December Silicon Valley Real Estate Market Update

This information summary and analysis uses MLS Listings Inc. (MLS) transactional data for November 2008. For single family homes in Santa Clara County, November saw an increase in closings of 7% from November 2007; closings of condos/townhouses saw a decrease of 16% in the same period. For single family residences, there were 613 closings in the month with 892 initiated sales (accepted offers). As you know, not all accepted offers result in a closing. Closings of single family homes also decreased in San Mateo County by 8%.

Inventory of available single family homes in Santa Clara County was 4,622, down 366 from last month but up 2% from the same month last year. San Mateo County inventory decreased by 222 to 1,432, and dropped 6% from November 2007. Similarly, Santa Cruz and Monterey counties show trends toward lower inventory levels.


Days of Unsold Inventory (DUI) or the intersection of the inventory (supply) with the recent sales level (demand), shows Santa Clara County at 143 for single family residences and 173 for condos/townhouses, modest increases from last month. San Mateo County is at 127 and 160, respectively. Santa Cruz County has a DUI reading of 193 and 163, respectively. Monterey County showed DUI at 140 and 208, respectively. Please remember that a lower figure is good here and that a declining measure represents an improvement in the market. Clearly, these levels continue to indicate a buyer's market condition as a reading of DUI of 90 or above depicts. As a comparison, a seller's market will have a DUI of less than 45 and a balanced market will have a DUI between the two. Keep in mind that these are county-wide averages. The wider area you measure, the statistics are less reliable as a decision tool for any specific area or neighborhood and also that there is often an incredible variation between those areas experiencing terrible market conditions compared to those that are stable. That's why I've mentioned that those statistics presented in newspaper and online articles are so general as to not be of much use as a decision tool for an individual making a decision on a home purchase or sale in a particular area. Real estate is local (down to the neighborhood level in some cases) and market conditions can vary within each county and even within cities by a large amount. Recently, local real estate is even more important now than ever as we witness an even greater of discrepancies between the different areas.


The median price for single family homes in Santa Clara County now stands at $515,000, down 40.0% from $858,000 the same month a year ago and down 35.5% from the December 2007 reading of $799,000. These sudden changes in the median prices (first way up and now way down) show that the real culprit or cause is a shift in the mix of what is actually being sold. Currently, there are a large number of lower-priced homes that closed and thus make up a larger portion of the total sales. Before, we witnessed a mix shift toward the higher-priced homes and saw the median price spurt higher. If you want more detail please contact me. Recently, the stock market crash has caused a major pause in the real estate market but only in the moderately-priced and higher-priced areas. The most affordable priced areas haven't been affected! The bottom 10% median selling price (10th percentile) was $300,000 in November and showed a decline of 48.0% from the same month a year ago and the top 10% median price (90th percentile) was $1,079,000, saw a drop of 34.4% from November 2007.


The price range with the lowest DUI reading we call the "sweet-spot" of the market for single family homes continues to be the $450,000 and under range with a DUI reading of 90. Next comes the $450,000 to $600,000 range with a DUI reading of 133. For condo/townhouses the picture looks similar with the sweet-spot being the $300,000 and under range with a DUI reading of 130.

For real estate investment buyers, the DUI for residential investment property has dramatically decreased and in now at 302 versus 259 last month. This means under the current rate of sales of multi-unit properties, there are about 10 months of unsold supply versus 8.5 last month. This remains a prime period for negotiation with a buyer with preapproved financing and adequate investment funds. As mentioned before, many lenders have substantially increased the borrower's minimum requirements to obtain a loan for investment property purchases AND many are not allowing the use of home equity credit lines for their down payments so I forecast that this area will remain weak and characterized as a buyer's market. This remains an area of opportunity for smart, long term investors with adequate down payments that have an appropriate long-term investment horizon. Matter of fact, we now see much better rates of return on rentals than previous. Rental vacancies are relatively low and steady. This year, rents are estimated to increase 10-12% in Santa Clara County.


Why is following all these trends and statistics worth it? I believe that informed clients make the best decisions -- both buyers and sellers. The research and staying on top of the changes to market conditions allows me to properly advise my clients on the appropriate strategy to employ so that they make the best decision possible whether they decide to buy or sell. This is an example of how I invest my time to benefit my clients. Most other agents spend the bulk of their time working on self-promotion ads for newspapers, magazines and send you stuff that fill your mailbox. Beware the various media sound-bites or headlines as they generalize too much (i.e., the national real estate market, the Bay Area real estate market, etc.). If you generalize too much you lose the fineness of being able to use current information strategically to make better decisions.

If you're curious about market conditions in a specific area, please don't hesitate to give me a call. I review details of the supply and demand within the smallest area possible. With the credit situation we're experiencing, banks will be more aggressive in approving loan modifications which will slow down foreclosure activity. If you need advice regarding your loan situation, please give me a call and whatever you do, don't go to an intermediary trying to extract a price for something you can get for free! However, not all borrowers will qualify for a loan mod and so there will continue to be some bank-owned properties available in the future. I have access to four major sources of bank-owned homes so if you'd like to explore this area, please give me a call to set up an appointment.

