Sunnyvale Housing Market Update - September 2007

It was a case of home owners sitting out the market.  New listings of single-family homes in Sunnyvale were at a 10-year low in August, dropping from 107 in August 2006, to 79 this year.  In fact, total inventory levels also dropped slightly, from 130 single-family homes to 127 over the same period. Sunnyvale's average number of new listings during the month over the last ten years is 105 and it's an illustration of why real estate is local.  National news headlines from around the country correctly talk about aggregate numbers that are lower because of deflating markets --- and many Silicon Valley home owners here who might have considered listing their homes, but could afford to wait, sat out.

But ultimately, real estate is about location, supply, and demand.  And while supplies were down, demand was actually both "normal" and "up".  The ratio of closed transactions to new listings in August 2007 was 73%.  The 10-year average is 74% and it was 58% last year.  How did that increase manifest itself?  Besides a fourth consecutive year of over-asking closing prices in single-family homes, have a look at the difference in the cost of Median Homes year-over-year.

Median Home 2007 - $930,000

The umbrella wasn't included in the number, which was $41,000 over the asking.  The Median Home in Sunnyvale is the 3 bedroom, 2 bathroom ranch at 956 Kintyre Way, a 51 year-old home.

And while it shows in the plain styling of its exterior, the inside was completely remodeled to today's expectations, with a new appliances in a completely renovated kitchen, hardwood floors, a pair of redone bathrooms, new paint inside and outside, and energy-saving double pane windows.  The lot is 6,572 square feet and comes with underground sprinklers and new landscaping.  All the work and upgrades paid off because the home took 6 days to go.

Compared With Last Year - $865,500

Kintyre's styling is in complete contrast to one of last year's Median Homes, the ultra-modern, 20 year-old, 1465 Yukon Drive, which sold for $870,000, 16 days after being re-listed (45-day CDOM).  The listing describes the home as "charming", which I always interpreted as a real estate code-word for "small", but this home is 2,068 square feet on the inside.

"Charming" might more accurately describe the lot for a home this size, which is 3,920 square feet.  Ratios aside, the claim to fame for this 3 bedroom, 2.5 bathroom --- I think you could call it a chalet bungalow --- is the Cupertino schools, Nimitz Elementary and Cupertino Middle, plus Fremont Union's highly-rated Homestead High School.

999 Glenbar Ave. is the other Median Home in Sunnyvale for August 2006.  As a 47 year-old home, Glenbar has a more traditional exterior but a completely modernized interior, with recessed ceiling lights, granite and stainless steel in the updated kitchen, new bathrooms, refinished hardwood floors, and maple vanities.

Its 1,524 square feet contain 3 bedrooms and 2 bathrooms, but it has a more traditional lot size at 6,098 square feet.  Unlike its fellow Median Home, Glenbar sold for above its $844,888 asking, for a rounder $861,000.  It went in 13 days.

Market Snapshot - September 7, 2007 

There are 114 single-family homes and 72 townhomes and condos listed, for a total of 186 available residential listings.  It's been generally good news for Sunnyvale, so let's focus on the homes where things aren't so good.

Of the common interest developments, 19 have undergone a reduction and 6 have had their asking price increased.  Here's a map plotting where the homes that have been reduced are.  As you can see, there's no single area, but they do share some characteristics.

First, they're smaller condos, many in the sub-1000 square foot range.  They have an average list price of $484,540 for an average of 1036 square feet.  The smaller condos are sitting because the ability of buyers in this range was largely hurt by the sub-prime implosion, the trend towards requiring higher down payments, and now by jumbo rate increases.

Second --- with the exception of the cluster around #10 which is that complex of lower-end condominiums that I mention in the Threats section of my notes on the Expressions of Sunnyvale and Belmont Terrace --- the small condos are either on or one block over from a major road east of Mathilda (and further from Mountain View).  Buying near a major road isn't ideal but it's really a combination of these two factors that has hurt this set of properties.

Of the 114 available single-family homes, 47 have undergone a reduction, with those 47 having an Active CDOM number of 84.7 days on average.  I was surprised until I pulled up a map.  You can't tell every person's situation from there.  Some people might have been too aggressive with their original mark.  Others might be in a bad financial situation.  But there are clusters in Sunnyvale towards and north of the 101.

Same issues here as with condos.  Homes at the lower-end have a shrinking set of buyers; home owners in more affordable portions of the city have a higher probability of being in financial distress.

