September Silicon Valley Real Estate Market Update

Quick Market Summary: We’ve gone through the historically hottest part of the year where a higher wave of buyer activity (demand) comes knocking. Now, we are in the summer months with many potential buyers in vacation mode so the activity is less intense EXCEPT for this year! With low inventory and enticingly low mortgage rates, we’ve seen a very brisk summer market. In August, inventory of available homes for sale remained anemic in each county. Median prices continue to set records — in Santa Clara County it was $1,150,000 and $1,423,000 in San Mateo County. Even though these levels have drifted slightly lower the past couple of months, they represent record median prices for this time of year in the Silicon Valley real estate market. It's always better to compare year over year results as it removes the seasonality aspect. The Santa Clara County median price for condos/townhouses is $760,000. Demand continues to outstrip supply in Santa Clara County as 74% of homes that closed escrow sold for more than list price inferring multiple offers and was 80% in San Mateo County. Historically, we see a higher level of interest from buyers post-Labor Day that lasts for a month or so. I expect higher prices.

Nuts and Bolts: Inventory or the amount of homes available for purchase in Santa Clara County was just 723 down from 834 last month and down from 1,278 the same month last year or 43.4%! Sales (accepted offers) were 1,131 down from 1,146 last month but increased slightly from 1,118 the same month last year. Closed sales were interesting — they were 919 in August but only 832 last year, an increase of 10.5%. That busts the myth that sales are constrained by a lack of inventory as what we witnessed was a turnover rate faster than at any time in the last 20 years!

For San Mateo County, inventory of single family residences stood at 330, up slightly from 319 last month with sales (accepted offers) at 393 an increase from 366 last month. For both counties, the inventory continues to lag well below the average for this time of the year placing pressure on buyers as evidenced in the predominance of multiple offer situations and heated competition between buyers to enter the market.

Sale price to list price ratio, a key market condition indicator, shows that for Santa Clara County transactions completed during August this ratio stood at 106.4% and the highest ever for this time of year! Currently, the highest ratio and the hottest market area belong to the Cupertino/Sunnyvale market area (median price of about $1.90 million) at 114.0% which means that the average closed sale has a sale price 14% higher than the list price. It also registered the lowest median days on market at just 8 which means half the inventory sells in 8 days! The coolest market area is Los Gatos/Saratoga (median price of about $2.55 million). However, even the coolest market area in Santa Clara County is still pretty good with Los Gatos currently more active than Saratoga.

San Mateo County’s overall sale price to list price ratio stands at an even higher level of 109.1% with the highest ratio and hottest market area in the Bay Cities (Belmont, Burlingame, Millbrae, San Carlos, San Mateo) market area (median price of about $1.60 million) at 110.7% with a median days on market of 11. The coolest market area are the Expensive (Atherton, Menlo Park, Portola Valley, Woodside, Hillsborough) market area, (median price of about $3.00 million) and the San Mateo Coast (Half Moon Bay, El Granada, Moss Beach, Montara) (median price of about $1.29 million.

As always, market dynamics change and the supply and demand relationships can vary by area. If you would like specific market condition information for your area or neighborhood or a current home valuation, please feel free to call me, your Remax Agent! You are welcome to leave your comments or questions or contact me directly. Check out and "like" my Facebook Business Page at Facebook Business Page (I'm trying for 1,000 likes!) or follow me on Twitter at Twitter Page. Thank you.

August Silicon Valley Real Estate Market Update

Quick Market Summary: We’ve gone through the historically hottest part of the year where a higher wave of buyer activity (demand) comes knocking. Now, we are in the summer months with many potential buyers in vacation mode so the activity is less intense. We continue to have buyer interest and activity but it is countered by continued low inventory. In July, inventory of available homes for sale remained anemic in each county. Median prices continue to set records — in Santa Clara County it was $1,168,000 and $1,600,000 in San Mateo County. Even though these levels have drifted slightly lower, they represent record median prices for this time of year in the Silicon Valley real estate market. Demand continues to outstrip supply in Santa Clara County as 74% of homes that closed escrow sold for more than list price inferring multiple offers. Same proportion in San Mateo County. Post Labor Day, we’ll see even more buyer activity so would expect prices to remain strong.

Nuts and Bolts: Inventory or the amount of homes available for purchase in Santa Clara County was just 834 with sales (accepted offers) of 1,146. In this measure, a downtrend in inventory levels continues in force since 2012!

For San Mateo County, inventory of single family residences stood at 319 with sales (accepted offers) at 366. For both counties, the inventory continues to lag below the average for this time of the year placing pressure on buyers as evidenced in the predominance of multiple offer situations and heated competition between buyers.

Sale price to list price ratio, a key market condition indicator, shows that for Santa Clara County transactions completed during July, this ratio stood at 105.5% and among the highest for this time of year over the past 17 years! Currently, the highest ratio and the hottest market area belong to the Cupertino/Sunnyvale market area (median price of about $1.90 million) at 111.5%. It also registered the lowest median days on market at just 8 which means half the inventory sells in less than 8 days! The coolest market area is South County (Morgan Hill/Gilroy) (median price of about $0.80 million).

San Mateo County’s overall sale price to list price ratio stands at an even higher level of 108.5% with the highest ratio and hottest market area in the Bay Cities (Belmont, Burlingame, Millbrae, San Carlos, San Mateo) market area (median price of about $1.70 million) at 112.0%. The coolest market area is the Expensive (Atherton, Menlo Park, Portola Valley, Woodside, Hillsborough) market area, (median price of about $3.33 million).

As always, market dynamics change and the supply and demand relationships can vary by area. If you would like specific market condition information for your area or neighborhood or a current home value, please feel free to call me, your Remax Agent! You are welcome to leave your comments or questions or contact me directly. Thank you.

June Silicon Valley Real Estate Market Comments

Here are my observations of the most recent May transactions for Santa Clara County real estate and San Mateo County real estate. Your comments and questions are always welcome. If you see something in your neighborhood that you are curious about or have a question, please don't hesitate to share with us. If you have questions or a comment, please leave them here, or feel free to contact me through my website.

> General Market Observations and Comments -- Closings increased a bit more in May than in April but continues to be less than the average May over the past ten years. Inventory, or the number of homes available for sale (supply) has increased but it, too, continues to grow at a slower rate than the ten-year average.

