The Peak of the Market

The Peak of the Market

People ask me about it all the time. I kept looking for it day-by-day, week-by-week. No, it wasn’t Sasquatch. I knew what I was looking for because I’d seen it before. Many times before, in fact. For a long time I couldn’t find it. Then suddenly, there it was, right behind us.

It” is the “peak of the market.” Many people want to find it. Generally, just for curiosity, not for any substantive reason. Statistical market peaks don’t really mean much in our everyday lives. Not even for most real estate matters. Really? Yes, it’s true. Consider these four topics:

Refinancing: There are a variety of reasons to refinance a mortgage loan. Some of which may depend more heavily on appraised value than others. But in all cases the financing options and pricing available will depend on the desired loan amount, income, debt, credit scores, and other factors. In the context of refinancing, if there is sufficient equity to satisfy borrower objectives and lender requirements, a little more or less equity probably wouldn’t change the outcome dramatically, so timing a refinance at the peak isn’t necessary.

Remodeling: Contractors in Silicon Valley are busy and have been for years. Many general contractors are booked solid for six to twelve months, even more. They can’t or won’t take on new business. For most categories of contractors their pricing is based on the demand for their services. When they’re hungry to get more business their prices decrease. But when they’re busy they can afford to turn down business and many of them do so by intentionally “pricing themselves out” of projects they don’t want to take on. This reality has nothing to do with real estate market conditions.

Tax Assessment: In California, Proposition 13 allows the County Assessor to increase property taxes by a maximum of 2% per year. Our market appreciation for the last several years has far exceeded that rate, so it will take a long time for the assessor to “catch up” with property values. And even if values dropped (that’s a whole different discussion) assessments will continue to increase until baseline assessed values creep much closer to each home’s actual market value. Peak or not, the county assessor has a lot of catching up to do whether values rise or fall in the near future.

Sales Price: In all market conditions, whether a peak, valley, or something in between, there are things a seller and a good agent can do to buck market trends. Peak statistical values contain data from low and high-end properties in a broad range of condition and geographical areas. Properly preparing a home for sale, given the unique aspects of the individual property and the seller’s objectives is where the focus should be, not on what the broad numbers may be indicating.

The real estate market peak is similar to a company’s stock price, or maybe the stock market as a whole. We only know when we hit the peak a few weeks or months after it happened. The peak is behind us, for now. No fake news here, as the data clearly shows. But just like in the past, we’ll see more of them as time goes on.

Just Listed! 1588 Camden Village Circle, San Jose, CA

Just Listed! 1588 Camden Village Circle, San Jose, CA

Just Listed! 1588 Camden Village Circle, San Jose, CA

A beautiful home in a fantastic community. Opportunities like this don’t come very often. This may be the one you’ve been looking for, and is truly ready for the next owner to just move right in. Retreat in the enormous master suite upstairs with a private bathroom, walk-in closet with extra storage, and an amazing view of the nearby hills. Two more sizeable bedrooms for kids, family, guests, home office and more. Updated kitchen and baths, inside laundry, new paint, energy efficient LED lighting and other recent updates inside and out. A nice private back yard and deck for relaxing or entertaining, and venture out into the ample common area with a pool, hot tub and clubhouse. A well maintained development yet low HOA dues of only $220 per month. Just a few minutes to Costco, Whole Foods, theaters and a thriving mall. Excellent schools, located in the “free zone” with an option for attendance at Branham or Leigh as your high school of choice.

Open Houses:

  • Saturday, May 19, 2:00-5:00pm
  • Sunday, May 20, 2:00-5:00pm

Offered at $948,000
Beds: 3
Baths: 2 full, 1 half
Sq. Ft: 1,539
Lot Size: 1,711 sq. ft

More information here or call Paul today at 408.888.1452.

Just Listed! 1665 Klipspringer Dr., San Jose, CA

Just Listed! 1665 Klipspringer Dr., San Jose, CA

Just Listed! 1665 Klipspringer Dr., San Jose, CA

Well maintained from top to bottom, this is gorgeous! Great location near schools, shopping, and a park at the end of the street. Real hardwood floors upstairs and down. Formal entry and separate living room are highlighted by the elegant staircase. Inviting floor plan has a full bedroom and bathroom downstairs. Two more bedrooms and a full bath upstairs along with a grand master suite with walk-in closet then a separate shower and tub in the master bath. The family room and kitchen combo is great for entertaining. Chefs and helpers will love the designer kitchen with custom granite slab countertops, soft-close cabinet doors & drawers, stainless steel appliances with separate Viking steam and convection ovens and a built-in refrigerator for that added touch of class. And check out the “microwave-in-a-drawer” in the island which opens with the touch of a button. The low maintenance back yard is ideal for relaxing and rejuvenating. This could be just the home you’ve been looking for!

Open Houses:

  • Thursday, March 22, 5:30-7:30pm
  • Saturday, March 24, 1:00-4:00pm
  • Sunday, March 24, 1:00-4:00pm

Offered at $1,450,000
Beds: 4
Baths: 3 full
Sq. Ft: 1,910
Lot Size: 3,840 sq. ft

More information here or call Paul today at 408.888.1452.

Rumors & Myths: Inventory Statistics

Rumors & Myths: Inventory Statistics

Our “Rumors and Myths” articles provide factual information regarding real estate markets and practices.

I’ve seen a ton of agent advertisements and news media info lately about the current craziness in the Santa Clara County real estate market. Much of it is fair accurate information, but I know from speaking with several people that they’re more confused now than before they heard the latest “market update.”

