Mountain View Housing Market – First Quarter 2010 Update

As in the neighboring cities of Palo Alto and Los Altos, the Mountain View housing market in the first quarter of 2010 has rebounded from the previous year.

The characteristics of Mountain View – situated in Silicon Valley and home to tech companies such as Google, Symantec and Intuit; one of the stronger school districts in California; a friendly downtown area next to Caltrain; and a more affordable single-family home and condominium and townhouse market compared to its northern neighbors – means that homebuyers are returning to the area to take advantage of reduced home prices that have occurred since the real estate crisis a few years back.

In the first quarter of 2010, the median sales price for single-family homes in Mountain View was $875,000, a slight decline from $900,000 in 2009. Though the median sales price dipped, the turnaround for this past quarter was that 50 homes sold with an average days on market of 24 days, compared to 41 sold and 62 days in 2009 during the same time period.

Mountain View home sales and the number of days on market have returned to 2008 levels, before the crisis really showed its teeth, but the median sales price this past quarter is still 20 percent lower than in 2008, which was $1.095 million.

The price range of single-family homes sold in Mountain View this past quarter, from $560,000 to $1.575 million, reflects a more affordable market than Los Altos and Palo Alto.

A strong local condominium and townhouse market

There is a larger market for condos and townhomes in Mountain View compared to Palo Alto and Los Altos, which makes it great for first-time buyers right now, especially when considering the depreciated market and government incentives.

A total of 52 condos and townhomes sold in Mountain View this past quarter at a median sales price of $589,000. Most of them had two or three bedrooms and took up an average of 1,327 square feet. To compare, Palo Alto sold 26 for a median price of $725,000 and Los Altos only sold seven for a median price of $780,000. If we were to take out properties that are less than five years old (in order to compare resale values) there was still 50 properties that sold in Mountain View, 15 in Palo Alto that sold for a median price of $672,000, and just two sold in Los Altos.

What sold for $875,000

A 1,859 square foot, four-bedroom and three-bath house was listed for $875,000 and sold for the same price this past quarter. It is a 10-year-old house and sits on a 3,920-square-foot lot in a cul-de-sac on Plum Court.

Sunnyvale Housing Market – First Quarter 2010 Update

The Sunnyvale housing market was one of the Bay Area cities that were hit harder by the recent real estate crisis.

Before the crisis hit in the first quarter of 2008,the median sales price for the 121 single-family homes that sold was $976,000 (including three short sales). The following year, the number of single-family homes sold during the first quarter dropped to 100(including 23 foreclosures and 18 short sales)andthe median sales price fell 46 percent, to $530,000.

The north region of Sunnyvale was most affected by the housing crisis, includingthe 94085 and 94089 area codes. Homes in the 94086 area code were slightly affected; and the homes that weathered the best, with sales in the million plus range, werein the 94087 area code.

This past quarter, 97 homes (including 12 foreclosures) sold for a median price of $820,000. Average days on market was 42 days, down from 85 days in 2009. The price range of home sales starts at $371,000, for a foreclosure home, all the way up to $1.45 million.

Sunnyvale is recovering quickly even though the crisis has had a more dramatic effect on the area compared to some of its neighbors,such as Los Altos and Mountain View.Because Sunnyvale is home to tech companies likeYahoo!, Palm, Inc., and AMD, and has some strong schools, including Cumberland Elementary and Cherry Chase, home prices are expected to return as the market stabilizes.

Homebuyers right now are taking advantage of this time to find good-valued homes beforesales abovelist price become common again, as in the first quarter of 2008, when the average listing price was $964,996 but the average sales price was $979,941. It wasn’t uncommon at that time to find a home selling $100,000 over list price, which was unheard of in 2009when most homes over a million did not sell at all.In 2010, as in the following example, we are seeing homes selling at those competitive levels again.

What sold for $820,000

A 1,210 square foot, three-bedroom and two-bath house was listed at $750,000 but sold for $820,000 this past quarter. The house was built in 1955 and sits on a 6,600-square-foot lot in Arlington Court. The home featured remodeled kitchen and bathrooms.

Palo Alto Housing Market – First Quarter 2010 Update

Palo Alto is one of the premier real estate markets in California, but that doesn’t mean it was able to pass through the mortgage and housing crisis, just two years ago, without a scratch.

Like most of the Bay Area, Palo Alto home prices and inventory dipped following the crisis but are now showing signs of recovering.