Demand continues to point to single family residences (SFR) and away from condos/townhouses. My advice for buyers: if you prefer the life-style of a condo or townhouse, there are better buys possible. Yes, they have homeowner association dues that often cover additional ownership features and benefits (e.g., utilities, pool/spa, exercise rooms, and the like) but the owner doesn't have to worry about it.

As for the available homes for sale -- we're seeing a bipolar market. Homes priced well and in good condition, sell quickly and get the most activity (i.e., higher prices, quicker sale). Overpriced homes or those in poor locations or in poor condition (bank-owned or short sale homes are mainly in this category) stay on the market far longer and eventually sell with lower prices or as "fixer uppers" or "fix and flips".

As was the case last month, one of the hot markets was the area comprising the cities of Mountain View, Los Altos and Palo Alto. This area had the lowest DUI reading in Santa Clara County of just 37 days, clearly a seller's market. Next door, Sunnyvale and Cupertino had a DUI of 50, balanced to seller's market. Some of us are calling this the "Facebook" effect. By contrast, the DUI for Los Altos Hills is 153, clearly indicating a buyer's market.

Days of unsold inventory (DUI) for Santa Clara County by price range is interesting. Overall, the DUI reading was 58. The DUI for homes priced under $450,000 was just 35 days; those priced from $450,000-600,000 was 59 days; those priced from $600,000-750,000 was 74 days; from $750,000 to $1 million was 66 days; from $1.0 million to $2.5 million was 74 days; from $2.5 million to $5.0 million jumped to 225 days and finally, those priced above $5.0 million was 1,330 days! Clearly, the higher priced homes may have to undergo more aggressive price concessions to move in this bipolar market environment.

Days of Unsold Inventory is an indicator I use to gauge whether the market is a Buyer's market, Seller's market or what we call a Balanced market. In Santa Clara County, the Buyer's market are for those areas above 90 DUI a Seller's market would have a DUI reading under 45. Balanced markets are those in between.

Reversal for Reverse Mortgages -- Wells Fargo, following Bank of America's lead a couple of months ago, announced they were leaving this market. This means that the two large banks controlling 50% of this market left! This does not bode well for the future as less competition means even higher rates and fees, something not pleasant for the consumer. Reverse mortgages were inherently high-cost items to begin with and in the past I've recommended clients being extremely careful of them. In theory reverse mortgages were good but more difficult certainly in practice.

Mortgage rates remain very favorable in the range in the high 4's. Since most buyers need a loan to purchase a home, mortgage rates are a major consideration in the decision and ability of the buyers to purchase.

Thanks for reading my blog. I'm Tom McEvoy, Realtor with RE/MAX Santa Clara Valley -- Let me know your comments, questions, observations you may have or any future topics you'd like me to address.

April Silicon Valley Real Estate Market Comments

Here are my observations of the most recent March transactions for Santa Clara County real estate and San Mateo County real estate. Your comments and questions are always welcome. If you see something in your neighborhood that you are curious about or have a question, please don't hesitate to share with us. If you have questions or a comment, please leave them here, or feel free to contact me through my website.

> General Market Observations and Comments -- Closings turned up sharply in March, indicating much stronger markets in Silicon Valley. Additionally, the amount of homes available for sale (supply) has increased as it usually does in the last winter, early spring. However, what's different is that the rate of increase is lower than the average over the last ten years.

Demand continues to point to single family residences (SFR) and away from condos/townhouses. My advice for buyers: if you prefer the life-style of a condo or townhouse, there are better buys possible. Yes, they have homeowner association dues that often cover additional ownership features and benefits (e.g., utilities, pool/spa, exercise rooms, and the like) but the owner doesn't have to worry about it.

As for the available homes for sale -- we're seeing a bipolar market. Homes priced well and in good condition, sell quickly and get the most activity (i.e., higher prices, quicker sale). Overpriced homes or those in poor locations or in poor condition stay on the market far longer and eventually sell with lower prices or as "fixer uppers" or "fix and flips".

Last month, I stated that one of the hot markets was the area comprising the cities of Mountain View, Los Altos and Palo Alto. This continues to occur but has spilled out to include some adjacent areas. One case involves Sunnyvale, where homes in the Cupertino school attendance area are selling rather quickly with multiple offers if they are good values and in good condition. These include those with list prices above $1 million.

Mortgage rates remain in the high 4 to low 5% range. Certainly this is positive inducement for buyer's home affordability. If rates go to 5 1/2%, that would be equivalent to a 10% increase in the price in terms of affordability. Those buyers needing financing could be forced to "buy down" or not buy at all if rates should seek higher ground.

Since there were problems obtaining accurate statistical information on March transactions, I thought to at least provide you some of my observations. I'm available for consultation if you are seeking marketing intelligence and strategies as you gel your real estate plans.

Thanks for reading my blog. I'm Tom McEvoy, Realtor with RE/MAX Santa Clara Valley -- Let me know your comments, questions, observations you may have or any future topics you'd like me to address.

March Silicon Valley Real Estate Market Highlights

Here are the highlights of February transactions and market comments for Santa Clara County real estate and San Mateo County real estate. Your comments and questions are always welcome. If you see something in your neighborhood that you are curious about or have a question, please don't hesitate to share with us. If you have questions or a comment, please leave them here, or feel free to contact me through my website.

> Market Overview -- The decrease in the amount of closed sales in both counties continues, an indicator of slowing markets. Closings of single family residences (SFR) in Santa Clara County decreased slightly from last month to 632 at match the level of the same month a year ago. For San Mateo County, SFR closings were 221, down from 234 last month and down from 230 from the same month a year ago. My analysis of the transactional information reveals:

* The supply of single family residences available for sale (inventory) in Santa Clara County, increased to 2,417 from 2,335 and is 10.1% higher than the same month a year ago. Similarly, we saw San Mateo County's inventory jump to 1,158 from 1,088 last month and was 18.2% higher than the same month a year ago. Keep in mind that many sellers remove their homes from the marketplace at the end of the year so this is not unexpected to see an increase into the first part of a year. The rate of increase is not too steep so that portends a more positive market environment. Generally, inventory is about on track with the ten-year average -- not too high or not too low. Against this backdrop, the market continues more positive in Santa Clara County than in San Mateo County.

