Today I pulled the sales info for our corner of east Los Gatos and thought you’d like to see how the year shook out for the real estate market here. There were 21 closed sales of single family homes in 2018.
The first sale listed above with a closing the first week in January of course went under contract in 2017.
There is also one pending sale which is scheduled to close escrow later this month, but went pending in 2018.
Additionally, there were 3 properties which went on the market but did not sell – they were canceled, expired, and / or withdrawn.
What are the odds of selling success?
The odds were pretty good for home sellers here in 2018: of 24 properties listed in 2018 (not the first sold, but including the pending, 21 total), 88% did sell. This includes the large estate style homes and properties with views as well as fixers and houses on busier roads.
Why is it that not every home sells in a strong seller’s market? Each case is different, of course, just as every seller and his or her property is unique. There are a few usual culprits, though, most often being price, but other challenges can be present as well. You can learn more about why some houses get listed but do not sell on my Valley of Heart’s Delight blog: https://sanjoserealestatelosgatoshomes.com/why-didnt-my-san-jose-home-sell/
What do we expect for the 2019 real estate market?
It’s all about supply and demand. Right now, demand is decent and supply is low. Here’s a look at the inventory of single family homes for sale in recent years by month, first in town and then for the county.
Inventory of single family homes for sale in Los Gatos 95030 & 95032 from Jan 2012 – Jan 2019:
In town (not including the Los Gatos mountains area), Los Gatos has extremely low inventory. I ran the numbers and this is lower than any other January since 2002, the longest back that the MLS will let me go. Locally, that bodes well for those looking to sell in Los Gatos. (Currently there are NO homes for sale in the Belwood, Belgatos, Surmont, or nearby areas of LG.)
What about the broader area? Most of the county has looser inventory than we do in LG. Have a look:
Inventory of single family homes for sale in Santa Clara County Jan 2012 – Jan 2019:
I think it is really important to view this month’s inventory for the county not just in relation to January 2018 (“inventory is up 8% from last year, oh no!”) but in the context of all the recent years since we’ve been in recovery from the Great Recession. Yes, inventory IS up from last year for Santa Clara County, when the first 6 months of 2018 saw prices shooting up like a geyser due to highly restricted inventory and ongoing demand. Most of 2017 and early 2018 were off-the-charts into overdrive. From early 2012 through 2016, we had a market that was appreciating at a good pace – too fast for some buyers, who opted to become permanent renters rather than to participate. Current inventory levels are very low relative to 2012 and later.
A return of some of the normal patterns?
Inventory tends to rise throughout the first half of the year, so I am expecting that to happen again in 2019. To the left, see a chart displaying the inventory of homes for sale in Los Gatos 95030 & 95032 from Jan 2016 to today. This is a pattern we usually see – though of course, it’s not a rule, and it can change.
Prices also tend to rise in the early part of the new year as inventory does not keep pace with demand, and I see no reason why that would not happen again.
Equally important is to understand that in the 2nd half of any given year, prices often soften. Home sellers sometimes believe that “summer is the right time to sell”, so get their homes on the market then. But activity from buyers slackens after the spring buying season, so in many years, inventory is higher than demand – so prices level off or even decline.
In 2018, prices in LG and the county did decline dramatically from the spring peaks, perhaps in the 12-15% range, generally.
Economists tell us that they expect the first half of 2019 to be decent to good, but not as wild a ride as early 2018. (Milder appreciation, 3-5%?) Some believe that the second half of 2019 will be much softer. A real estate correction is expected sometime between now and 2-3 years from now. We do believe that locally, in Silicon Valley, we are at or near the top of this real estate cycle. For those wishing to sell and move out of the area, 2019 could be a good year in which to do that. It’s impossible to pinpoint the exact top or bottom of the market, though. That is something we only know when it’s passed, just like with the stock market.
You’ve probably heard that home prices in Silicon Valley generally and Los Gatos specifically peaked earlier this year and have been coming down significantly since then.
How is the market today in our corner of Los Gatos with Leigh High School? Here’s a breakdown of single family home sales in the last 90 days, broken into 4 pricing tiers, starting with the most expensive homes. (I crunched this myself on the MLS tonight.)
It’s interesting too note that most homes are about 50 – 60 years old. Lot size and home size are the main drivers within these parameters. The home’s condition makes a big difference, of course. Properties that are in original or fixer condition will sell for a lot less than those which have been fully or largely remodeled.
If you focus on the sale price to list price ratio, it looks like the hottest segment of this market is in the low $2 millions.
Also curious to me is that the bottom 3 tiers rise in terms of home and lot size and price at an almost predictable pace, while that upper tier is out in the stratosphere by comparison.
Thinking of downsizing?
This info is also interesting if viewed through the lens of someone who may be ready or interested in down sizing. If your home about 2500 SF on a 10,000 SF lot and you’re thinking of “right sizing” to a 1500 SF home on a 6,000 to 8,000 SF lot, how does that shake out? Perhaps your current home would sell for $1.8 to $2 million if all fixed up / remodeled and so on. The replacement home, if you were to stay here in Los Gatos, would be perhaps $1,500,000. After paying off any mortgage balance, closing costs, and capital gains taxes, is such a move worth it? Perhaps not.