Net-net, the amount of "really good" inventory has been relatively low and those sellers have reaped the benefits.  But higher jumbo interest rates are pushing the effective cost of homes higher, so home owners should keep that in mind when listing a home towards or below the median --- the minimum bar buyers have to jump over is getting higher.

Conversely, buyers need to keep in mind there might be less inventory than it seems, particularly above the median.  Buyers will get some relief because of the publicity of the loan implosion and the time of year, but only certain sellers will need to entertain lowball offers.

(c) Steve Leung, Realtor, for the Silicon Valley Real Estate Blog at 1SiliconValley.com

Realtor Notes on Belmont Terrace

Belmont Terrace is a 158-unit townhome complex in Sunnyvale, which like its neighbor theExpressions of Sunnyvale, is located to the south of Central Expressway and west of Mathilda Ave., towards Mary Ave.  It's across the street from the Gardens of Sunnyvale townhomes.

Strengths

1)  Units in the Belmont Terrace complex cost less than the Gardens townhomes to the north and the Expressions townhomes to the south, while still being in the same neighborhood.

2)  A lot of attention goes into the lush greenery around the complex, which sets it apart from many other developments.

3)  Cannery Park, its open space, and small playground and picnic area are next door.  And high school students in this complex go to Homestead High School which was rated 10 out of 10 statewide by the California Department of Education in 2006.

4)  It's only a few minutes' drive from Belmont Terrace to Downtown Mountain View and Downtown Sunnyvale, in addition to 101, 85, 237, 280 and Central Expressway.  The Caltrain Station in Downtown Sunnyvale is about one mile away.

Weaknesses

1)  The Belmont Terrace HOA fees are slightly more expensive than those for the Gardens and Expressions complexes, even though the square footage per unit is generally smaller.

2)  Many units have a narrow feel to them on the inside, particularly where fireplaces and their flues protrude from the walls.

3)  Patios, typically located outside the front entrances, are more like throwbacks to old-style porches where people might gather and watch the neighbors.  The ones at Belmont Terrace don't offer any privacy.

Opportunities

1)  The cost of townhomes is in the lower mid-range of the homes in this area.  From a real estate standpoint, I generally prefer homes that aren't the most or least expensive in the area because they don't encounter as much resistance going up and don't face the same possibility of erosion at the low end.

2)  Successful redevelopment of Downtown Sunnyvale, only a mile away, will increase the demand for and number of local destinations from the Expressions of Sunnyvale complex.

3)  In 2007, Sunnyvale was rated the second safest city in California.  According to the private research firm Morgan Quinto, Sunnyvale ranked in the top 25 safest cities across the U.S. from 2000 to 2006.  315 cities were included in the report.

Threats

1)  If HOA costs increase, they'll be considered very expensive relative to neighboring complexes and the services provided.

2)  Several low-end condominiums in a complex one block down and one block over on California Ave. are still on market after several months.  Those one bathroom condos are the lowest cost homes in the area and don't directly compete with Belmont Terrace, but that complex is likely to see some erosion in pricing.

3)  Downtown Sunnyvale redevelopment hit a snag after discovery that some water cleanup will be needed.  Water issues and such aren't new to Silicon Valley, where they're actually pretty common.  But it's not news residents want to hear.

Schools and School District Information for Belmont Terrace

Since school boundaries and availability may change based on enrollment needs and population shifts, it is always a good idea to check with the local school district (Sunnyvale School District, Fremont Union High School District) for the latest information.

1)  Vargas Elementary School (see ratings and parent opinions).  California Distinguished School.

2)  Sunnyvale Middle School (see ratings and parent opinions).  National Blue Ribbon School.

3)  Homestead High School (see ratings and parent opinions).  Rated 10 out of 10 statewide by California Department of Education in 2006.

Map

View Larger Map

Sunnyvale Releases Resident Satisfaction Survey

The City of Sunnyvale released its 2007 Resident Satisfaction Survey, which highlighted that 93% of respondents felt that Sunnyvale was a good or excellent place to live.  84% thought the same of their neighborhood.  This chart was taken directly from the PDF document which Sunnyvale provides from the National Research Center.

I thought it was interesting that those folks in the 9% difference didn't like where they were living all that much, but still liked Sunnyvale as a whole.  (Usually people who don't like one prefer their neighborhoods over city itself.)