* 46.5% of sellers in Santa Clara County get at least list price for their homes! In San Mateo County, the corresponding percentage is 43.9%. This is another indicator that the overall market remains stronger in Santa Clara County. Also, these indicators have perked up a bit in each county.

* Days of Unsold Inventory (DUI), continues to move lower making for a more positive market in both counties. We watch this important indicator closely to provide insight into how the market is handling demand and supply. DUI is a calculation using both supply and demand so is not an opinion. A higher figure for DUI, then, means the market is becoming weaker. For February, Santa Clara County had a DUI of 56 for SFR's, down from 62, 58 for condos/townhouses, down from 64 and 99 for multi-unit properties, up slightly from 95. San Mateo County had a DUI for SFR's of 71 down from 85 last month, 87 for condos/townhouses down from 103. Once again, all readings continue to point to a more positive market for Santa Clara County.

> Seller Markets? -- For Santa Clara County the hottest (seller) market areas are Santa Teresa, South San Jose, and East Valley portions of San Jose followed by the market area comprising Mountain View, Los Altos and Palo Alto. For San Mateo County, there were again NO hot markets! A seller's market has characteristics of a shorter time on the market, fewer number of homes available for sale, higher demand by buyers along with a tendency for multiple offers and sale prices generally exceeding list prices. A seller's market area has a potential of price appreciation.

> Buyer's Markets? -- For Santa Clara County, we see buyer's markets in the Willow Glen area of San Jose and Campbell. Willow Glen is currently my "Best Buy" area in the county. For San Mateo County, we see buyer's markets in Foster City/Redwood Shores and especially the San Mateo Coast cities. The "Bay Cities" of San Mateo County like San Mateo, Redwood City, etc. are a bit cool. What makes a buyer's market is the relationship of supply to demand -- simply put as higher supply relative to demand, the area will have the characteristics of a longer time on the market, higher number of homes available for sale, lower demand by buyers which translates into a lower probability of multiple offers and a tendency for price stabilization or even price depreciation. We see buyer's market areas have price reductions before a buyer makes an offer.

Where do I get "Seller's" and "Buyer's" market information? This is not based on price levels but a calculation I make using the number of homes for sale (supply) and the number of sales (demand) in the prior month which results in days of unsold inventory (DUI).

> Median prices have moved lower in Santa Clara County but increased in San Mateo County -- The median price for SFR's in Santa Clara County has decreased for the last several months. It now stands at $530,000, versus $532,000, or a 0.4% decrease from last month and a decrease of 4.0% from the same month a year ago. The median price for condos/townhouses was unavailable due to incomplete data. San Mateo County's median price for SFR's was $640,000, up 8.5% from $590,000 last month and down 2.3% from the same month a year ago. The median price for San Mateo County condo/townhouses was $372,500, up 1.4% from $367,500 last month and down 1.7% from the same month a year ago. I continue to advise my clients NOT to use an entire county's median price level to decide whether to buy or sell or time the market as market areas within each county differ. For instance, I see divergencies in the different market areas in each county so these are general statements. Ask me to provide you with how your area compares.

> $5+ million sales return! -- More rare is the fact that there are now some high end transactions that have taken place in Santa Clara and San Mateo counties. Matter of fact, there were 7 sales in each county last month. I use this as a leading indicator of market conditions which have swung to positive in other price ranges as well.

Need help with understanding the market in your area? For instance, how can there be a difference between the relatively hot market conditions in Los Altos and Palo Alto but very cool market conditions in Campbell? Give me a call or email me for a no-obligation consultation and research to arm you with market intelligence to help you make a better, more-informed decision.


Thanks for reading my blog. I'm Tom McEvoy, Realtor with RE/MAX Santa Clara Valley -- Let me know your comments, questions, observations you may have or any future topics you'd like me to address.

December Silicon Valley Real Estate Market Highlights

Here are the highlights of November transactions and market comments for Santa Clara County real estate and San Mateo County real estate. Your comments and questions are always welcome. If you see something in your neighborhood that you are curious about or have a question, please don't hesitate to share with us. If you have questions or a comment, please leave them here, or feel free to contact me through my website.

> Market Overview -- The last several months has seen a continual decrease in the amount of sales in both counties, an indicator of slowing markets and something we see each year as we enter the fall and holiday season. Closings of single family residences (SFR) in Santa Clara County jumped a bit from last month to 820 but was 8.8% lower than the same month a year ago. For San Mateo County, closings were 330, virtually the same level as November 2009. My analysis of the transactional information reveals:

* The supply of homes available for sale (inventory), which was increasing later in the year (far longer than in most years), has now reversed course and is following historical trends in both counties. As usual for this time of year, inventory tends to drift lower. I'm sure we'll again see a major drop-off at the end of the year as many listing agreements expire on 12/31 of each year. Ask me why this is an extremely poor strategy that will set sellers up to lose money. Still, the market overall remains more positive in Santa Clara County. However, inventory levels were 37% higher in Santa Clara County and 33% higher in San Mateo County than the same month a year ago.

* 40% of sellers in Santa Clara County get at least list price for their single family homes! In San Mateo County, the corresponding percentage is a bit over 34%. This is another indicator that the overall market remains stronger in Santa Clara County. Also, these indicators have drifted lower and underscore a slowing market in both counties -- usual though for this time of year.

* Days of Unsold Inventory (DUI) continues to move lower. If this trend continues, it could portend a market that is gaining strength and could point to more positive market conditions next year. We watch this important indicator closely. As we have discussed, DUI is conceptually the inverse of inventory turns ratio and represents a calculation using both supply and demand. A higher figure for DUI, then, means the market is becoming weaker. For November, Santa Clara County had a DUI of 70 for SFR's, 84 for condos/townhouses and 140 for multi-unit properties. San Mateo County had a DUI reading of 94 for SFR's, 122 for condos/townhouses and an even higher number of 487 for multi-unit properties. Once again, notice that all readings were lower, hence more positive, for Santa Clara County.

> Seller Markets? -- For Santa Clara County the hottest (seller) market areas are Milpitas, the area comprising the cities of Mountain View, Los Altos and Palo Alto, East Valley (SJ), Evergreen Valley (SJ), South San Jose. For San Mateo County, we see hot markets in Foster City and Redwood Shores. A seller's market has shorter time on the market, fewer number of homes available for sale, higher demand by buyers with a tendency to have multiple offers and sale prices generally exceeding list prices with a potential of price appreciation.