Comparing first quarter results between 2008 and 2010, the number of single-family homes on the market went from 81 to 68, and the median sales price from $1.681 million to $1.518 million. First quarter results in 2009 were even lower, with 66 homes sold and a median sales price of $1.275 million.

Again, because of a location in the Silicon Valley, neighboring Stanford University and a top performing school district (news link), Palo Alto homes are some of the last to be hit by a recession and a bellwether out.

When considering a home in Palo Alto, homebuyers have over 14 distinct neighborhoods to consider and home values that range from $800,000 to tens of millions.

Entry-level market

I am seeing a lot of homebuyers trying to take advantage of the dip in local home prices and trying to secure a low mortgage rate right now. As a result, buying an entry-level home in Palo Alto can be a very competitive market.

Most entry-level homes in Palo Alto can be found south of Oregon Expressway, in the Midtown and south Palo Alto neighborhoods.

The median sales price this quarter for the area was $1.27 million; and the average days on market, excluding Midtown and two outlier homes, was 24 days.

Good family homes exist under one million, and I recently sold a three-bedroom, one-bath in south Palo Alto for $950,000 this quarter. But buyers should be aware that strong competition for entry-level Palo Alto homes results in many going above list price after multiple offers are made – sometimes as close to 20 offers.

High-end market

The mortgage crisis has slowed the sales of high-end homes because sellers can afford to wait until home values return. Buyers are also more cautious with their money and may find it difficult to get approved for a jumbo loan under today’s stiff mortgage regulations.

The number of high-end home sales, like in Palo Alto’s Crescent Park neighborhood, are returning back to normal levels this year. In the first quarter of 2008, seven homes sold in Crescent Park at a median price of $4.25 million. In the first quarter of 2009, only two homes sold, the higher one selling for $1.7 million. And in 2010, five homes sold for a median price $2.75 million.

What sold for $1.25 million in 2009 and 2010

A 2,091 square foot, four-bedroom and two-bath, two-story house was originally listed for $1.495 million but sold for $1.25 million in the first quarter of 2009.

The house was built in 1963, sits on a 7,688-square-foot lot and is located at Barclay Court, a cul-de-sac in the Charleston Meadows neighborhood. Inside are oak floors, a combination living and dining room with a fireplace. The house is located next to Robles park and part of the Palo Alto school district.

During this past quarter, a 1,324 square foot, three-bedroom and two-bath house was listed for $1.198 million and sold for $1.27 million.

The house was built in 1954, sits on a 9,009-square-foot lot and is located at Fairfield Court, a cul-de-sac in the Green Meadow neighborhood. Inside is hardwood floors, stainless appliances, new fixtures and a combination living and dining room with a fireplace. The large rear yard features a patio.

Market Snapshot - May 3, 2010

There are currently 69 single-family homes and 44 townhomes and condos available. Out of the69 single-family homes, the prices have a wide range from $760,000 to $8,000,000.

2009 Santa Clara and San Mateo County API School Scores

2009 Santa Clara County API School Scores

September is the time of the year when the California Department of Education releases its yearly Academic Performance Index (API) scores. Here are the 2009 Growth API Scores for Santa Clara County and San Mateo County. 

We see an overall steady increase in scores compared to last year's growth API scores.

A few notables in the following Silicon Valley Santa Clara County school districts:

Berryessa Union Elementary School District: Ruskin Elementary School continues to lead the pack and breaks the 900 barrier with a general improvement in most of the schools in the district

Cupertino Union School District: Continues to have a plethora of high achieving schools (Murdock-Portal and William Faria Elementary School and Joaquin Miller Middle School)

Fremont Union High School District: Monta Vista High increase it's lead over Lynbrook High School from four to nine points.

Los Gatos Union Elementary: Significant increase across the board for most elementary schools

Moreland Elementary School: Leroy Anderson Elementary takes one of the largest increases in scores by an increase of 136 points to 810

Palo Alto Unified: Herbert Hoover and Duveneck Elementary Schools continue to lead the way

Santa Clara Unified: Overall Santa Clara schools had good improvement with notable Rivermark's Don Callejon as well as Westwood and Briarwood Elementary jumping nearly 40 points.

Sunnyvale School District: Cherry Chase increases 28 points to an impressive while Cumberland drops 26 points to 905

Check out our previous post to find out what's the difference between Growth and Base API scores and how they are calculated.