That satisfaction rating puts Sunnyvale in the 81st percentile nationwide.  Not bad.  People didn't think highly of the city as a place to retire (26th percentile) or --- shockingly --- as a place with access to "affordable quality housing" (24th percentile).  It is the "Heart of Silicon Valley" after all.

But where Sunnyvale excelled in the survey was in "openness and acceptance towards people of diverse backgrounds" (95th percentile), "quality of police services" (93rd percentile), and value for tax money spent (94th percentile).

Sunnyvale Town Center Conversion Under Way

The long-awaited tear down of Sunnyvale Town Center's main building, in favor of building a more open and walkable layout, has begun.  Target and Macy's are open during this deconstruction effort but the parking lot in front of the west side Macy's entrance is currently closed.  You can find more information about Sunnyvale's revitalization plans in the Sunnyvale neighborhood section.  Pictures below.

Image of Sunnyvale Town Center Demolition 1

Image of Sunnyvale Town Center Demolition 3

Demolition of Sunnyvale Town Center Mall Approved

One Macy's, one Target and one very unused shopping mall on 25 acres of prime downtown real estate.  The City of Sunnyvale approved the demolition of the long-shuttered Sunnyvale Town Center Mall not long after Friday sale of the 25-acre site to Downtown Sunnyvale Mixed Use LLC, a partnership between real estate investment manager RREEF and Sand Hill Properties (see my previous article Downtown Sunnyvale Revitalization Gets Desperately Needed Kickstart).

Bolstered by the recent success of the Vallco Mall re-branding to Cupertino Square, the downtown Sunnyvale project includes the creation of a "Redwood Square" which features the six stalwart redwood trees whose preservation is a critical component of the new revitalization. 

The complete redevelopment area includes (basically) the area enclosed by Mathilda, El Camino Real, Carroll, and Evelyn.  Macy's and Target will remain open during the process, and a new single-story Target built above a parking structure is planned to replace the current double-decker Target.  No word yet on what kids in the store will do for fun without the shopping cart escalator.

Sunnyvale Home Prices - April 2007 Update

Yesterday we looked at Cupertino home prices, how there were opportunities in the townhome and condo market, and how the premiums over the Santa Clara County average are at a 10-year low.

But for people looking for their own freestanding single-family home with a nice backyard and a safe neighborhood, the numbers say there's another opportunity to be had, in Cupertino's neighboring city, Sunnyvale.

From 2000 to 2006, Sunnyvale ranked in the top 25 overall safest cities (out of 315) in America according to the private research firm Morgan Quinto.  No other city in Silicon Valley can claim that distinction (though it's also interesting to note that San Jose consistently places in the top 10 safest cities with a population of 500,000 or more.)

The challenge with Sunnyvale is that it doesn't have the hipness factor of Mountain View or the education credentials of Cupertino (even though their school districts overlap in many places). 

What it does have, though, is a first in the last decade: a year-over-year price drop that brings Sunnyvale homes in line with the Santa Clara County average.  That means no price premium to live in a Silicon Valley city that's consistently rated as one of the safest in America.

It's Hip to Be Square

Truthfully, if you're looking for someplace trendy, Sunnyvale isn't it.  That's one reason why it's less expensive than neighboring cities.  Sunnyvale's downtown area has the Murphy Avenue row of restaurants, bars and clubs plus the Town & Country Village with its specialty shops --- and there are some good restaurants in downtown Sunnyvale like Dish Dash and Thai Basil. 

Given the choice between downtown Mountain View and downtown Sunnyvale, most folks go to Mountain View.

Fortunately, Sunnyvale is only three miles from downtown Mountain View without the skyrocketing prices and tight inventory of that area, so living close to --- but not in --- a trendy area is affordable.  (You can find details on the market in downtown Mountain View by reading my Silicon Valley Housing Market Update - April 2007.)

Sunnyvale Townhome and Condo Prices and Premiums Up

Common interest developments in Sunnyvale have traditionally been a good value because you can get a lot of square footage at a reasonable price. 

But with a year over year increase in median price from $530,000 to $590,000 in March 2007 (an 11% jump), they don't represent the steal they were last year or in 2003, as evidenced by the higher price premium relative to the Santa Clara County average for townhomes and condos.

That said, they're still tracking pretty close to the overall median and while prices aren't bargain basement, they're not unreasonable for Silicon Valley 2007 standards.