Your comments are welcome! Please feel free to post them here or send me an email.

Thanks for reading!

Silicon Valley Community Calendar -- December

Here is an update to some of the events and on-going programs you might want to put on your calendar for December. Most of these are selections from Sunnyvale and Cupertino but other communities in Silicon Valley may be included (e.g., Mountain View, Santa Clara, Palo Alto).

•December 1-6: California Theater Center presents – “The Elves and the Shoemaker”, 408-245-2978 or www.ctcinc.org
•December 1: Board of Library Sunnyvale Trustee’s Meeting, 7pm
•December 2, 9, 16: Sunnyvale City Council Meeting, 7pm
•December 2: Oregon Shakespeare Festival, Sunnyvale Public Library, 7pm
•December 3, 10, 17: Kiwanis Club of Silicon Valley, 7:20am, 408-774-0609
•December 3: American Association of Retired Persons (AARP), monthly meeting, 1:30pm, 408-296-3805
•December 3: Silicon Valley Toastmasters, 5pm
•December 4: Sunnyvale Community Services Auction, 725 Kifer Road, 5pm, 408-738-4321
•December 4: SNAIL Neighborhood Association, monthly, 7pm
•December 5: Holiday Luncheon, Senior Center, 550 E. Remington Drive, $11 for members, $13 for non-members, 408-730-7360, Noon – 1pm
•December 5: Heritage District Neighborhood Association Monthly Meeting, 7pm
•December 6, 13, 20, 27: Farmers Market, 510-745-7100
•December 7, 14, 21, 28: Fair Oaks Toastmasters, 11:30am
•December 8-20: California Theater Center presents – “Madeline’s Christmas”, 408-245-2978 or www.ctcinc.org
•December 8: San Miguel Neighbors Association, General Meeting, 7pm
•December 8, 22: Sunnyvale Planning Commission Meeting, 8pm
•December 10: Sunnyvale Parks and Recreation Commission Meeting, 7pm
•December 10: Lakewood Village Neighborhood Association, monthly, 7pm
•December 13: Breakfast with Santa, Senior Center, 8-10am or 11am-1pm, 408-730-7360
•December 13: An Evening of Cultural Arts presents “Kugelplex – Klezmers Coming to Town”, 8pm, 408-733-6611
•December 15: Personnel Board Meeting, Sunnyvale, 5pm
•December 17: Arts Commission Meeting, 7pm
•December 18: Sunnyvale Bicycle & Pedestrian Advisory Commission Meeting, 6:30pm

•Mondays, Wednesdays, Fridays: Computer and E-Waste Recycling, 8:00am-4:30pm, Cupertino proof of residency
•Every Wednesday: Silicon Valley Toastmasters, 5pm, 260 S. Sunnyvale Avenue, Suite 4, Sunnyvale, 866-387-4086
•Every Saturday: Family Astronomy Evenings, De Anza College Planetarium, 6:00pm, 7:00pm or 8:00pm, Cupertino
•Every Second Monday of Month: Fine Arts League of Cupertino, Quinlan Community Center, 7:00pm

Thanks for reading!

Cost vs. Value Report - 2008

Remodeling Magazine, published by Hanley-Wood, LLC, Washington, D.C., has been publishing the "Cost vs. Value Report" annually for more than twenty years. The 2008 version compiles information for 79 markets, (up from 64 in past years) on 29 upscale and midrange home improvement projects estimated by HomeTech Information Systems (www.hometechonline.com), which publishes estimating software for professional remodelers.

What do the latest numbers have to say? Home prices have fallen from the summer of 2007 to the summer of 2008 (Cost vs. Value information complied during each summer) but that the value of improvements have fallen less which means that improvements continue to add incremental value. The national average percentage that homeowners can expect to recoup was 67.3% versus the high reached in 2005 of 86.7%. Higher cost estimates for projects coupled with lower resale prices have tipped the percentages to below 100% with minor exceptions. What I noticed in going through the report, with few exceptions, was that the percentage of cost recouped on upscale additions and remodels were generally lower than midrange additions and remodels. This stands to reason as many upscale remodels are not undertaken using an investment return mentality.

Repeated this year is an online source (requires registration) for free city reports. If interested, go to www.costvsvalue.com. A map on the site shows cost comparisons by region.