Changes on The Ave: Willow Glen's Lincoln Avenue

The shops on Lincoln Avenue have never been flashy, and in contrast to Santana Row and even downtown Los Gatos it is quite tame.  The residents of Willow Glen are proud and protective of their strip and can be quite vigilant when it comes to new development because of the fear of change.

However, lately there have been a lot of businesses on the Ave that have not been able to survive, especially in this economic downturn.  I was surprised to hear that two businesses recently have thrown in the towel and will close:  Vin Santo Ristorante and Willow Glen Liquors.  I am especially saddened to hear Vin Santo is closing because this is where my husband proposed to me. 

Willow Glen Liquors who is looking to stay in business but relocate off Lincoln, always has a wonderful selection of wines and as my personal mission to support local retailers, I buy my wines here instead of the BevMo directly across the street. 

The Ave is all abuzz this holiday season with holiday shoppers and faithful local residents supporting Willow Glen businesses, but what is going to happen once this flurry of shopping is over, when the decorations are boxed up and the excitement of Christmas is over?

Here are the plans.

Changes to Lincoln Ave. in Willow Glen

The latest news on the Ave is that there are ambitious plans to build a public plaza at the corner of Willow Street and Lincoln, where Willow Glen Frozen Yogurt & Ice Cream Co. now sits.  The proposed plan calls for construction of a three-story building that will include ground-floor retail, 26,000 square feet of office space on two floors, and a two-story parking structure, in addition to the public plaza. 

If the plans are approved, the opening date will be in spring 2012.  Also on the agenda is the opening of grocer Fresh & Easy (AKA Tesco) on the corner of Minnesota and Bird Avenue, where Albertsons used to sit.  Fresh & Easy is also going to locate in the Almaden Plaza upon the departure of Safeway; the opening of these two grocers is on track for 2009.

Willow Glen Residents' Opinions

So, how do the local residents feel about these new changes?  As far as the Fresh & Easy grocery stores locating to Willow Glen, most are okay with this plan, however no one knows much about the British-based company.  The only concern is what has been reported in the news lately about Tesco, and what the quality of the food will be like. 

With the changes proposed for the Avenue, there are those that are very supportive about the plans to give Lincoln Avenue a badly needed facelift, and others who feel that the Avenue is fine the way that it is now, and do not want to see developers come in and ruin the look and feel of Willow Glen. 

Some people are very excited about the new plaza which will add an additional 150 new parking spaces, beautify the street and bring in new retailers.  With more retailers, Lincoln Avenue will bring in more business to Willow Glen, which will in effect be better for the economy of our town. 

On the flip-side, the nay-sayers are aggravated that more retailers equals more cars, more traffic, more development, and ultimately the demise of all history in town.  Another fear is that the older storefronts, such as Willow Glen Books, Hicklebees, the Thrift Box and Details Clothing will go out of business with bigger stores coming in, competing and pushing out 'the little guys'.

A community meeting was held on December 17th to discuss the plans with local residents; everyone was able to voice their opinions and ask questions at the meeting.  There was overwhelming support.  The next step is to have the proposed plans presented to San Jose Planning Department, who will either approve or reject the design.  It will be interesting to see how this unfolds, and I will share more information as it becomes available.

Bay Area High Schools in Nation's Top 100: US News and World Report

US News and World Report published its list of best high schools and according to the report, the looked at "more than 21,000 public high schools in 48 states" to come up with a list of the top 100.  Three Silicon Valley high schools made the list:

73.  Monta Vista High, Cupertino

74.  Henry M. Gunn High, Palo Alto

80.  Saratoga High, Saratoga

These awards were based on how well-prepared students are for college as measured by Advanced Placement (AP) tests. 

California, as a state, did very well in the rankings, placing #4 out of all rated states --- this means that out of all the high schools rated by US News and World Report, California has a higher percentage of silver and gold medal recipients than all but three states, based on the same criteria above. 

Of California's 1,999 high schools rated, 126 (6.3%) received silver or gold.  The number one state, Massachusetts had 338 high schools rated and 29 (8.6%) silver and gold medalists.

US News' rating by AP score is different from California's standardized testing and Academic Performance Index (API), which focuses on California's own standardized tests.  It's no surprise that Bay Area high schools Monta Vista, Gunn and Saratoga each have API scores that are some of the best in California, exceeding 900 (out of 1000).