There are a couple low-end ($400-500K range) complexes in Sunnyvale where you can't walk thirty paces without hitting "another" for sale sign so, if you made me promise to guess, I'd say that the median price for condos will dip --- but that doesn't mean there's overall weakness in mid-range and above properties.

The Value Play in Sunnyvale Single-Family Homes

That's a curve we haven't seen in Sunnyvale.  The dip below the Santa Clara County median line for single-family homes.  In fact, the Sunnyvale price is 2% below that media line this year and the first thing I thought about for my clients was "value play."

The thing about Sunnyvale is that, besides the phase one work on Moffett Towers by Jay Paul Co., the city hasn't gotten any of the buzz from the giant companies located around it in Mountain View (you know who you are) and Cupertino (with HP's mega-complex, Symantec corporate and Apple's current and planned world headquarters campus).

Sunnyvale is literally ten minutes from all of that, and it counts Juniper and Yahoo among its corporate residents.

So for my clients who are tech professionals looking to cut their commute costs (see the bottom of my article Determining Your Must-Haves When Buying a Home) and get a good deal on a single-family home --- today --- I search for houses in Sunnyvale.  Sunnyvale has many reasons why it isn't average, and at a -2% premium, now you don't have to pay for them.

Silicon Valley Distinguished Schools and Area Home Values

The California Department of Education (CDE) just released the recipients of its California Distinguished Schools award, which honors the "exemplary and inspiring" schools across the state. 

Typically only 5% of schools are awarded with the California Distinguished School title, which schools are allowed to use for four years --- and in 2007, there were 21 Silicon Valley schools (11 from San Mateo County and 10 from Santa Clara County) that received the honor. 

Elementary and secondary schools are evaluated in alternating years and, this year, it was time for the middle and high schools to go under the microscope.

As frequent readers here know, I'm a big advocate of not only looking at real estate in established educational powerhouses, but also finding up-and-coming schools.  After all, schools power real estate demand --- even if you don't have kids --- and people looking for the "next big thing" in terms of appreciation need to look beyond what's already been priced into the market.

There were some big winners this year in Silicon Valley and this article kicks off a week of market analysis homing in on key cities in these school districts.  Here's a whirlwind tour.

Fremont Union High School District (South Bay)

Fremont Union primarily covers the Silicon Valley staples, Cupertino and Sunnyvale, but also includes areas of other Santa Clara County cities including Los Altos, Saratoga, and San Jose.

Three of Fremont Union's five high schools received the California Distinguished School award this year.  Monta Vista High School and Lynbrook High have both amassed five of the awards, while fellow 2007 winner, Cupertino High, has been named a California Distinguished School three times.

The Fremont Union High School District web site has a PDF map that shows the areas each school in the district covers. 

Sequoia Union High School District (Peninsula)

Sequoia Union covers a wide stretch of Silicon Valley and the Peninsula, serving the San Mateo County cities of Atherton, Belmont, East Palo Alto, Menlo Park, Portola Valley, Redwood City, San Carlos, and Woodside.

Three of Sequoia Union's four comprehensive education high schools (Sequoia Union has one vocational high school) won this year.  And of the award winners, both Sequoia High School and Menlo-Atherton High School have won the award twice, while Carlmont High School has won the award three times.

The Sequoia Union High School District web site has a handy tool that lets you check what school any given address in the district feeds into. 

Up-and-Coming Schools

The Campbell Union High School District has two up-and-coming schools that are brand new winners this year, Del Mar and Branham High. 

And, further north in the San Mateo Union School District are two more first-time winners, Burlingame High and Hillsdale High.

I'll post the latest home values in the 1SiliconValley.com Housing Market section.

Bedford Square Model Home Videos and Updated Pricing

Bedford Square (see previous update and writeup) has announced their next sales release (Saturday, April 21 at 9am) and updated pricing.  10 units are available, with an approximate delivery in December this year or January 2008.

There are four floorplans.  Plan 1 units are listed at 1,223 square feet with 2 bedrooms and 2.5 baths.  This release sees four Plan 1 units at $673,900 to $678,900.  On their February 17 release --- I keep track of these things --- Plan 1 units ranged from $659,900 to $666,900.  

Plan 2 units are listed at 1,450 square feet with 2 bedrooms and 2.5 baths.  There are two Plan 2 townhomes priced at $711,900 and $715,900.  In February, there were three Plan 2 units, one at $689,000 and two at $699,900.  