Here are samples of 2008 midrange projects for the Pacific Region along with its average percentage of cost recouped:

* Bathroom addition - 76%
* Deck addition (wood) - 97%
* Family room addition - 75%
* Master Suite addition - 74%
* Bathroom remodel - 76%
* Home office remodel - 65%
* Major kitchen remodel - 87%
* Minor kitchen remodel - 96% (one of the projects I have advised clients to consider)
* Roof replacement - 79% (may be needed for buyers to obtain fire insurance coverage)
* Siding replacement - 84%
* Windows replacement (vinyl) - 94%


Hope this information is of help to you as you decide on remodeling projects to either enhance the value of your home for immediate reselling or to enjoy the lifestyle benefits of the improvements and have no plans to sell. Please remember that not all remodeling projects will result in higher resale values. Many folks think that someone will want to pay $100,000 more for their remodeled home that costs them $50,000 to complete. Perhaps, but it depends upon on the project, the neighborhood, the likely market conditions upon completion, and other factors. If you are considering remodeling for a sale or just want to see what projects may cost and understand the process, I recommend reading the book "Remodel or Move?" by Dan Fritschen. His website at www.remodelormove.com has a remodel or move calculator to help you with your decision.

For more information and to view the entire Cost vs. Value Report online, please visit www.realtor.org/realtormag. If you want a professional opinion of how the market will react to your proposed project and as a way to save time, money and hassle, please contact me. I would provide you a market assessment of your contemplated remodeling project and if you want, a referral to a licensed trades-person who can provide free estimates or just to talk it over as you firm up your plans, please let me know. I would do this whether or not you would be doing the project for resale as I work exclusively by referral so regularly provide referrals to my clients to help them maintain or improve their homes. By the way, the only thing I get for a referral of this type is the satisfaction that you will be well-cared for by a licensed professional.

Thanks for reading!

November Silicon Valley Real Estate Market Update

This information summary and analysis uses MLS Listings Inc. (MLS) transactional data for October 2008. For single family homes in Santa Clara County, October saw an increase in closings of 41% from October 2007; closings of condos/townhouses saw an increase of 20% in the same period. There were 809 closings in the month with 1,073 initiated sales (accepted offers). As you know, not all accepted offers result in a closing. Closings of single family homes also increased in San Mateo County by 26%.

Inventory of available single family homes in Santa Clara County was 4,988, up a few from last month but up 5% from the same month last year. San Mateo County inventory increased by one to 1,654, but dropped 1% from October 2007. In Santa Cruz County, inventory trend has been slowly decreasing. Monterey County shows a steady trend toward lower inventory levels.


Days of Unsold Inventory (DUI) or the intersection of the inventory (supply) with the recent sales level (demand), shows Santa Clara County at 140 for single family residences and 163 for condos/townhouses, modest increases from last month. San Mateo County is at 142 and 167, respectively. Santa Cruz County has a DUI reading of 193 and 172, respectively. Monterey County showed DUI at 135 and 197, respectively, and now sports the best DUI for single family homes of the four counties. Please remember that a lower figure is good here and that a declining measure represents an improvement in the market. Clearly, these levels continue to indicate a buyer's market condition as a reading of DUI of 90 or above depicts. As a comparison, a seller's market will have a DUI of less than 45 and a balanced market will have a DUI between the two. Keep in mind that these are county-wide averages. The wider area you measure, the statistics are less reliable as a decision tool for any specific area or neighborhood and also that there is often an incredible variation between those areas experiencing terrible market conditions compared to those that are stable. That's why I've mentioned that those statistics presented in newspaper articles are so general as to not be of use to an individual making a decision on a home in a particular area. Real estate is local (down to the neighborhood level in some cases) and market conditions can vary within each county and even within cities by a large amount.


The median price for single family homes in Santa Clara County was $550,000, down 36.2% from $861,500 the same month a year ago and down 31.2% from the December 2007 reading of $799,000. These sudden changes in the median prices from month to month show that there are many more lower-priced homes that closed, thus causing the drop in median and the mix of homes shifted from the higher-priced homes to the more affordable homes. Recently, the stock market crash has caused a major pause in the real estate market but only in the higher priced areas. The more affordable priced areas haven't been affected. The bottom 10% median selling price (10th percentile) was $329,600 in October and showed a decline of 44.6% from the same month a year ago and the top 10% median price (90th percentile) was $1,200,000, saw a drop of 31.2% from October 2007.


The price range with the lowest DUI reading we call the "sweet-spot" of the market for single family homes. For October, it was the $450,000 and under range with a DUI reading of 84. Next comes the $450,000 to $600,000 range with a DUI reading of 121. For condo/townhouses the picture looks similar with the sweet-spot being the $300,000 and under range with a DUI reading of 105.

For real estate investment buyers, the DUI for residential investment property has dramatically decreased and in now at 259 versus 316 last month. This means under the current rate of sales of multi-unit properties, there is about 8.5 months of unsold supply versus 11 last month! This remains a prime period for negotiation with a buyer whit preapproved financing and adequate investment funds. As mentioned before, many lenders have substantially increased the borrower's minimum requirements to obtain a loan for investment property purchases AND many are not allowing the use of home equity credit lines for their down payments so I forecast that this area will remain weak and characterized as a buyer's market. This remains an area of opportunity for smart, long term investors with adequate down payments that have an appropriate long-term investment horizon. Matter of fact, we now see much better rates of return on rentals than previous. Rental vacancies are relatively low and steady. This year, rents are estimated to increase 10-12% in Santa Clara County.