1SiliconValley.com and Alex Wang Featured in The Registry

The July issue of The Registry, the popular Bay Area real estate magazine, features the Silicon Valley Real Estate Blog, 1SiliconValley.com saying:

"...the site offers many well-written articles on a variety of relevant subjects, from school API scores to new developments built or approved in a particular neighborhood."

"...a great source of information for South Bay first-time buyers."

Our own Alex Wang is featured in their Residential Market Report on page 40, "Boom and Bust Still Exist Side by Side".  In an interesting anecdote about the lending crisis, he offers a story of a self-employed client with a $200,000 annual income who had to endure a complete third-party audit before his loan could close.

Congressman Mike Honda's Foreclosure Prevention Workshop

Rep. Honda's office contacted us about the workshop the Congressman is hosting on protecting your home from foreclosure.  This is a mainstream topic even for folks in Silicon Valley where we have a high average income and many people who are generally financially savvy. 

Here are some details of the event they'd like to publicize:

5:00 p.m. "? 7:00 p.m.

Wednesday, July 2, 2008

Berryessa Branch Library

Community Room

3355 Noble Avenue

San José, CA 95132

Attendance is free and open to the public.

Please RSVP by email at Honda.RSVP (at) mail.house.gov

For more information please contact Christine Pham or Chris Schwarz in the Campbell office at 408-558-8085.

The Nuances of Real Estate Contingencies

A contingency in a real estate purchase contract is a way in which a buyer (or seller) could get out of the contract within a set period of time for a particular reason. For example, if there is a buyer contingency that the home must appraise to purchase price, but the appraisal comes in low, the buyer can get out of the agreement because of this - as long as the buyer has not already signed for the removal of that contingency. A seller might have a contingency that the sale of the home is contingent upon the seller finding a replacement property.

Most home buyers and sellers in Silicon Valley understand that ordinarily, home purchases are contingent upon or "subject to" their approval of the property's condition and upon getting the desired loan. Under the broad umbrella of property condition and financing, though, there are other relevant or supporting issues, and consumers may not be aware of them.

For instance, with a loan or finance contingency, there are several key steps to go through in order to be assured that the lending institution will extend the loan as planned.

A pre-approval means that the buyer has turned in bank statements, pay stubs, copies of recent income tax forms, debt information, and so on - and all of it has been submitted to a lender (not just the person taking the loan application, who has conditionally approved it). With that approval, the lender then should require only a ratified purchase agreement, a preliminary title report, and a satisfactory appraisal.  Actually, though, there's a little more to it than that. What other issues could there be?

• if loan rates change substantially and the buyer has not "locked" the loan, it may not be guaranteed
• if there's a delay in the close of escrow (rain forcing a delay in fumigating the property, for instance) and the buyer's loan lock rate expires, the lender may not grant the loan
• many lenders require an "outside appraisal review" and if it doesn't get through that step unscathed, the buyer may not get the loan
• natural disasters such as fire or earthquake can cause lenders to pull the loan until the property is reinspected and/or reappraised

So buyers and sellers will want a little more information than simply "the buyer is preapproved". Here's what they need to know.

The Contingency Details

It's important to know if the loan rate is locked and for how long. Also it's imperative to understand if there will be an outside appraisal review, if it is delayed, what the lender will do about that (they can always take it to another company, but may be reluctant to do so). 

A few lenders may be discounting all appraisals by a set percentage - so that is another question to ask. Broadly, it is helpful to ask with the financing "what are the conditions?" and get a list from the lender. Hopefully, it is a short list!

Some sellers are having to part with their homes under a hardship and must attempt a short sale (in which the bank agrees to take less than is owed on the property). They have a seller's contingency that the offer's acceptance is contingent upon bank approval. When offers are written, a definite time period exists for that to happen - buyers may allow 3 or 4 weeks or more.

But what happens if the bank does not respond in time (which is often the case)? There's no sale and the buyers and sellers are "out of contract". If the bank later approves the short sale and the buyers agree to move forward, it may still lead to a closing. In most cases, though, the bank responds so slowly that the home is no longer worth what the buyer previously offered or worse, the bank never responds at all.

Property Condition

Similarly, with the property condition contingency, there are underlying issues besides just how the home does with the inspections. These supporting issues are key for Silicon Valley homebuyers to understand! In California, not only is the structure of the property and the land to be acceptable, but so do other related elements that may impact the buyer's sense of value for the property.

These may include things such as local school scores, the crime rate of the area, the presence of natural hazards such as being on an earthquake fault or being in a flood plain, the noise from local businesses or transit, and so on.