> Buyer's Markets? -- For Santa Clara County, we see buyer's markets in Saratoga, Willow Glen (SJ), Los Gatos/Monte Sereno, Almaden Valley (SJ). Saratoga is my current "Best Buy" area in the county. For San Mateo County, we see buyer's markets in Menlo Park, Atherton, Belmont, Burlingame, Redwood City and especially the San Mateo Coast cities. What makes a "buyers" market is the relationship of supply to demand -- simply put as higher supply and lower demand. The characteristics of a buyer's market is a longer time on the market, higher number of homes available for sale, lower demand by buyers which translates into a lower probability of multiple offers and a tendency for price stabilization or even price depreciation.

Where do I get "Seller's" and "Buyer's" market information? This is not an opinion or based on price levels but a calculation I make using the number of homes for sale (supply) and the number of sales (demand) in the prior month which results in days of unsold inventory (DUI).

> Median price situation has changed in Santa Clara County -- The median price for SFR's in Santa Clara County which has mainly remained flat to slightly nudging upwards for several months has turned down. It now stands at $590,000, versus $641,500, or an 8.0% decrease from last month and a decrease of 2.5% from the same month a year ago. The median price for condos/townhouses was $315,975, down 4.25% from $330,000, last month a 10.4% drop from last year. San Mateo County's median price for SFR's was $723,000, up from $675,000 last month but a decrease of 0.3% from the same month a year ago. The median price for San Mateo County condo/townhouses was $415,000 or 9.2% higher than the $380,000, last month and decreased 6.5% from last year. I continue to advise my clients NOT to use an entire county's median price level to decide whether to buy or sell or time the market. To formulate an effective strategy, I recommend the use of the supply-demand characteristics for the neighborhood under consideration.

> Buyers get going -- I've mentioned that buyers need to think about a time of year when there is historically less activity and a good time of the year to do that is when we approach and are in the holiday period of the year -- like NOW. We're seeing the inventory of available homes decrease and those homes remaining on the market, in all likelihood, have sellers that have a higher motivation to sell. In Santa Clara County currently there is a tendency for buyers to search for single family residences but there are better deals in condos/townhouses due to greater supply compared to demand in the $450,000 to $750,000 price range. Same goes for San Mateo County -- good deals are probable in all price ranges but the lowest price range ($450,000 and below).

Need help with understanding the market in your area? Give me a call or email me for a no-obligation consultation and research to arm you with market intelligence to help you make a better, more-informed decision.


Thanks for reading my blog. I'm Tom McEvoy, Realtor with RE/MAX Santa Clara Valley -- Let me know your comments, questions, observations you may have or any future topics you'd like me to address.

November Silicon Valley Real Estate Market Highlights

Here are the highlights of October transactions and market comments for Santa Clara County real estate and San Mateo County real estate. Your comments and questions are always welcome. If you see something in your neighborhood that you are curious about or have a question, please don't hesitate to share with us. If you have questions or a comment, please leave them here, or feel free to contact me through my website.

> Market Overview -- The last several months has seen a continual decrease in the amount of sales in both counties, an indicator of slowing markets. Closings of single family residences (SFR) in Santa Clara County decreased and were at 780, 24.0%lower than the same month a year ago. Even though the amount of sales in San Mateo County rose a bit from September, the same general decline exists. My analysis of the transactional information reveals:

* The supply of homes available for sale (inventory), which was increasing later in the year (far longer than in most years), has now reversed course and is following historical trends in both counties. As usual for this time of year, inventory tends to drift lower. We'll see, I'm sure, a major drop-off at the end of the year as many listing agreements seem to expire on 12/31 of each year. Still, the market overall remains more positive in Santa Clara County.

* 44% of sellers in Santa Clara County get at least list price for their homes! In San Mateo County, the corresponding percentage is a bit over 39%. This is another indicator that the overall market remains stronger in Santa Clara County. Also, these indicators have drifted lower and underscore a slowing market in both counties -- usual for this time of year.

* Days of Unsold Inventory (DUI) has turned the corner and is now heading down. this could portend a market that is gaining strength and could point, if it continues, to a more positive market condition in 2011. We shall keep an eye on this important indicator. As we have discussed, DUI is conceptually the inverse of inventory turns ratio and represents a calculation using both supply and demand. A higher figure for DUI, then, means the market is becoming weaker. For October, Santa Clara County had a DUI of 70 for SFR, 87 for condos/townhouses and 193 for multi-unit properties. San Mateo County had a DUI reading of 99 for SFR's, 136 for condos/townhouses and a whopping 395 for multi-unit properties. Once again, notice that all readings were lower, hence more positive, for Santa Clara County.

> Seller Markets? -- For Santa Clara County the hottest (seller) market areas are South San Jose, East Valley (SJ), Milpitas, North Valley (SJ) and the area comprising the cities of Mountain View, Los Altos and Palo Alto. A seller's market has shorter time on the market, fewer number of homes available for sale, higher demand by buyers with a tendency to have multiple offers and sale prices generally exceeding list prices with a potential of price appreciation.

> Buyer's Markets? -- For Santa Clara County, we see buyer's markets in Almaden Valley (SJ) and Willow Glen (SJ). Almaden Valley is my current "Best Buy" area in the county. What makes a "buyers" market is the relationship of supply to demand -- simply put as higher supply and lower demand. The characteristics of a buyer's market is a longer time on the market, higher number of homes available for sale, lower demand by buyers which translates into a lower probability of multiple offers and a tendency for price stabilization or even price depreciation.

Where do I get "Seller's" and "Buyer's" market information? This is not an opinion or based on price levels but a calculation I make using the number of homes for sale (supply) and the number of sales (demand) in the prior month which results in days of unsold inventory (DUI).

> Median price situation -- Santa Clara County median price for SFR's has mainly remained flat to slightly nudging upwards. It now stands at $641,500, an increase of 8.1% from the same month a year ago. The median price for condos/townhouses was $330,000, a 8.6% drop from last year. San Mateo County's median price for SFR's was $675,000 and represented a 3.8% decrease from the same month a year ago. The median price for San Mateo County condo/townhouses was $380,000, a drop of 5.0% from last year. I continue to advise my clients NOT to use an entire county's median price level to decide whether to buy or sell or time the market. To formulate an effective strategy, I recommend the use of the supply-demand characteristics for the neighborhood under consideration.