Why is following all these trends and statistics worth it? I believe that informed clients make the best decisions -- both buyers and sellers. The research and staying on top of the changes to market conditions allows me to properly advise my clients on the appropriate strategy to employ so that they make the best decision possible whether they decide to buy or sell. This is an example of how I invest my time to benefit my clients. Most other agents spend the bulk of their time working on self-promotion ads for newspapers, magazines and send you stuff that fill your mailbox with either "brag" cards or "spray and pray" cards. Beware the various media sound-bites or headlines as they generalize too much (i.e., the national real estate market, the Bay Area real estate market, etc.). If you generalize too much you lose the fineness of being able to use current information strategically to make better decisions.

If you're curious about market conditions in a specific area, please don't hesitate to give me a call. With the credit situation we're experiencing, banks will be more aggressive in approving loan modifications which will slow down foreclosure activity. However, not all borrowers will qualify for a loan mod and so there will continue to be some bank-owned properties available in the future. I have access to four major sources of bank-owned homes so if you'd like to explore this area, please give me a call to set up an appointment.

Your comments are welcome! Please feel free to post them here or send me an email.

Thanks for reading!

October Silicon Valley Real Estate Market Update

This information summary and analysis uses MLS Listings Inc. (MLS) transactional data for September 2008. For single family homes in Santa Clara County, September saw an increase in closings of 73% from September 2007. There were 899 closings in the month with 1286 initiated sales (accepted offers) that indicates that closings in October will likely remain at about the same level as not all accepted offers close escrow. Closings increased also in San Mateo County by 9% and Santa Cruz County of 64%. In Monterey, closings were 308, 250% higher than September 2007.

Inventory of available single family homes in Santa Clara County was 4,981, down from last month but up from the same month last year. San Mateo County inventory increased a bit to 1,653, but dropped slighted from September 2007. In Santa Cruz County, inventory decreased from last month and also from the same month last year. Monterey County shows a lower inventory than last month as well as lower than September 2007.


Days of Unsold Inventory (DUI) or the intersection of the inventory (supply) with the recent sales level (demand), shows Santa Clara County at 121 for single family residences and 135 for condos/townhouses, a slight drop from last month. San Mateo County is at 112 and 129, respectively. Santa Cruz County has a DUI reading of 167 and 141, respectively. Monterey County showed DUI at 124 and 202, respectively. Please remember that a lower figure is good here and that a declining measure represents an improvement in the market. Clearly, even with the drops in this indicator, these still are indicating a buyer's market condition as a reading of DUI of 90 or above depicts. As a comparison, a seller's market will have a DUI of less than 45 and a balanced market will have a DUI between the two. Keep in mind that these are county-wide averages. The wider area you measure, the statistics are less reliable as a decision tool for any specific area or neighborhood and also that there is often an incredible variation between those areas experiencing terrible market conditions compared to those that are stable. As I've mentioned, real estate is local (down to the neighborhood level in some cases) and market conditions can vary within each county and even within cities by a large amount.


The median price for single family homes in Santa Clara County was $600,000, down 29.4% from $850,000 the same month a year ago and down 24.9% from the December 2007 reading of $799,000. A sudden change in the market shows that there are many more lower-priced homes that closed, thus causing the drop in median and the mix of homes shifted from the higher-priced homes to the more affordable homes. The bottom 10% median selling price (10th percentile) was $330,000 in September and showed a decline of 46.3% from the same month a year ago and the top 10% median price (90th percentile) was $1,331,869, saw a drop of 20.6% from September 2007.


The price range with the lowest DUI reading we call the "sweet-spot" of the market for single family homes. For September, it was the $450,000 and under range. Next comes the $450,000 to $600,000 range. For condo/townhouses the picture looks similar with the sweet-spot being the $300,000 and under range.

Potential real estate investment buyers take heed: the DUI for residential investment property is at 316. This means under the current rate of sales of multi-unit properties, there is about 11 months of unsold supply! Better opportunity to negotiate. As mentioned last month, many lenders have substantially increased the borrower's minimum requirements to obtain a loan for investment property purchases AND many are not allowing the use of home equity credit lines for their down payments so I forecast that this area will remain weak and characterized as a buyer's market. This remains an area of opportunity for smart, long term investors with adequate down payments that have an appropriate long-term investment horizon. Matter of fact, we now see much better rates of return on rentals than previous. Rental vacancies are relatively low and steady. This year, rents are estimated to increase 10-12% in Santa Clara County.