For homes belonging to a homeowner's association, it may also include the HOA documents with revelations about the financial stability of the association, the reserve account, neighborhood nuisances that are discovered by reading the newsletters and minutes of the meetings, etc. Having the house and yard in great condition does not mean that the buyer cannot find a reason to get out of the transaction based on the property condition contingency. The issues included are far broader than what is contained within the property lines.

Buyers should know that at some point, they will be selling.

You are not just buying a condo or a house - you are buying a neighborhood, with all that the area has to offer, good and bad. Visit it several different times on different days of the week to see how it looks and sounds. You don't want too many cars on the street, but of course if it's SuperBowl Sunday or Independence Day and it's just a party, there's probably nothing to worry about.

Do your due dilligence in person, online, and with the disclosures and reports. Ask questions and persue answers from the experts until you are satisfied that you truly understand the condition of the home and area. Don't sign blindly, even when the disclosures may look like boilerplate - make sure you understand what you are given so that you are not surprised about the property or area later.

Sellers should address area issues as well as those that come up in their home or yard.

Are there abandoned cars on your street? Do the roads have potholes? Is there a problem with the property line, a loud neighbor, or tree branches growing over a fence? Is tagging or graffitti an issue? Whatever annoys you as a homeowner is likely to annoy the buyer or prospective buyer of your home.  Best to do what you can to address and resolve these issues as the occur so that when you go to sell, you can disclose them as past issues and not ongoing nuisances.

An important mistake for sellers to avoid is making a late disclosure. If the buyer has removed all contingencies and the seller later provides a new, important disclosure, it may provide the buyer a new 3 day "right of recission" (a new opportunity to back out of the transaction). Do the disclosures early on and make sure the buyer receives them as soon as is practical so that there's not a chance that a new escape clause is inadvertantly given to the buyer. 

Buyers don't want this either - a new disclosure may come at a time that is too inopportune to back out (moving truck in the driveway, old home sold, or?) so they could be in a bad position of having to close escrow and then seek some sort of justice after closing. That would not be a happy event for buyer or seller.

For everyone involved in real estate transactions, there can be layers of issues to understand. Part of the challenge can be knowing which questions to ask.

With the loan or financing contingency, it seems to be a changing landscape due to the mortgage crisis, but asking the lender what hurdles still need to be cleared or what conditions exist is probably a good start.

With the property condition contingency, there are many sub-areas such as the title documents, the disclosures, the ability to get homeowner's insurance, and many other subjects. Because of the broad nature of that contingency, buyers do not have a difficult time getting out of a purchase agreement prior to the removal of the property condition contingency.

Recommended Reading:

• Considering One HOA Versus Another
• Why the Perfect House Wasn't So Perfect
• Preparing Your Finances for Buying a Home
• API Scores: Base vs. Growth

Santa Clara County School District Ratings: 2007 Base API

California's 2007 Base API scores have been released and, looking at the complete list of Santa Clara 2007 Base API scores, congratulations need to go to Los Altos, Saratoga, Cupertino, and Palo Alto elementary school districts for maintaining district API averages above 900.  While this is par for the course in these districts, to put this achievement in perspective, the overall state API for all grades is 728.

There are two other metrics in the report, statewide rank and similar schools rank, both ratings from 1 to 10.  Each number represents a decile, with 10 being the top 10% of all schools in that category.

This metric compares schools that have similar characteristics, based on ethnicity, socioeconomic status, teacher credentials, and (about a dozen) other factors.  So which number matters more: the state or similar schools rank?

By far, the state number.  Let's look at some of the Cupertino Union figures for examples. 

The third column is the state ranking and the fourth is for similar schools: Blue Hills is 10/8, Collins is 10/7, and DeVargas is 8/2.  Eisenhower and Muir (not shown) are both 10/2 with API scores of 906 and 894 respectively.

The difference in API between 10/8 and 10/7 is only 10 points, but the difference between a 10/2 and 8/2 is about 60 points.  The reason is because schools that are alike tend to have similar performance.  When you group those schools together and rank them, some turn out to be the best of the group and others the lowest-rated of the group.  

So if a 10/10 school is the best of the best, should parents be worried about a 10/2 school like Eisenhower or Muir elementary?  There is room for improvement, but a 10 means the school is in the top 10% of all schools in California.  At that level, I'd be more focused on what programs, classes and activities a school has to offer than beating other quality schools in standardized tests.