> Short Shift? -- REO's (bank-owned homes) and short sale listings are termed "lender-controlled" transactions. Bottom line is that short sale homes sell but are a lot less apt to close. Here's a chart of the latest breakdown to illustrate my point:

You can see that short sales, comprise 25% of the available inventory and 35% of the pendings, only comprise 16% of the closings.

> Buyers get ready -- Last month I mentioned that buyers need to think about a time of year when there is historically less activity and a good time of the year to do that is when we approach and are in the holiday period of the year. We're seeing the inventory of available homes decrease and those homes remaining on the market, in all likelihood, have sellers that have a higher motivation to sell.

Need help with understanding the market in your area? Give me a call or email me for a no-obligation consultation and research to arm you with market intelligence to help you make a better, more-informed decision.


Thanks for reading my blog. I'm Tom McEvoy, Realtor with RE/MAX Santa Clara Valley -- Let me know your comments, questions, observations you may have or any future topics you'd like me to address.

July Silicon Valley Real Estate Market Highlights

Here are the highlights of June's transactions and market comments for Santa Clara and San Mateo counties. Your comments and questions are always welcome. If you see something in your neighborhood that you are curious about or have a question, please don't hesitate to share with us. You may leave comments here, or contact me through my website.

> Market Overview -- It's been over a year since we called the bottom of the real estate market in Santa Clara County -- March-April 2009. Since then we've seen a steady improvement in market conditions and this remains more apparent in Santa Clara County than San Mateo County. Closings of single family residences (SFR) in Santa Clara County decreased to 1,084 from 1,230 last month and was down 8.9% from the same month a year ago. San Mateo County actually saw higher SFR closings at 446 from 418 last month and was up 6.2% from the same month a year ago. My analysis of the transactional information reveals:

* The supply of homes available for sale (inventory) is trending upwards in both counties these past six months which is usual for this time of the year. What is not usual is that while the inventory in Santa Clara County is 2.9% higher than the same month a year ago, the inventory in San Mateo is 25.8% higher!

* 53% of sellers in Santa Clara County get at least list price for their homes! In San Mateo County, the corresponding percentage is 43.7%. This is another indicator that the overall market remains stronger in Santa Clara County.

* Days of Unsold Inventory (DUI) continues a positive trend -- as readers will remember that a lowering of this number translates into a faster market. DUI is conceptually the inverse of inventory turns ratio and represents a calculation using both supply and demand. A lower figure for DUI, then, means improvement. For June, Santa Clara County had a DUI of 68 for SFR, 78 for condos/townhouses and 216 for multi-unit properties. San Mateo County had a DUI reading of 97 for SFR's and 92 for condos/townhouses and 332 for multi-unit properties. All readings were more positive for Santa Clara County.

> HOT Markets? -- For Santa Clara County the hottest (seller) market areas are South San Jose, East Valley, Evergreen Valley, Santa Teresa areas of San Jose. A seller's market has shorter time on the market, fewer number of homes available for sale, higher demand by buyers with a tendency to have multiple offers and sale prices generally exceeding list prices and the potential of price appreciation.

> Cool Markets? -- We call them buyer's markets but everything is relative, right? For Santa Clara County, we see buyer's markets in Saratoga, Los Gatos/Monte Sereno, and the Almaden Valley and Willow Glen portions of San Jose. Saratoga and Willow Glen with Los Gatos/Monte Sereno are my current "Best Buy" areas in the county. What makes a "buyers" market is the relationship of supply to demand -- higher supply and lower demand. The characteristics of a buyers market is a longer time on the market, higher number of homes available for sale, lower demand by buyers which translates into a lower probability of multiple offers and a tendency for price stabilization or even price depreciation.

Where do I get "Seller's" and "Buyer's" market information? This is not an opinion or based on price levels but a calculation I make using the number of homes for sale (supply) and the number of sales (demand) in the prior month which results in days of unsold inventory (DUI).

> Median prices continue upward trend -- Santa Clara County median price for SFR's increased to $637,500 versus $550,250 or 15.9% increase from June 2009. The median price for condos/townhouses was $360,000 or 3% higher than the same month a year ago. San Mateo County's median price for SFR's was $792,000, 2.9% higher than the same month a year ago, whereas condos/townhouses was $451,000, 3% lower. Notice that with prices I don't use month to month changes but year over year. This eliminates seasonal fluctuations and is something that newspapers and most online pricing sources haven't figured out yet! Or, perhaps they use this intentionally to scare folks to sell newspapers! However, I advise my clients NOT to use an entire county's median price level to decide whether to buy or sell or time the market but use the trend information in a general manner. To formulate an effective strategy, I use analysis of the supply-demand characteristics of the neighborhood under consideration and advise my clients of the appropriate strategy to employ to maximize their dollars if they are selling and maximize their house if they are buying.

> Distress Sales Watch -- Santa Clara County's real estate market has changed over the past year. Last year there were more bank-owned listings, this year more short sale listings. Both categories are what we call "lender-controlled". However, the surprising thing is that last year there were 56% of the closings were normal but this year normal has jumped to 69% of the total.

> Shorts are Long! -- Bank-owned transactions are similar to normal transactions as to length of escrows but short sales can try a buyer's patience. Matter of fact, they try all parties patience. Banks tell us they are working to reduce the process time for short sales but with a number of decision makers involved in a short sale, its anybody's guess. Here's some details as to why they take much longer AND there's no guarantee that they close! The ultimate decision rests with the Investor or owner of the loan. Most people think that if they get a loan through Wells Fargo or Bank of America, the bank owns the loan. Not true, as most of the loans have been sold to other investors (e.g., Fannie, Freddie, FHA, private investor groups, etc.). With this situation, the bank services the loan (collecting payments, producing statements, etc.) but does not own the loan, earning a fee for doing so. Each loan they sold, freed up funds to loan to someone else! Each Investor (and there could be more than one), tries to minimize their losses, each has their unique contractor guidelines (FHA requires TWO appraisals) and there are other interested parties (e.g., mortgage insurance company, Second lien mortgage holder. In fact, where there’s more than one loan, they could easily be held by different banks complicating the process even more. All the parties must be in alignment before a home can be sold. Banks or Investors who hold mortgages are sophisticated sellers.

