How's the Los Gatos Real Estate Market?

December 06, 2007

For the MOST CURRENT Los Gatos real estate market information, please click on the header above to visit the most recent posts. Each week there will be an update to the housing market in Los Gatos, so return often!

The real estate market for single family homes in Los Gatos is moving more into a buyers’ market. Values may be slipping some, but the big story is the fact that so few homes are selling and closing. Whether you compare November 2007 against other recent months or against other Novembers in the last ten years, sales are clearly, and dramatically, way off.

Let’s take the number of closed sales from November for the last 10 years, then we’ll look at the absorption rate, or “months of inventory” for Los Gatos in recent months.

Graph reflecting closed single family homes in Los Gatos for the month of November in the last decade

As is apparent in the graph, closings are at an all-time low for November over the last decade, and in fact is about half of average. This movement is not exclusive to Los Gatos but is being seen all over Silicon Valley; this is the reason there are so many layoffs among lenders, title companies, and real estate offices (in support staff, not commissioned sales people). So even “seasonally”, this is unusual.

Next, let’s look at the “months of inventory”, meaning how long it would take to sell off the current inventory (how many months) if nothing new came on the market and homes continued to sell off at the rate of the closeds for the month. Here, too, the figures show a deepening buyers’ market. (Under 6 months is considered a sellers’ market by the National Association of Realtors, over 6 months a buyers’ market.)

Months of inventory for single family homes in Los Gatos from Nov 2006 to November 2007

Again, the month to month view is a clear reflection of the slowing market and the reality that fewer homes are selling. The larger the number of months, the harder it is to sell.

Some experts predict that things will calm down in 2008 and we’ll have a flat or normal market, or very slight appreciation at best. Other experts predict a worsening real estate market.

Silicon Valley often marches to the beat of its own drummer. Since we have geographical constraints (two sets of mountains and a bay), a good economy and a housing shortage, I believe things will go fairly flat for most of the valley in the next year or two.

It always comes down to supply and demand. Right now there’s plenty of supply in Los Gatos (about 108 homes). In neighboring Saratoga, though, there are fewer than 75 homes available – so the absorption rate there looks very different. If, in the new year, there are a lot of homes on the market, it will put downward pressure on pricing and homes will sell for less than they’re selling today. If inventory tightens up, that won’t happen.

Tomorrow: the real estate market for condos and townhomes in Los Gatos.

The Strange Real Estate Market in Los Gatos

June 14, 2007

The Los Gatos single family real estate market appears to be split, with some price ranges faring far better than others, but overall, it is clearly a buyer’s market. For the homes that do sell, prices are appreciating somewhat.

Since June 1st, there have been just 9 closings among single family homes. Of these, the average “days on market” was a brisk 15, with one house selling after 55 days on the market and another after 33 days – both of these, however, sold for significantly less than asking price, while homes that sold fast generally sold at list price or higher than list price. None of the closeds were under $1 million or over $1.6 million (average sales price was $1,376,865).

There have been 13 pending sales since June 1st (compared to an inventory of available single family homes in this same are of 101). Not one of the most recent sales is under $1 million and not one of the recent sales is over $2 million (there are not so many available under $1 million, wheras there are lots available over $2 million).

If we consider ALL pending sales, there are 20 to view and the range of all pending sales prices (not just sold in the last 2 weeks) is a little wider than with the closeds: 2 were just a hair under $1 million, one was a low $729,000 (for an “attached” single family home) (so 3 under a million, compared to 10 available) and four ranged from $2 million to $2.5 million (compared to 53 available). Most recently pending sales are priced solidly between $1 and $2 million.

So what are a seller’s odds of selling? Right now, for all homes priced under $2 million, about one in three. For homes more than $2 million, it’s about 16% (there are 9 pendings – not just since June 1st but generally – and 53 available properties in that range). You are most likely to sell if your home is the middle range between 1 and 2 million and if your property has Los Gatos Schools with no adverse conditions (high voltage power lines, freeway too close, etc.).

Sales are down 15 – 20% from a year ago, and sales then were down significantly from the year before that. Prices have been rising modestly but that doesn’t help a seller if the home doesn’t sell! Inventory is continuing to rise and appears that we are going into a deeper buyer’s market at this time. The market does ordinarily begin to soften around this time each year, so seasonally this is not out of the ordinary. But the number of sales and the narrow range within which they are selling is key. (And this quick view did not even consider school districts or other issues that can impact value.)

Sellers: This is not a market to see if you can “get your price”. You will be wasting your time. This is not a market for homes that are dirty, difficult to view, poorly staged, needing work, or overpriced. The real estate market is unsympathetic to what a seller wants to get out of the house (just like the stock market), and the market is the one thing that neither the agent, nor the seller, can control. If it is important to you to sell now, then you need to put your best foot forward on all fronts, from staging to marketing to accessibility to pricing – most of all pricing. (Most homes that do not sell fail to do so because they are overpriced.)

Buyers: If you are in the market for a luxury property, now is the time to move on it, particularly if you are an all-cash buyer. Another good angle for you is to find a property that needs updating and/or has been sitting on the market awhile, since the longer the days on market, the more likely you are to get a good price. However, the seller has to be motivated for that to happen – and in every market, there are sellers who will only sell if they get their price. Don’t assume that you can get a bargain just because the DOM is long. (But hey, it’s worth a try.) Understand that if you buy in the most desireable areas and with the best schools, and if the home is priced well and beautifully updated, you could pay $50,000 over list price to get that “shiney penny”.

For advice specific to your area, please contact me.

Mary Pope-Handy signature


Market Conditions

April 30, 2007

How’s the Market?

That’s what everyone asks Realtors, all the time.

In Los Gatos, California, the market under $2 million is great. Fantastic. Outrageously good.

And that is also true for the neighboring communities of Saratoga, Campbell, Cambrian Park, and Almaden.  As long as a home is in good shape, priced appropriately (for location and condition), and marketed decently, it’s selling fast – often in a week to ten days.

In EVERY market, even in the hottest markets, there are some homes that don’t sell. Right now, there are only 91 homes available in “area 16” which is mostly Los Gatos addresses (though a few San Jose ones). There are 31 pendings, and 30 of these have sold since April first. Looking at those that do sell, the homes under a million generally seem to be selling within a week (if they are going to sell at all). The higher priced the home, the longer the days on market. Overall, it’s about 2 months on the market if you include all price ranges.

In my own real estate practice, I sold two homes in the last week (one listing, one buyer sale), fielded multiple buyer calls, met with one new buyer couple and did two listing presentations (and talked to a whole lot of other folks about both buying and selling). If I were ONLY getting calls from buyers or ONLY getting calls from sellers, I would have a sense that the market were tilted. But in my experience, there’s a lot of activity on all fronts. The price ranges in these clients ranged from entry level to move up (less than 1.5 mil.)

How’s the market?  I would say “healthy”. It’s a good time to both buy and sell!