September 13, 2009
Let’s take a look at the real estate market for Los Gatos condos and townhomes from a very high vantage point: a two year overview. (Graphs created by me using Clarus Market Metrics, a subscription of my board and MLS.)
For the “really big picture”, let’s start with the “Supply & Demand by Month”, going from August 2007 to August 2009. Green represents demand, and red represents supply.
As you can see, there’s a big gap between available homes and how many are sought & purchased – so clearly this is a strong buyer’s market.
Now let’s turn to the absorption rate, or months supply of inventory. Below is the chart for all of “area 16”, which is Los Gatos/Monte Sereno (with a few homes in San Jose or Campbell along the border included – but by and large, it’s Los Gatos).
The condo and townhome market has improved tremendously since the doom and gloom of last Decemeber (then nearly 22 months, today less than 5).
As I’ve mentioned in other posts, the market can vary a lot depending on zip code, price point, and school district. This particular tool, the Clarus Market Metrics, does not use schools as a variable, unfortunately. But we can see what happens just with price point by breaking it down to home under and over $500,000.
Immediately below: absorption rate for Los Gatos homes priced UNDER $500,000 (condos & TH):
and next, months of inventory (absorption rate) of homes priced between $500,000 and $1,000,000:
Interestingly, the “sweet spot” of the Los Gatos condominium and townhome market is not in the least expensive condos and townhouses, but those between $500k and $1 mil. (I should add that there are some condominiums and townhouses priced over a million, but not a lot and the data gets squirrelly due to the low numbers so I am not using them in this post).
This is curious because the lowest priced homes are usually the “hottest”, but not here. Why? I only have theories, but my thinking is this:
- the lowest priced condos are mostly either senior condos (along Alberto Way, the Los Gatos Commons) or very small units
- if seniors are hoping to downsize to move to a smaller place, they are probably electing to wait so that their home values “recover” some
- some people will elect to purchase a single family home in San Jose for $500,000, but perhaps others are buying a more expensive condo or townhouse to enjoy the benefit of the schools – so this would not be super tiny (more than 1 bedroom) since they are purchases for the schools
I may do more digging in the future to see what’s causing this trend, but this is my hunch. I welcome any comments from my readers on what they see happening with the condo market here in Los Gatos.