I’ve toiled over all sorts of real estate statistics for years, and have concluded there is no making sense of a trend. That’s right, I said it. Sure, if you look at “the market” from a 10,000 foot level, certainly there are statistical trends that can be tracked at the city, county or regional level, or maybe the whole state. National figures are reported by Case-Shiller and others, but none of that drills down into the current happenings in YOUR neck of the woods.

Imagine we were talking about the transportation industry, and someone asked about the average or median sales price of a “vehicle.” The details indicate a bicycle, an SUV and a European sports car sold for $1,000, $49,000 and $100,000, respectively. Both the median and average come in pretty close to $50,000. However, these metrics are not particularly helpful in really understanding the transportation market unless the time is taken to dig a little deeper into the specifics.

Santa Clara County has an average of less than 1,000 single family home sales per month. Most real estate professionals track statistics by MLS area, and we have 50 such areas in the county. On average, that’s about 20 sales per MLS area per month. Is it safe to rely on basic statistics with such a small sample size? I’d suggest the need to dig a little deeper to understand WHY the numbers are what they are.

“Low inventory” is the most significant number being talked about these days. Inventory is the number of homes for sale where the Seller is still seeking offers (“Active” listings). How low is low for Santa Clara County? In the height of the last recession in 2008 the number peaked at nearly 7000. As consumer confidence and buyer activity increased, it had dropped to 2600 in 2012, and less than 1200 in 2016, fluctuating, of course, month-by-month. Today it sits at about 400. Yes, very low. 

Whether you dig deep into “why” or not, something is very clear: High demand and low supply has continued to increase values dramatically. Need the specifics? Call us today. 

Rumors & Myths: Real Estate Signage

Rumors & Myths: Real Estate Signage

Our “Rumors and Myths” articles provide factual information regarding real estate markets and practices.

Signs, signs, everywhere a sign (and I’m not writing about the 1971 rock classic written by Les Emmerson). It seems real estate signs are everywhere, especially at intersections on weekends. They used to be important to help direct the public to a property for sale, but thanks to mobile location services there hasn’t been much of a need for them for many years. However, most agents still use them as a means to broadcast to the neighborhood that they are doing business there, and they may provide some comfort to buyers and “lookers” by confirming that they are in the right vicinity.

You may notice different sign styles or sizes that are used by various agents or companies. Most cities have specific sign ordinances for their jurisdiction. It’s the responsibility of the individual agent placing it to know what height, width, and style can and can’t be used in each city. The placement, number per intersection, and the information printed on the signs are expected to be in compliance with each city’s rules. When the sign is not in compliance, it can be confiscated or the agent can receive a citation. Be careful when relying on these intersection signs – I’ve seen the directional arrow pointing the wrong way down a one-way street.

Often, the agent’s name on the sign is not the same as the agent who has listed the property for sale. In most cases the person who is hosting the open house will have their signs on the street in order to get market recognition and visibility for themselves, not the listing agent for the property. If you see a real estate sign that does not have an agent’s name on it, there’s a good chance the person hosting the open house is a new agent who has not yet received their personalized signs.

The signs placed in front of a home for sale are a totally different game. A friend of mine recently told me a home in his neighborhood hit the market one day and was sold the next. He insisted it was done, over, sold in one day, and he knew this because on top of the crossbar on the post there was a placard (we call these sign riders) that read in bold letters, “SOLD.” Even with cash offers, real estate transactions are complex, entail a lot of required paperwork and involve several entities. It’s virtually impossible to close a sale in one day.

An individual agent will put up a sign rider to convey a message based on their own training, marketing ideas, and sometimes ego. “Sale Pending” generally means the seller has accepted an offer but they want people to stay tuned in case the buyer gets cold feet or the transaction falls through for some other reason. “Sold” usually means there’s little risk of the sale falling through (like after a buyer has removed all contingencies) and the agent is sending a message, “we’re almost done with this one.” By the time possession truly passes to the new owner, the sign should have already been removed.

Again, there are rules and these signs should be in compliance with the sign ordinance for their location. A decade or so ago an executive at a local brokerage encouraged all their agents to put lights on their yard signs to increase visibility and recognition for his company. The problem was that most cities didn’t allow lights on real estate yard signs. I still wonder what happened to all those lights so many agents bought. I also wonder if they check into the rules before new marketing ideas are launched.

The most important thing to remember about real estate signs is that they’re like any advertisement sign for any other business — except in real estate the signs move around. “I’m Gorgeous Inside,” “Remodeled,” “Reduced Price,” and (my favorite) “Honey, Stop the Car” should probably be addressed in another post. But you get the message.

Just Listed! 1636 Klipspringer Dr, San Jose, CA

Just Listed! 1636 Klipspringer Dr, San Jose, CA

Just Listed! 1636 Klipspringer Dr, San Jose, CA

Sophisticated and casual elegance describes this beautiful Cambrian home. Modern amenities and conveniences are coupled with tasteful old-world European charm. It’s ideal for the discerning owner who takes pride in their home and appreciates the opportunity to live and entertain in comfort and style in low-maintenance surroundings. Meticulously cared for and truly move-in ready for the next owner. A full bath and bedroom downstairs with direct access to the exterior. A grand master suite with double doors, walk-in closet, high ceilings, and a bathroom with two sinks, separate real marble-surrounded shower and a soaking tub for the ultimate in relaxation. You won’t spend weekends fighting the weeds or mowing the yard. It’s drought tolerant and nearly maintenance free. Challenge your friends or family to a contest on the professional putting green — trophies have been won from practice there!

Offered at $1,285,000
Beds: 4
Baths: 3 full
Sq. Ft: 1,910
Lot Size: 3,840 sq. ft

More information here or call Paul today at 408.888.1452.