Need help with understanding the market in your area? Give me a call or email me for a no-obligation consultation and research to help you make a better, more-informed decision.


Thanks for reading my blog. I'm Tom McEvoy, Realtor with RE/MAX Santa Clara Valley -- Let me know your comments, questions, observations you may have or any future topics you'd like me to address.

November Silicon Valley Real Estate Market Highlights

Here are my observations of October's transactions and market actions for Santa Clara, San Mateo, Santa Cruz, and Monterey counties. You are encouraged to leave your comments and questions or even update us on what you are witnessing in your neighborhood or area.

> Market continues showing strength and improvement -- Market activity has continued to display improvement for six months! For instance, in Santa Clara County, October saw an 18% increase in closings over the same month last year. My analysis of the transactional information reveals:

* Buyers continue to trip over each other to submit offers for homes in the more affordable areas of Santa Clara, San Mateo, Santa Cruz, and Monterey counties. Many offers submitted are for all cash or have substantial down payments. There are still only 22 days of unsold inventory on single family residences in Santa Clara County with a price of under $450,000! For those in the range of $450,000 to $600,000, there is only 33 days of unsold inventory. It is similar in San Mateo County.
* The supply of homes available for sale (inventory) continues to trend lower in each of the four counties without exception. This trend has been virtually uninterrupted since February 2009 and it is still more pronounced in Santa Clara and Monterey counties.
* The sale price to list price ratio continues above 100% in Santa Clara County and stands at 100.8%, continuing an upward trend; San Mateo stands at 99.3%.
* The Days of Unsold Inventory (DUI) continues to improve generally in each county for single family residences and condos/townhouses, respectively. Santa Clara's DUI stands at 47 and 44, San Mateo's DUI is 69 and 77, Santa Cruz's DUI is 108 and 105 and Monterey's DUI is 70 and 83.

> Super-heated Seller's Markets? -- You bet! East Valley, South San Jose, Blossom Valley, Evergreen, Santa Teresa, Santa Clara, North Valley, Milpitas. To refresh you, characteristics of a seller's market are shorter time on the market, fewer number of homes available for sale, higher probability of multiple offers with many sale prices exceeding list prices and a tendency towards price appreciation.

> Buyer's Markets? -- For Santa Clara County, we see buyer's markets in Saratoga, Los Gatos, and Los Gatos Mountains. Los Gatos exhibits the highest Days of Unsold Inventory in the county at 141. To refresh you, characteristics of a buyer's market are longer time on the market, higher number of homes available for sale, lower probability of multiple offers or even an offer with most sale prices below list price. The tendency is to have price depreciation or stable prices at best case under this market condition.

Where do I get "Seller's" and "Buyer's" market information? This is not an opinion thing but a calculation I make using the number of homes for sale (supply) and the number of sales (demand) in the prior month which results in days of unsold inventory (DUI). Additionally, this is not based on price levels but a supply-demand relationship. For instance, the higher-priced area of Palo Alto/Mountain View/Los Altos exhibits a DUI of only 56 which translates into a balanced market.

> Median prices -- Took another jump upwards last month median price now stands at $593,250 for Santa Clara County and $702,000 for San Mateo County. These are UP about 8% from the same month a year ago in Santa Clara County and down 1% in San Mateo Ccounty. I coach my clients to no use an entire county's median price level to decide on whether to buy or sell. To formulate an effective strategy, I use analysis of the supply-demand characteristics on a much smaller area down to the neighborhood in most cases.

> Tale of Two Markets -- Sales of affordable homes in Santa Clara County less than $450,000 level have gotten even hotter than the past few months. There are just 21 days of unsold inventory for single family residences below $450,000 and 41 for homes with prices from $450,000 to $600,000. As the price ranges increase, the DUI increases in what we call a normal pattern. For Santa Clara County, high-priced homes in the $2,500,000 to $5,000,000 range showed a DUI of 242 or about eight months of supply whereas in San Mateo County showed a similar result of 192.

> Polarized Market -- Sales of higher-priced homes (above $1,000,000) are sluggish at best, depending upon area. Last month, there were no sales of $5+ million homes in Santa Clara County and just one in San Mateo County (4.2 years of unsold inventory). With slow movements in higher-priced homes and a white-hot situation in lower-priced homes, I call this a polarized market.

> Forbes Says We're Safe -- According to an article in the Silicon Valley Business Journal, Forbes Magazine reported that San Jose-Sunnyvale-Santa Clara was the 7th safest area in the country. Factors included were: violent crime, workplace fatality rates, traffic death rates and natural disaster risk. Silicon Valley was the second safest area behind the Twin Cities of Minneapolis-St. Paul.

> Sellers Be Sooner -- I continue to maintain my recommendation for sellers of higher-priced homes, especially those above $1 million that they should consider selling sooner and having an initially more-aggressive list price as the market usually softens when we go move into the holiday season. In any case, check with a Realtor knowledgeable about the technical aspects of the market conditions to guide you in positioning your home for maximum activity and price while minimizing time on market.

For those considering a purchase of a home in an expensive area like Los Altos Hills, Los Gatos/Monte Sereno, Saratoga, your time is getting closer! Be ready but I think we'll see list prices reduced and sale prices dropping as we get into the holiday season this year. Most years we experience more activity in the early spring and spring so the best time for a purchase is coming up soon!

> Investor's Corner -- Activity continues to trend upwards as more and more investors reenter the market, many of them are completing all cash purchases, especially in the more affordable price ranges. For Santa Clara County, there were 88 sales during the month with 47 of them in the less than $600,000 price range as that price range had a DUI of just 37 whereas the DUI for residential investment properties above $600,000 jumps to nearly a year. For investors who have the ability to purchase higher-priced properties (above $1,000,000), there is about one year of unsold inventory at current sales demand and represents a BUYER'S market as I'm sure there are at least some motivated sellers in that range.


Thanks for reading my blog. I'm Tom McEvoy -- Let me know your comments, questions, observations you may have.

June Silicon Valley Real Estate Market Update

Here are my observations of the most recent market actions for Santa Clara, San Mateo, Santa Cruz, and Monterey counties. You are encouraged to leave your comments and questions or even update us on what you are witnessing in your neighborhood.