Why is following all these trends and statistics worth it? I believe that informed clients make the best decisions -- both buyers and sellers. The research and staying on top of the changes to market conditions allows me to properly advise my clients on the appropriate strategy to employ so that they make the best decision possible whether they decide to buy or sell. This is an example of how I invest my time to benefit my clients and part company from most other real estate agents. Most other agents spend the bulk of their time working on self-promotion ads for newspapers, magazines and stuff that fill your mailbox with either "brag" cards or "spray and pray" cards. Beware the various media sound-bites or headlines as they generalize too much (i.e., the national real estate market, the Bay Area real estate market, etc.). If you generalize too much you lose the fineness of being able to use current information strategically to make better decisions.

If you're curious about market conditions in a specific area, please don't hesitate to give me a call.

Your comments are welcome! Please feel free to post them here or send me an email.

Thanks for reading!

September Silicon Valley Real Estate Market Update

This information summary and analysis uses MLS Listings Inc. (MLS) transactional data for August 2008. For single family homes in Santa Clara County, August saw an increase in closings of 33% from August 2007. There were 1,044 closings in the month with 1,260 initiated sales (accepted offers) that indicates that closings in September will likely remain at about the same level as not all accepted offers close escrow. However, closings of condos and townhouses decreased by 14% from the same month last year.

Inventory of available single family homes in Santa Clara County was 5,166, down from 5,368 last month but up 14% from August 2007. San Mateo County inventory decreased to 1,542, 6% higher than the same month a year ago. San Mateo and Monterey counties have seen a similar downtrend in available single family homes whereas inventory in Santa Cruz County has been flat these past five months.


Days of Unsold Inventory (DUI) or the intersection of the inventory (supply) with the recent sales level (demand), shows Santa Clara County at 125, down from 131 last month and compares favorably to the 210 figure for August 2007. San Mateo County is at 112, up from 105 last month. Santa Cruz County has a DUI reading of 165, down slightly 169. Monterey County showed DUI at 122, down from 136 last month. Please remember that a lower figure is good here and that a declining measure represents an improvement in the market. Clearly, even with the drops in this indicator, these still are indicating a buyer's market condition as a reading of DUI of 90 or above depicts. As a comparison, a seller's market will have a DUI of less than 45 and a balanced market will have a DUI between the two. Keep in mind that these are county-wide averages. The wider area you measure, the statistics are less reliable as a decision tool for any specific area or neighborhood and also that there is often an incredible variation between those areas experiencing terrible market conditions compared to those at virtually the other extreme. As I've mentioned, real estate is local (down to the neighborhood level in some cases) and market conditions can vary within each county and even within cities by a large amount. For instance, within Santa Clara County, Sunnyvale has the best market climate in the county with a DUI reading of 51, representing a balanced market while Los Gatos has the worst reading of 170 (actually, Los Gatos Mountains is higher at 270). The following table is a ranking of Santa Clara County cities or areas with their current DUI readings compared to last month's calculation as well as my notations as to the type of market the area is in (seller's, balanced or buyer's) and the recent direction of change in this indicator. Even though there are a lot of "better" notations made, many of these areas are still in what we call a "buyer's market" and have poor market climates. Just some markets are much better off than others.

Sunnyvale 51 55 Balanced/BETTER
North Valley 63 68 Balanced/BETTER
Milpitas 63 65 Balanced/BETTER
Blossom Valley 64 68 Balanced/BETTER
Cambrian 76 69 Balanced/WORSE
Cupertino 79 57 Balanced/WORSE
South San Jose 82 90 Balanced/BETTER
East Valley 82 92 Balanced/BETTER
Santa Teresa 90 74 Balanced/WORSE
MtView/LA/PA 93 77 Buyer’s/WORSE
Downtown SJ 93 106 Buyer's/BETTER
Santa Clara 94 97 Buyer's/BETTER
Evergreen 96 106 Buyer's/BETTER
Campbell 102 96 Buyer's/WORSE
M Hill/Gilroy 143 141 Buyer's/WORSE
Almaden Valley 144 139 Buyer's/WORSE
Willow Glen 146 145 Buyer's/WORSE
Los Gatos 170 211 Buyer's/BETTER
Saratoga 166 130 Buyer's/WORSE
LG Mountains 270 359 Buyer's/BETTER


The median price for single family homes in Santa Clara County was $648,500, down 24.6% from $860,000 the same month a year ago and down 18.8% from the December 2007 reading of $799,000. A sudden change in the market shows that there are many more lower-priced homes that closed, thus causing the drop in median and the mix of homes shifted from the higher-priced homes to the more affordable homes. Lower-priced homes account for one-third of the market -- a significant increase in the percentage this price range occupied of the market in recent months. The bottom 10% median selling price (10th percentile) was $355,270 in August and showed a decline of 43.1% from the same month a year ago and the top 10% median price (90th percentile) was $1,513,500, saw only a drop of 16.7% from August 2007's record high of $1,816,000. The northwest quadrant of the county including Palo Alto, Mountain View, Los Altos, Cupertino and parts of Sunnyvale (zip 94086 and 94087) have seen price appreciation and are at their all time highs while county-wide medians are down. With few exceptions, the single family home markets become weaker when you cross Lawrence Expressway heading east.