Plan 3 units are listed at 1,564 square feet with 2 bedrooms, 2.5 bathrooms, and a bonus room.  There are two available in this release, priced at $729,000 and $732,900, compared to four in previous releases ($699,900 to $714,900).  

Plan 4 units are listed at 1,761 square feet with 3 bedrooms and 3.5 bathrooms.  There are two in this release, at $788,900 and $793,900.  There was only one in the February release and it was priced at $768,900.  

Buying a home from directly from the developer is sometimes tricky because they have an army of people doing market research for them. Sometimes their prices aren't necessarily market competitive either. Did you know that, even with new homes, you can contract a buyers agent (usually at no cost to you) to ensure you're making the right decision?

The developer won't look out for you. I will. And, if want wider range choices --- for example, if you need a home before their expected end-of-year completion, or don't like the area --- I can offer you those choices (again, usually at no cost to you).

Bedford Square Models Open Saturday, April 14

Bedford Square is a townhome community located on the border of Mountain View and Sunnyvale, close to 237.  Pulte, the developer, is sending out messages about the grand opening of the model homes there this Saturday. Their phone number is 650-625-1850.  Before visiting, you can have a look at our previous write-up, find homes around Bedford Square, or contact me to run a current market analysis of the properties in and around that area.

Silicon Valley School System Bang-for-the-Buck

The California Department of Education (CDE) has released the updated 2006 Academic Performance Index (API) scores for California schools, including data for San Mateo County and Santa Clara County.  The API is a statewide benchmark based on standardized achievement tests which is primarily used to rank schools relative to one another and relative to schools with similar demographics.  Here's an example of what the statistics look like.

We'll take a look at how school rankings and Silicon Valley real estate prices are related, but first let's look at how to read the information.

Number of Students. In the first column, you'll find the number of students whose results were included from that school.  It's pretty close to the total number of students, less any excluded students.  The rules for excluding students are listed in the API Base Documentation Information Guide found on the CDE API page.  Surprisingly, the number of students has little to do with how well the school did in its API scores (almost, see epilogue).

Base API, Statewide Rank, Similar Schools Rank. The Base API score is like an SAT score except it's from 200 to 1000.  Higher is better.  To make comparing schools easier, the CDE provides a statewide rank from 1 to 10 (ten is best) and a similar schools rank that rates schools (again from 1 to 10, ten being best) that have similar demographics and characteristics.  Apples-to-apples in a way.

Growth Target, API Target. The growth target is the number of points California wants the school to improve in the next year.  That added with the current base API score equals the API target.  The CDE doesn't set a target for schools above the current statewide performance target of 800.

Silicon Valley School District Scores

I've assembled information from the CDE site and the Palo Alto Daily News to provide a table of school district API averages for Silicon Valley and Bay Area elementary and middle schools.

Comparing School Districts and Housing Prices

Remember the chart of median Silicon Valley single-family home prices in February 2007 from my article Determining Your Must-Haves When Buying a House?

Combining the chart for Silicon Valley school district rankings with the one for Silicon Valley median single-family real estate prices brings up some surprises.  (I used a simple ratio between how far the API score was above 700 and the median single-family home price.  The resulting number isn't really that relevant, it's the visual comparison I was looking for.)

Regarding Schools and Value in Pricing

First, while Cupertino and Foster City housing prices are very similar, there is a vast difference between the performance index of their school districts.  On school rankings, compared to Foster City, Cupertino represents a much better value based on the median sale price of single-family homes.

Second, while Los Altos has the highest API scores, it also had a much higher median price putting it on-par with other elite school districts like Palo Alto and Los Gatos, but well-below Saratoga which had both higher test scores and a lower median home price.

Third, it is possible to cherry-pick good schools in average school districts.  For example,  you can search around Sunnyvale's Cherry Chase Elementary, which has a base API score of 941, if you're looking for a good elementary school.  Stay tuned.

[ed.  This is the CYA: The data in the report is considered accurate but not guaranteed.]

Epilogue

There's a quirk in the ratings system where only test scores for "statistically significant" groups (read: ethnicities) are counted.  Some schools, none that I can find documentation on, were accused of reclassifying lesser performing students into groups that weren't statistically significant to prop up their overall test scores.

There is a measure of transparency, though, because if you drill down on the individual schools, it will show which groups were counted, which weren't, and how many were in each.