> Market continues in turnaround mode! My recent posts have mentioned that the market activity is turning around. Well, May's activity continues the trend and provides more evidence that we could have seen the bottom! How can this be?

• Buyers are all but tripping over each other to submit offers for homes in the more affordable areas of Santa Clara, San Mateo, Santa Cruz, and Monterey counties.
  
• The supply of homes available for sale (inventory) continues to decline in each of the four counties. Normally, inventory is increasing at this time of the year. Lowered inventory and strong demand means HIGHER PRICES!
  
• The number of initiated sales (in contract) have jumped in Santa Clara County and is trending higher in the other counties, too.
  
• The Days of Unsold Inventory (DUI) has improved (decreased) substantially. The DUI for single family residences in Santa Clara County for under $450,000 is an astonishing 26 which means when freezing inventory, ALL homes would sell in less than month!. Anything less than 45 represents a Seller's market with market characteristics of multiple offers, high percentage selling above list price AND, price APPRECIATION.
• Median prices have increased in each county except for Monterey.

> 2 Hot 2 Handle? -- How's 20 offers on a single family residence? Or, 81 or even 99 offers? Yes, those are real numbers of offers received on three listings that I'm familiar with. I coach my buyers that list prices don't mean a thing, especially when the list price is way under the fair market value of the home. Research must be done to determine, as best as possible, the fair market value so that an intelligent offer can be submitted otherwise you're just spinning wheels. No seller whether a bank or not is going to sell for less than it's market value. So what we have now is that sales are extremely high but closings (close of escrows) are running at the third worst month in the last ten years!

> Bank-owned homes offer the best deals? -- First, that's a myth in general as banks are actually sophisticated sellers. They've already lost money and maintaining a listing costs them even more so they hire listing agents, who in many cases, set list prices at ridiculously low prices to spur activity AND multiple offers. This sets up in the minds of potential buyers that they can actually buy the home at or even under the list price. Invariably, the home sells for it's fair market value.

Second, prices have adjusted tremendously in many areas so are a lot less than they were at the peak in real estate pricing which differs in each area.

> Seller's Markets? -- Yes, there are! Areas of Santa Clara County experiencing a seller's market condition are: Blossom Valley (hottest market in Valley), South San Jose, East Valley (Alum Rock), Santa Teresa, Cambrian and Evergreen. To refresh you, characteristics of a seller's market are fewer days on market, lower number of homes available for sale, higher probability of multiple offers with many sale prices exceeding list prices and some added price appreciation.

> Buyer's Markets? -- OK, yes, there are some of those too! Areas of Santa Clara County experiencing a buyer's market condition are: Saratoga (coolest market in Santa Clara County), Los Gatos, Almaden Valley, Mountain View, Los Altos, Los Altos Hills, Palo Alto. To refresh you, characteristics of a buyer's market are longer days on market, higher number of homes available for sale, lower probability of multiple offers or even an offer with most sale prices below list price with general price depreciation.

> Sales per Day -- The amount of average sales per day in May reached 56.7 for Santa Clara County. The last time this figure was this high was in May 2005 when the market activity was nearing a crescendo! The only other May that had higher sales per day was in 2004 which was over 64. The big difference between 2004 and 2005 and May of 2009 was that many transactions this year did not close!

> Median prices. Stuck at $450,000 for Santa Clara County these past few months, moved up to $470,000 in April increased yet again to $490,000. Median prices (the middle transaction) for an entire county are actually worthless to use as part of a strategy for buying or selling. Each area, down even to the neighborhood, has differing dynamics of supply and demand so needs to be looked at accordingly. We've observed that market mix has helped bring down median prices due to more low-priced homes closing as a percentage of total closings. With more of the lower-priced home selling briskly there will be a lot less of them available and buyers will have to buy some higher priced ones.

> Tale of Two Markets -- Sales of affordably-priced homes mainly in the less than $450,000 level are HOT. On the other hand, sales of higher-priced homes are virtually dead, as some would say, in the more expensive areas. For instance, there have been no sales of $5+ million homes in the last five weeks in Santa Clara County.

So keep this in mind that if you are considering a sale in an expensive area, you probably want to sell quickly rather than waiting but in any case check with a Realtor knowledgeable about current market conditions to guide you in positioning your home for maximum activity and price while minimizing time on market. You really don't want to be on the market for a year or more.

And, if you are considering a purchase of a home in an expensive area, get ready to buy! Why, get ready? I think we'll see list prices reduced and sale prices dropping more before they are likely headed higher.

> Want to sell with multiple offers? The percent of completed sales or closings with a sold price greater than list price stands at 37.1%. This level, up a bit, means that fully one out of three sellers received more than their asking price. Oh, and another 8.1% of sellers received their full list price!

Want to hear a little secret? Some of those sellers receiving either their list price or something higher had to reduce their list prices to generate one or more offers. These figures don't calculate what the sale price to original list price ratio is but only what the current list price was at the time of sale.

> Loan Traffic Jam Lets Up! Last month, I mentioned that if you have applied to refinance your existing mortgage that lenders were clogged with loan applications. Well, what a difference a month of increasing mortgage rates makes. There's still a backlog but if you were trying to play the interest rate game and waiting for another 1/8th or 1/4 point drop, the mortgage rates shot up almost a full point!

Moral of this story is that if the current rate works (benefits you financially) then lock in the rate and close the loan!

> Investor's Reawaken Somewhat - A bit more activity in the multi-unit properties but wanted to mention that those properties with list prices less than $600,000 are seeing much more activity. The days of unsold inventory (DUI) for this type of property in this level has dropped to 54 versus an improved 122 overall.


Thanks for reading -- what are your thoughts and comments?

May Real Estate Market Highlights

Here are my observations of the most recent market actions for Santa Clara, San Mateo, Santa Cruz, and Monterey counties. You are encouraged to leave your comments and questions or even update us on what you are witnessing in your neighborhood.

> Market is in turnaround mode! My recent posts have mentioned that the market activity is turning around. Well, April's activity continues to provide more evidence that we could have seen the bottom! How can this be?

• Buyers are all but tripping over each other to submit offers for homes in the more affordable areas of Santa Clara, San Mateo, Santa Cruz, and Monterey counties.
  