The price range with the lowest DUI reading we call the "sweet-spot" of the market for single family homes. For August, it remains at the $450,000 and under range. It's DUI reading is 87. Next comes the $450,000 to $600,000 range with a DUI reading of 127.

Potential real estate investment buyers take heed: the DUI for residential investment property is at 324, down from 502 and a huge improvement from last month. This means under the current rate of sales of multi-unit properties, there are about 0.90 years of unsold supply! As previously mentioned, many lenders have substantially increased the borrower's minimum requirements to obtain a loan for investment property purchases AND many are not allowing the use of home equity credit lines for their down payments so I forecast that this area will remain weak and characterized as a buyer's market. This remains an area of opportunity for smart, long term investors with adequate down payments that have an appropriate long-term investment horizon. Rental vacancies are relatively low and dropping and we see strong increases in rental rates continue. This year, rents are estimated to increase 10-12% in Santa Clara County.


Why is following all these trends and statistics worth it? I believe that informed clients make the best decisions. The research and staying on top of the changes to market conditions allows me to properly advise my clients on the appropriate strategy to employ so that they make the best decision possible whether they decide to buy or sell. This is one area I part company from most other real estate agents as only a relative handful of agents invest the time to study the trends. Most other agents spend the bulk of their time working on self-promotion ads for newspapers, magazines and stuff that fill your mailbox with either "brag" cards or "spray and pray" cards. Beware the various media sound-bites or headlines as they generalize too much (i.e., the national real estate market, the Bay Area real estate market, etc.). If you generalize too much you lose the fineness of being able to use current information strategically to make better decisions.

If you have any comments or questions, please feel free to post them here or send me an email at tom.mcevoy@remax.net.

Thanks for reading!

Silicon Valley Community Calendar -- September

Here is an update to some of the events and on-going programs you might want to put on your calendar for September. Most of these are selections from Sunnyvale and Cupertino but other communities in Silicon Valley may be included (e.g., Mountain View, Santa Clara, Palo Alto).

• September 1: Labor Day
• September 3, 10, 17, 24: Kiwanis Club of Silicon Valley, 7:20am, 408-774-0609
• September 3: American Association of Retired Persons (AARP), monthly meeting, 1:30pm, 408-296-3805
• September 3: Heritage Preservation Commission Meeting, 7pm
• September 4: SNAIL Neighborhood Association, monthly, 7pm
• September 5: Heritage District Neighborhood Association Monthly Meeting, 7pm
• September 6, 13, 20, 27: Farmers Market, 510-745-7100
• September 7, 14, 21, 28: Fair Oaks Toastmasters, 11:30am
• September 8: Board of Library Sunnyvale Trustee’s Meeting, 7pm
• September 8: San Miguel Neighbors Association, General Meeting, 7pm
• September 8, 22: Sunnyvale Planning Commission Meeting, 8pm
• September 9, 16, 30: Sunnyvale City Council Meeting, 7pm
• September 10: Sunnyvale Parks and Recreation Commission Meeting, 7pm
• September 10: Lakewood Village Neighborhood Association, monthly, 7pm
• September 11: WakeUp Sunnyvale!, Sunnyvale Chamber of Commerce Networking Breakfast, 7:29am, 408-736-4971
• September 13: State of the City Celebration, 11am – 2pm, Downtown Sunnyvale, 408-730-7535
• September 15: Personnel Board Meeting, Sunnyvale, 5pm
• September 17: Arts Commission Meeting, 7pm
• September 18: Sunnyvale Bicycle & Pedestrian Advisory Commission Meeting, 6:30pm
• September 20: Household Hazardous Waste Drop-Off, 8am-1pm, Sunnyvale residents, 408-730-7262, TDD 408-730-7501
• September 20: Compost Workshop, 10am
• September 24: Glaucoma Support Group of the South Bay, 6:30pm, 408-523-3221 or 408-404-8479
• September 24: Housing and Human Services Commission Meeting, 7pm
• September 24: “For Your Health” Free Community Wellness Presentation, 7pm, Sunnyvale City Chambers, 408-523-3295
• September 25: Sunnyvale Chamber of Commerce Business Mixer, 408-736-4971
• September 27: Sunnyvale Historical Museum Grand Opening, Noon to 4pm, Heritage Park, 550 E. Remington Drive, 408-736-4713

• Mondays, Wednesdays, Fridays: Computer and E-Waste Recycling, 8:00am-4:30pm, Cupertino proof of residency
• Every Wednesday: Silicon Valley Toastmasters, 5pm, 260 S. Sunnyvale Avenue, Suite 4, Sunnyvale, 866-387-4086
  

Thanks for reading!

Median Price Comparison Tables for Silicon Valley

Here are some calculations I made comparing July 2008 with July 2007 median prices for both single family and condos/townhouses. These data are from the MLSListings statistics of actual transactions in both months.

