May 18, 2007
What is the Silicon Valley and Los Gatos Market Doing?
Silicon Valley vs Los Gatos (and a few other places)
Santa Clara County (Silicon Valley) has a declining number of sales but a rising median sales price. Does this mean that the average home is worth more now than it was a year ago?
It depends on the location and price point.
The news reports and statistics indicate that the market is split between the wealthier communities, such as Palo Alto, Sunnyvale, Cupertino, Saratoga, Monte Sereno, Los Gatos, and Almaden Valley, which seem to be experiencing a seller’s market, and the poorer communities, including many places along the east valley, which seem to have a buyer’s market. (See the San Jose Mercury News article from 5/17 and Broderick Perkins’ article dated 5/9.)
Entry level condos and homes on the east side are being impacted by the subprime loan problems – buyers are having a harder time qualifying for 100% financing and this is impacting the ability of those entry level homes to sell. The consensus is that much of the reason that the median home price is higher is because the lower priced homes just aren’t selling. So it’s not a case that “a rising tide lifts all boats” this time around. The numbers are skewed because of the falloff of lower-cost homes.
But in Los Gatos (and in many of the west valley markets), things are rosier than they were 6 months ago. Closed sales in April (representing sales in March, generally) were up 26% over a year ago (countywide, sales were down from 578 closings in April 2006 to 431 in April 2007).
And so we return to the question: what about the value of a home (my home)? Is it worth more now than it was worth a year ago?
The best way to analyse this is to find your exact floorplan, if possible, and track where it has been selling in recent years and where it’s selling now.
Shy of that, a good way is to track the neighborhood as a whole and watch the average price per square foot.
On the eastern edge of Los Gatos lies the community near Belgatos Park (Belwood, Belgatos, and Surmont subdivisions). Generally, homes here are in the range of 2000-3000 sf though a few are smaller or larger than that.
Here are the average prices per square foot for the last few years:
2007 $566.64 (just 2 closed so far, the least of which was at $537/SF)
So this area of Los Gatos has risen steadily in value in recent years. It’s very likely that it would be true for most of the town, if not all. Countywide, things are mixed. But in Los Gatos, it seems that yes, homes are continuing to appreciate well at this time.