• In Santa Clara County, there have been only four months in the past ten years where we've seen as many or more homes sold!
  
• The number of initiated AND completed sales or closings are trending upwards in Santa Clara, San Mateo and Monterey counties. Only Santa Cruz County has relatively-flat transactions. Monterey County continues setting records.
  
• The Days of Unsold Inventory (DUI) has improved (decreased) substantially. The DUI for single family residences in Santa Clara County for under $450,000 is an astonishing 28 which means when freezing inventory, ALL homes would sell in a month!. Anything less than 45 represents a Seller's market with market characteristics of multiple offers, high percentage selling above list price AND, price APPRECIATION.
• Median prices have increased in all four counties.
  

> Seller's Markets? -- Yes, there are! Areas of Santa Clara County experiencing a seller's market condition are: Milpitas (hottest market in Valley) East Valley (Alum Rock), North Valley, South San Jose, Santa Teresa, Blossom Valley. To refresh you, characteristics of a seller's market are fewer days on market, lower number of homes available for sale, higher probability of multiple offers with many sale prices exceeding list prices and price appreciation.

> Buyer's Markets? -- OK, yes, there are some of those too! Areas of Santa Clara County experiencing a buyer's market condition are: Mountain View, Los Altos, Los Altos Hills, Palo Alto, Willow Glen Los Gatos, Los Gatos Mountains, Saratoga (coolest market in Valley). To refresh you, characteristics of a buyer's market are longer days on market, higher number of homes available for sale, lower probability of multiple offers with most sale prices below list prices and price depreciation.

> Mortgage Refinance Tips -- Some of you may know that I used to "do" mortgage loans and advised my clients on a couple of handy "rule-of-thumbs" as quick indicators to see if refinancing would be a financial benefit to the borrowers, not the loan officer!

• First, the rate should be more than 10% difference, obviously lower, than your current rate. That means if your currently at 5.50%, the new rate should have a rate at least 10% under this or 4.95%. (For the math, you'd subtract 10% of 5.50 or 0.55 from 5.50 to equal 4.95%.) A rate lower than this level should benefit you and amortize the costs (no free lunch!) of the loan so you can more quickly start accruing the savings AFTER the cost of doing the loan, AND
• Second, it matters most how long you plan on keeping the LOAN. If you plan a sale in a year or so, it probably does NOT make financial sense to refinance.

Finally, just about everyone knows that rates bounce all over the place so that a quote you receive one day or spot on the internet is probably gone the next. The only way you can guarantee a rate is to "lock" it in and that takes an application and commitment to a loan officer not 50 inquiries over the internet. Need a referral to a trusted loan professional? Please contact me.

> Sales per Day -- The amount of average sales per day in April reached 55.5 for Santa Clara County. The last time this figure was this high was in April 2005 when the market activity was nearing a crescendo! Inventory or the amount of available single family residences for sale has dropped 33% from the levels of April 2008. Normally, inventory levels trend higher this time of year but has been going the other way. This shows a "tightening" market and a swing toward a seller's market in many areas.

> Foreclosures up and NOD's down - How can that be? -- Recently, the San Jose Mercury News reported that the number of foreclosures rose but the number of Notice of Defaults (NOD's) issued have dropped. Remember, the moratoriums placed on banks during the holiday months? Well, there have been moratoriums in place for six of the past eight months. With those moratoriums relaxed, banks are back to foreclosing. Another artificial barrier has been the state of California where they will institute a lengthening of the process so banks have to wait about seven months instead of the current four. These governmental barriers actually prolong the pain as well as exacerbate the problems of separating those that can't make consistent mortgage payments with those who can. For current homeowners wishing to trade up or trade down, the impact on values in many neighborhoods continue.

> Median prices. Stuck at $450,000 for Santa Clara County these past few months, moved up to $470,000 in April. Median prices (the middle transaction) for an entire county are actually worthless to use as part of a strategy for buying or selling. Each area, down even to the neighborhood, has differing dynamics of supply and demand so needs to be looked at accordingly. We've observed that market mix has helped bring down median prices due to more low-priced homes closing as a percentage of total closings. We have also seen the opposite occur in 2007 when higher-priced homes sold and the lower-priced homes were engulfed with the sub-prime loan issues and didn't sell as frequently.

> Some are Hot, Some are Not -- Sales of affordably-priced homes mainly in the less than $450,000 level are HOT. On the other hand, sales of higher-priced homes are virtually dead, as some would say, in the more expensive areas. If you are considering a sale in an expensive area, you probably want to sell quickly rather than waiting but in any case check with a Realtor knowledgeable about current market conditions to guide you in positioning your home for maximum activity and price while minimizing time on market. And, if you are considering a purchase of a home in an expensive area, get ready to buy! Why, get ready? I think we'll see list prices reduced and sale prices dropping more.

> Want to sell with multiple offers? The percent of completed sales or closings with a sold price greater than list price stands at 33.4%. This level, back up a bit, means that fully one out of three sellers received more than their asking price. Oh, and another 7.7% of sellers received their full list price!

Want to hear a little secret? Some of those sellers receiving either their list price or something higher had to reduce their list prices to generate one or more offers. These figures don't calculate what the sale price to original list price ratio is but only what the current list price was at the time of sale.

> Traffic Jam! If your GPS unit has live traffic updates, it still won't be able to help with those lenders who are clogged with loan applications. With the lowest mortgage rates since the '60's continuing, the demand by borrowers trying to refinance has created an avalanche of work for the lenders. Things to remember are:

• First, rates for refinance loans average about 1/4 point higher than similar program purchase loans.
  
• Second, the process can take as much as 60-90 days as purchase loans get first priority due to the impending event of close of escrow.
  
• Third, there's no cash-out refi's as that option effectively disappeared.

> Investor's Reawaken - We've mentioned that investors have not been doing much lately with multi-unit residential properties. A couple of reasons are more stringent loan application and increased down payment requirements lenders have imposed. But, there are now 83 investor properties in escrow in Santa Clara County -- much higher than in recent months. The days of unsold inventory (DUI) for this type of property has dropped to 148 from more than triple current levels. Two-thirds of the activity is in the less than $600,000 price range.


Thanks for reading -- what are your thoughts and comments?

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!

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!