Newspaper articles utilize data from DataQuick, a firm that compiles property transfer information for it's subscribers. The problem with DataQuick information is that they first combine all transfers of single family homes, condos and townhouses, mobile homes. In addition, DataQuick includes transfers that are NOT sales like transfers in a divorce and family transfers where parents transfer property to their children where there is no money changing hands. For example, in a divorce a court may order a spouse to transfer a home to the other spouse for $120,000 when the market value of the home was closer to $800,000. In a family transfer where there is no property tax reassessment, these values are recorded at a zero value. These "transactions" or transfers are part of DataQuick's database and are counted as $120,000 and $0, respectively! DataQuick provides subscribers like the San Jose Mercury News this information. MLSListings, on the other hand, captures only actual sales transactions that are based on a buyer willing to step up and put money toward the purchase of a home -- a far more reliable an indicator of market value.

It used to be that when real estate prices decreased, the higher-priced homes went down a higher percentage than lower-priced homes. Well, we have witnessed in the recent past that this has not been the case with this adjustment period. The phrase "location, location, location" used for real estate is an even more important attribute to consider as there is a wider gap between the affordable and expensive homes.

In the tables below, notice the wide variances between the types of properties as well as within the different counties. Another interesting comparison is the difference between the percentage changes from the lowest 10% (10th percentile) and the highest 10% (90th percentile), especially in Santa Clara and San Mateo counties but also evident in Santa Cruz County.

Single Family - Median Prices	Santa Clara	San Mateo	Santa Cruz	Monterey
Lowest 10%	-35.7%	-26.4%	-39.2%	-58.9%
Median 50%	-16.0%	-20.9%	-21.5%	-52.6%
Highest 10%	-3.0%	-11.8%	-13.7%	-55.9%

Condo/Townhouse Median Prices	Santa Clara	San Mateo	Santa Cruz	Monterey
Lowest 10%	-30.4%	-21.5%	NA	NA
Median 50%	-10.2%	-14.9%	NA	NA
Highest 10%	+2.2%	+9.2%	NA	NA

That positive numbers for Santa Clara and San Mateo counties for condos/townhouses are not misprints. There is actual price appreciation in the highest 10% (90th percentile) due mainly to the mix of where these transactions occurred. You probably guessed it -- in the more expensive areas.

Please let me know if you have any comments or questions. Thanks for reading!

NOTE: NA is "not available"

August Silicon Valley Real Estate Market Update

This information summary and analysis uses MLS Listings Inc. (MLS) transactional data for July 2008. For single family homes in Santa Clara County, July saw an increase in closings of 2% from July 2007. There were 892 closings in the month with 1276 initiated sales (accepted offers) that indicates that closings in August will likely remain at about the same level as not all accepted offers close escrow. Closings increased also in San Mateo County by 13% and Santa Cruz County of 7%. In Monterey, closings set another record of 259, 84% higher than July 2007.

Inventory of available single family homes in Santa Clara County was 5,368, up slightly from last month but down from the record-high of 5,540 set in April. This is still a 27% higher inventory level than in July 2007. San Mateo County inventory dropped a bit to 1,601, 16% higher than the same month a year ago. In Santa Cruz County, inventory increased from June but is 7% lower than in July 2007. Monterey County shows a lower inventory than last month as well as lower than July 2007 by 14%.


Days of Unsold Inventory (DUI) or the intersection of the inventory (supply) with the recent sales level (demand), shows Santa Clara County at 131, a slight increase from the 125 last month and compares favorably to the 139 figure for July 2007. San Mateo County is at 105, up from 95 last month. Santa Cruz County has a DUI reading of 169, up from 145 last month but much more favorable than the 199 last year. Monterey County showed DUI at 136, also down from 146 last month and a huge improvement from the 485 reading last year. Please remember that a lower figure is good here and that a declining measure represents an improvement in the market. Clearly, even with the drops in this indicator, these still are indicating a buyer's market condition as a reading of DUI of 90 or above depicts. As a comparison, a seller's market will have a DUI of less than 45 and a balanced market will have a DUI between the two. Keep in mind that these are county-wide averages. The wider area you measure, the statistics are less reliable as a decision tool for any specific area or neighborhood and also that there is often an incredible variation between those areas experiencing terrible market conditions compared to those at virtually the other extreme. As I've mentioned, real estate is local (down to the neighborhood level in some cases) and market conditions can vary within each county and even within cities by a large amount. For instance, within Santa Clara County, Sunnyvale has the best market climate in the county with a DUI reading of 55, representing a balanced market while Los Gatos have the worst reading of 211. The following table is a ranking of Santa Clara County cities or areas with their current DUI readings compared to last month's calculation as well as my notations as to the type of market the area is in (seller's, balanced or buyer's) and the recent direction of change in this indicator. Even though there are a lot of "better" notations made, many of these areas are still in what we call a "buyer's market" and have poor market climates. Just some markets are much better off than others.