If you go across the border to Cambrian for downsizing, that 1500 SF home on a smaller lot will run about $1.3 – $1.5 million today, depending on lot size and condition. Again, that’s probably not a steep enough drop to make it worthwhile for most people after all the other costs are factored in. Hence, may retirees move to places like Sacramento (or nearby: El Dorado Hills, Roseville, etc.), San Luis Obispo, or perhaps where grown kids and grandkids live, if they have been priced out of the market here.
Interested in buying or selling a home in east Los Gatos (or anywhere in Santa Clara County)? Please shoot me an email and we can set up a confidential, no obligation consultation.
Please also see:
Stop by the Belwood of Los Gatos cabaña is Saturday between 10 and 6 on Saturday, November 10th, and take in the annual holiday boutique! Find items for the holidays, including Thanksgiving, to enjoy yourself or to give as gifts. A wide variety of offerings inclue jewelry, baked goods, photographs, Christmas decor, wine art and lighted wine bottles. ALL ARE WELCOME!
Saturday November 10, 2018
From 10 a.m. to 6 p.m.
Belwood of Los Gatos Cabaña Club
100 Belwood Gateway (cross street Blossom Hill Road)
Los Gatos CA 95032
Two Leigh High School students, Nathan Viskovich and Kylie Hansen, recently completed an English class project which aimed to have the participants create a positive impact in their community. The Belwood Beautification Project is the end result. Neighbors and friends were asked to donate time and / or money to help. The goal was to collect $2,000 by May 24th so that the volunteers can complete the project on May 26. The goal was exceeded, and the entry to the neighborhood now looks fantastic. Great project and kudos to these students!
You can read all about it and donate to the Belwood Beautification Project on the GoFundMe page.
What’s going on with the real estate market in the Belwood, Belgatos, Surmont, and nearby areas of east Los Gatos? Here’s a quick update of the year to date listings and sales activities, taken from the MLS.
Right now, there are 6 properties for sale in the neighborhood. That’s more than what has been normal in recent years. The stats for these active listings are as follows:
Average list price $2,286,333
Average square footage 2,906
Average lot size 16,194
Average days on market 19
Average price per SF $800.92
Average age 49
There is only one pending sale, and no properties at all in the area which closed in June. We had steady rate of sales closed earlier in the year: three in February, two in March, five in April, two in May.
For those tracking the absorption rate, which is the rate at which homes would sell if no new properties come on the market, this is a bit of a surprise. Zero homes (sold / closed in the last 30 days) divided by 6 active listings = an infinite months supply of inventory. Of course, it is not truly that dire, since there were 2 closings in late May and there’s one pending sale (went into contract June 15), but it does suggest that home buyers may have put the brakes on.
We are seeing this drop in sales activity across the valley in many areas, so it’s not just this corner of 95032.
Is it just a big rise in inventory that is causing the market to stall out a little? In some areas, homes have continued selling at the same pace, but with fewer offers over the last 6 weeks or so. Those areas may not have had as large an inventory jump as we have seen on the east end of Los Gatos.
Here’s a look at the inventory for single family homes for sale in 95032 with Campbell Union High School District (so Leigh or Westmont High) from July 2012 to July 2018.
Inventory is up, but not to an unprecedented degree. There were more in June, and June’s inventory was not too different from most of the recent years (2014 and forward).
A holiday week is often slow, so I would encourage people thinking of selling to not get discouraged. Part of what we are seeing could simply be a seasonal trend – summer is normally a bit of a “slowdown” period in real estate, with things picking back up again in early to mid September. Last year we did not see seasonality at all, as the market was raging hot through December.
If you are interested in buying or selling a home in east Los Gatos or anywhere in Silicon Valley, please reach out to me and we’ll find a time to talk and see if we might be a fit for working together.
The Belwood of Los Gatos community is hosting its annual Independence Day or 4th of July celebration and the details are announced on the Belwood HOA website. (Quick note: A parade begins at Cabana at 1pm. The neighborhood festivities run from 1 – 5 at the cabaña. Read all about it on the Belwood HOA site!)
Please note that since the weather is warm, dry, and windy, the risk of fire danger is high right now. A sign at Belgatos Park warns that viewing fireworks is strictly prohibited.
Got Facebook? If so, you might consider “liking” the Belwood Cabaña page on Facebook. They are great at keeping people updated on neighborhood events (this is not my page, btw). That’s where I first learned that the holiday is being celebrated in traditional fashion.
Another “Bingo and Movie Nights” is planned for this summer for cabaña members and residents of Belwood, Surmont and Belgatos on Tuesday, July 3rd will be Wonderwoman. Friday July 20th will be a Bingo AND movie night, with the featured film being Black Panther. There will be one more on Saturday, August 11th – the film is not yet announced.
Bring something comfy to sit on – blankets, sleeping bags, lawn chairs etc. Popcorn, cotton candy, and other treats are available for purchase!
For more information, keep an eye on the Belwood HOA website page for bingo and movie nights.