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August 09, 2009

Are home prices rising in Los Gatos? It does appear that way. What is reported, though, may not be what it seems.

Below are the stats for the closed sales in July – they are still off, year over year, considerably, but they are up from the month before.

Los Gatos Single Family Home Statistics – Closed Sales

Trends At a Glance Jul 2009 Previous Month Year-over Year
Median Price $1,185,000 $1,080,000 (+9.7%) $1,347,500 (-12.1%)
Average Price $1,333,290 $1,082,350 (+23.2%) $1,492,650 (-10.7%)
No. of Sales 28 27 (+3.7%) 26 (+7.7%)
Pending Properties 23 40 (-42.5%) 23 (0.0%)
Active 168 157 (+7.0%) 164 (+2.4%)
Sale vs. List Price 96.0% 95.8% (+0.1%) 98.3% (-2.4%)
Days on Market 62 66 (-6.3%) 31 (+96.8%)

Los Gatos Condominium and Townhouse Statistics – Closed Sales

Trends At a Glance Jul 2009 Previous Month Year-over Year
Median Price $518,000 $635,000 (-18.4%) $668,000 (-22.5%)
Average Price $534,806 $615,000 (-13.0%) $605,600 (-11.7%)
No. of Sales 8 7 (+14.3%) 5 (+60.0%)
Pending Properties 12 9 (+33.3%) 5 (+140.0%)
Active 45 52 (-13.5%) 54 (-16.7%)
Sale vs. List Price 99.2% 95.4% (+4.1%) 95.3% (+4.2%)
Days on Market 86 112 (-23.7%) 44 (+94.9%)

What does it mean?

Clearly, while single family home sold prices are higher than a month ago, this is not the case for condos and townhomes (which have been “beat up” in this market, all over San Jose and also countywide). This is our first clue that “the Los Gatos Market” is again not one unified block, with everyone benefitting equally. Rather, there are micro-markets. Part of the market is advancing strongly – the lower priced homes in the Los Gatos School District – and those homes are selling and appreciating briskly. Other parts of the market, such as the townhouse and condominium market, the luxury market, and the homes not in the Los Gatos school area, are not faring as well. In fact, most homes in Los Gatos are not selling at all, and overall, it is still very much a buyer’s market, but it IS improving.

Below, please see a chart displaying the “market barometer” for Los Gatos. N the gap between the number of properties on the market (168) and those sold (28) – divide the former by the latter to get the “months of inventory”, which is 6 months right now. According to the National Association of Realtors, 6 months is a “balanced market” or a “neutral market”.

How can this be? How is it possible for it to be a neutral market (or in some segments of Los Gatos, a buyer’s market) when prices are rising (and homebuyers are experiencing multiple offers in places)?

It’s not happening in every segment of the Los Gatos market, that’s how. The homes that are selling are doing well. But many – most – remain unsold.


Broad sweep – here’s a view of inventory by Los Gatos zip code (95030 and 95032):

Real Estate Market Chart by Altos Research

As you can see, inventory is rising among homes in the 95030 part of Los Gatos, but falling among 95032 (often more affordable).

Here’s the 95030 zip code area by price quartile:Real Estate Market Chart by Altos Research

And here’s the 95032 part of Los Gatos by price quartile:Real Estate Market Chart by Altos Research

Unfortunately, I cannot break out the school district differential with this subscription, but anecdotal information indicates that homes “in the schools” are the ones selling with multiple offers if they are priced low (close to or under $1 million). So I went to the MLS and checked a few numbers myself.

Right now in 95030 and 95032, there are 47 single family homes for sale in the Campbell Union High School District (meaning Leigh High & Westmont High), and 4 closed sales of the same in the last month. That is an 11.75 month supply of inventory.

Right now in 95030 and 95032 there are 159 single family homes for sale in the Los Gatos-Saratoga High School District, with 28 closed sales in the last month, which is a 5.67 month supply of inventory.

Price point aside
, the school district is the driving force.

List prices by zip code in Los Gatos:Real Estate Market Chart by Altos Research

Prices are rising more in the 95032 part of Los Gatos than in the less-affordable 95030 part of town. Knowing what we do about the months of inventory, what we see are that the most affordable homes with the schools are the “hot” segment of the market.

What homes are these? The ones where a buyer can get into a single family home for close to a million dollars or less (up to about 1.3 mil max) and enjoy the Los Gatos Schools. Even so, houses must be “turnkey” and priced aggressively.

Homes outside of this parameter – which is most of the Los Gatos real estate market – are struggling.

Please contact me for help in buying or selling a home anywhere in Los Gatos.