Mountain View, Los Altos, Palo Alto	77	52	Balanced/WORSE
Cupertino	57	70	Balanced/BETTER
Sunnyvale	55	49	Balanced/WORSE
Santa Teresa	74	81	Balanced/BETTER
North Valley	68	76	Balanced/BETTER
Campbell	96	94	Buyer's/WORSE
Santa Clara	97	109	Buyer's/BETTER
Cambrian	69	107	Buyer's/BETTER
Almaden Valley	139	100	Buyer's/WORSE
Blossom Valley	68	88	Balanced/BETTER
South San Jose	90	94	Buyer's/BETTER
Willow Glen	145	107	Buyer's/WORSE
Milpitas	65	78	Balanced/BETTER
Los Gatos	211	135	Buyer's/WORSE
Evergreen	106	114	Buyer's/BETTER
Downtown SJ	106	133	Buyer's/BETTER
East Valley	92	123	Buyer's/BETTER
Saratoga	130	135	Buyer's/BETTER
Morgan Hill/Gilroy	141	185	Buyer's/BETTER
Los Gatos Mountains	359	539	Buyer's/BETTER

The median price for single family homes in Santa Clara County was $719,500, down 17.1% from $856,500 the same month a year ago and down 9.9% from the December 2007 reading of $799,000. A sudden change in the market shows that there are many more lower-priced homes that closed, thus causing the drop in median and the mix of homes shifted from the higher-priced homes to the more affordable homes. The bottom 10% median selling price (10th percentile) was $400,000 in July and showed a decline of 35.7% from the same month a year ago and the top 10% median price (90th percentile) was $1,647,500, only saw a drop of 3.0% from July 2007. The northwest quadrant of the county including Palo Alto, Mountain View, Los Altos, Cupertino and parts of Sunnyvale (zip 94086 and 94087) have seen price appreciation and are at their all time highs while county-wide medians are down. With few exceptions, the single family home markets become weaker when you cross Lawrence Expressway heading east. Median price comparisons for single family homes by county for July 2008 were:

County	July 2008	July 2007	Percentage Change
SANTA CLARA	$719,500	$856,500	-16.0%
SAN MATEO	800,000	1,011,000	-20.9
SANTA CRUZ	612,000	780,000	-21.5
MONTEREY	325,000	685,000	-52.6

I thought it interesting to present the following table that shows the July 2008 change from record high median prices for each county. Of particular note is the extreme price adjustment that has taken place in Monterey County. A little perspective is appropriate here. Median prices in Monterey County first reached the $325,000 level in January 1999. That means that in the last 11 months, 10 years of appreciation has been wiped out. Main cause? The extreme overbuilding that occured in the county. Santa Clara County did not have the building binge so was more insulated from the extreme price depreciation.

County	July 2008	Record High (m/y)	Percentage Change
SANTA CLARA	$719,500	$868,406 (4/07)	-17.1%
SAN MATEO	800,000	1,026,282 (10/07)	-22.0
SANTA CRUZ	612,000	790,000 (8/07)	-22.5
MONTEREY	325,000	799,500 (8/07)	-59.3

The price range with the lowest DUI reading we call the "sweet-spot" of the market for single family homes. For July, it changed again to the $450,000 and under range. Next comes the $450,000 to $600,000 range. For condo/townhouses the picture is flipped around with the sweet-spot being the $750,000 to $1,000,000 range followed by the $600,000 to $750,000 range.

Potential real estate investment buyers take heed: the DUI for residential investment property is at 502. This means under the current rate of sales of multi-unit properties, there are about 1.40 years of unsold supply! Better opportunity to negotiate. As mentioned last month, many lenders have substantially increased the borrower's minimum requirements to obtain a loan for investment property purchases AND many are not allowing the use of home equity credit lines for their down payments so I forecast that this area will remain weak and characterized as a buyer's market. This remains an area of opportunity for smart, long term investors with adequate down payments that have an appropriate long-term investment horizon. Rental vacancies are relatively low and dropping and we see strong increases in rental rates continue. This year, rents are estimated to increase 10-12% in Santa Clara County.

Why is following all these trends and statistics worth it? I believe that informed clients make the best decisions. The research and staying on top of the changes to market conditions allows me to properly advise my clients on the appropriate strategy to employ so that they make the best decision possible whether they decide to buy or sell. This is one area I part company from most other real estate agents as only a relative handful of agents invest the time to study the trends. Most other agents spend the bulk of their time working on self-promotion ads for newspapers, magazines and stuff that fill your mailbox with either "brag" cards or "spray and pray" cards. Beware the various media sound-bites or headlines as they generalize too much (i.e., the national real estate market, the Bay Area real estate market, etc.). If you generalize too much you lose the fineness of being able to use current information strategically to make better decisions.

If you have any comments or questions, please feel free to post them here or send me an email at tom.mcevoy@remax.net.

Thanks for reading!