12 are sold and closed – that’s 60% 3 are still on the market 1 is currently a pending sale 4 are off the MLS (show as expired, cancelled or withrawn)
Of the four removed from the MLS, some may have sold privately, been lost to foreclosure, or perhaps the owners were able to work out some other solution, such as a loan modification or getting a tenant into the property to help make the payments.
Overall, though, we do know that 60% of the short sales listed a year ago did eventually sell and close. Most of the rest are still trying.
Whether you’re a buyer or a seller interested in working through a short sale, this change in success rates is good news. You will still need time, skill and patience to work these through, but they are an opportunity – one that seems to be growing all the time.
Please also see these posts for more information on Los Gatos Short Sales
Are there bargain homes to be found in Los Gatos (and Monte Sereno), as in a lot of short sales or bank owned houses, condos & townhomes on the market? These types of properties have been in far shorter supply in the Los Gatos area than in most of Silicon Valley (San Jose, Santa Clara County). Yesterday I logged onto MLSListings.com and did the research on the “Area 16” or Los Gatos – Monte Sereno real estate market – tedious, but interesting. (Area 16 includes Monte Sereno, consists of the 95030 and 95032 zip codes and a sliver of Campbell and San Jose, Cambrian Park – but is about 95% Los Gatos). Results below:
If you are a Los Gatos homebuyer, you’ll find that there are not very many distressed properties on the market.
Los Gatos Houses for Sale
Of the 142 active listings in “area 16” (the Los Gatos area, including Monte Sereno and an exceedingly small sliver of Campbell and San Jose – Cambrian Park), only 10 are distressed homes for sale (short sales and REOs combined). That’s just 7% of the available pool of Los Gatos houses for sale are distressed properties (4% short sale, 3% bank owned).
Los Gatos Condos and Townhomes for Sale
Among the condo market, about 10% is short sales and none is a bank owned property.
Pending & Closed Sales of Homes in Los Gatos
The pendings show a lot more activity among short sales – but will they close escrow? (Unfortunately a significant percentage of short sales never close. Buyers get tired of waiting, banks request things that sellers won’t do, such as sign a promissory note, or foreclosure happens prior to the short sale being completed – just a few of the reasons why the success rate is lower than with either regular sales or REOs.) Although about half of all homes in escrow are short sales, a look at the closeds over the last month belies that most won’t close – only about 3% of the combined closed sales in the last month are short sales. Fourteen percent are bank owned – still a small fraction of the combined market (12% are distressed properties).
Will the info (and percentages of sale type) be different if we view it “year to date”?It’s pretty similar in that the distressed homes in Los Gatos are a small pert of the market – among the single family homes sold in 2009 in Los Gatos, about 6% are short sales, 11% are bank owned homes (about 17% of the solds are “distressed” sales). Interestingly, the amount of recently closed houses that are distressed is a lot less than the year-to-date.
Among the condo and townhome market, year to date about 8% of the sales are short sales and about 5% are bank owned home sales (13% are distressed sales). For the current month, it’s a similar 12%.
The distressed element of the Los Gatos real estate market is significant but a minor part of the available, pending, and sold properties in the Los Gatos area. The lower prices of short sales and bank owned homes will have a negative effect on home valuations, but not nearly so strong as is seen in most of the San Jose area. Depending on your price point and location, there may be more or less of an impact on your home’s value (or the value of the home you wish to buy).
Trulia is a great source for real estate information, but when it reports on the distressed housing sector, it relies on Realty Trac, which I have found to be inaccurate and unreliable much of the time. Twice I’ve had a subscription to Realty Trac and seen homes showing up on their database which were long since closed, for instance (so the numbers were inflated). If you are visiting these sites to get a sense of the distressed housing market in Los Gatos, please allow me to provide you information from our MLS as of today. You may be surprised that it’s not quite as bad as it may appear on that site.
A couple of disclaimers: first is that not all distressed homes are for sale. The first step in the foreclosure market is receiving a Notice of Default. Some people do “catch up” and that NOD never turns into a foreclosure.
In other cases, the home may be on the market with a NOD but is not actually a short sale – there’s enough equity in the home so that when it sells, the bank will be paid off in full. Those types of sales are “under the radar” as our MLS only tracks homes identified as short sales and those known to be bank owned (which the agents are required to disclose).
That said, here’s the information as of today on homes in Los Gatos which are short sales or bank owned. I am including the Santa Cruz mountain areas as well (95033). These numbers are far lower than in much of Silicon Valley:
Total for sale
# Short Sale
# Bank Owned
One extreme, in these times of financial chaos nationwide, is to assume that Los Gatos is “tanking”. That is one extreme that I hope I have helped to dispell here. The other extreme is to assume that we are somehow so insulated in our beautiful haven that we are not impacted by the crisis at all. Make no doubt, Los Gatans are feeling the effects of the mortgage meltdown and the crisis in our economy overall. The lack of available credit is hurting home buyers and home sellers, but also those who work in any industry where having credit matters or where spending is a matter of discretion. So Los Gatans who sell automobiles are hurting right along side those who sell houses or have anything to do with the Silicon Valley real estate market. The lack of available money to loan is part of the formula which is pushing house prices down, of course.
So yes, Los Gatos is impacted by the mortgage crisis and general roller coaster on Wall Street. Some homeowners are in real trouble with their mortgages. Many residents who work in credit-dependent fields are making much less then they used to and in some cases have walked away from careers in lending and selling altogether. But the sky isn’t falling on our housing market. The numbers, above, are proof enough of that.