March 11, 2004

Sellers' market leads to local real estate frenzy

By Lorraine Gabbert
Staff Writer

Housing sales are red hot in Almaden Valley, as they are in all of Santa Clara County. Interest rates are low; few houses are available, therefore houses that are available often see multiple offers.

In early March 2003, the Moore family put their Almaden four-bedroom, two-bath, 2,100-square-foot home on the market for $719,000. After three weeks and one open house, it sold for $710,000. Missing the schools and the neighborhood, in December the Moores started looking to move back, limiting their search to homes in the Los Alamitos Elementary School area, since they loved the school so much. So far, in that locale, only one house matched their criteria, and they were outbid by $20,000.

“They wouldn't show it until Wednesday or Thursday, and they wouldn't take offers until Sunday at the open house,” Shana Moore says. “It was a frenzy—you could just see the people circling. Everyone was waiting until they'd take offers at 4 p.m., and the realtor said they were expecting six offers.”

Inventories low
According to Realtor Lorraine Combs of Windermere Silicon Valley Properties, it's actually a hard time for agents because there are so few homes on the market, and they're going for as much as 10 percent over the asking price, depending on the home. She blames the limited number of available homes on the market for the current home-buying intensity.

“Due to the economy, people have been scared to make moves. Also, the baby boomers aren't ready to sell yet. If interest rates rise, we will have less of a buying population,” notes Combs, who sees these trends mirrored across the board throughout Santa Clara County. “Everything that's coming on is selling,” she says. “The difference this time, as opposed to last year, is that even high-end properties are selling for up to $2 million with multiple buyers.”

She anticipates home prices in Almaden continuing to rise due to the excellent schools and the elderly population slowly being replaced by younger families. “In addition, if the Coyote Creek Industrial Park gets developed, people will want to live in Almaden with the close commute situation,” she says.

Andrew and Angie Torres have been searching for a home for three months in the Almaden and Evergreen areas. In Evergreen, they found a 2,200-square-foot, four-bedroom, two-bath home for $724,000. “On Thursday, we saw the same model home with a 9,000-square-foot lot that went up for sale that day,” Andrew Torres relates. “We called our realtor and saw the house, and everything was updated and fresh and new. Over the next few days, all of these people came in to see it.”

The asking price was $695,000, which their realtor felt was low. “He said he would start accepting offers on Sunday,” Andrew continues. “We liked the house, and decided to offer $705,000, which was $10,000 over the asking price. We made our offer on Sunday, and our realtor felt maybe we were even a little high, but we wanted the house. She called two hours later and was told that the offer above us was $20,000 more. That upset us quite a bit.”

In the end, the Torres family bought a 2,800-square-foot house in Evergreen before it went on the market for $828,000. “We got real lucky,” Andrew comments. The Torreses sold their house in the Silver Leaf neighborhood the day after they put it on the market at the price they wanted. “In two days, we had 30 people come to see it,” Andrew says.

Houses selling quickly
Realtor George Nowicki of Windermere Silicon Valley Properties agrees that properties are selling fast. “Basically, since the day after the Super Bowl, it's been a complete sellers' market,” he says. “It's classic supply and demand. Houses are being sold in three days with multiple, full-price offers. Even at the higher end, houses in the $2 million range are selling in Silver Creek and Almaden, and houses under $600,000 are sold within hours. In Cambrian and Blossom Valley, homes listed under $700,000 are selling fast, especially with first-time buyers. If it is well priced, it will get sold within days. Smart buyers are going out during the week and are not waiting for the weekend, because better properties are selling.”

According to Nowicki, the turnover is so immediate that the top agents are living on their computers. “It's really hard because you have buyers, and you call them up the minute you see something on the market, and it can sell the same day. Right now it's extremely fast, and you have to be on your toes,” he comments, noting that the housing shortage is affecting all of Santa Clara County.

“As of the third week of January, we were down to 40 percent of what we usually have for the county as a whole. They're predicting this will probably last until May, when more houses will go on the market with children getting out of school.”

Statistically speaking, as of March 8, there were 74 pending home sales in Almaden Valley, Nowicki says, and of these, only 49 homes are active, or still available. Of the 74 pending sales, 58 sold within 30 days, 43 within two weeks and 28 within the first week. The list prices of these homes ranged from $489,000 to more than $2.45 million. One is under $500,000; three were under $600,000; 10 were between $600-699,000; 22 were between $700,000-$799,000; eight were between $800,000-$899,000; 11 were between $900,000-$999,000; 15 were between $1 and $2 million and four were more than $2 million. Of the 49 available homes, 18 are less than seven days old, and currently 30 out of the 49 are less than 14 days old.

“Last year, the average time on the market was 57 days; this year things are selling quickly,” observes Nowicki, who suspects the scarcity of home sales may be a continuing trend. “In Santa Clara County, there were 1,087 total home sales for February 2002, compared with 698 sales in February 2003,” he notes.

Stronger market
“It's amazing,” says Realtor Jayne “JJ” Gibson, of Alain Pinel Realtors. “The market is just getting stronger and stronger. The inventory is low right now, which is always a driving force, and the interest rates are very good. We're seeing so many multiple offers on homes, it's just incredible.” However, Gibson notes, in some instances, people are listing their homes at lower prices in an effort to get multiple offers, and the end result is that they probably end up with what their homes would have sold for in the beginning.

“There are also more options for buyers now to purchase a home: for first time buyers, there are interest-only and 100 percent loans,” she says. “Once the lower price range sells, the move-up starts, and there goes your domino effect. The pricing in Almaden is becoming very aggressive, with pricing going higher and higher. It's a very desirable place to live. The schools academically are very high, and it's a wonderful place to raise your family. It's a beautiful setting.”

Realtor Margaret Yost of Coldwell Banker has been seeing a rapid acceleration of pricing in all price ranges in Almaden, as well as multiple offers with prices getting bid up from their list price. She credits the buying mania to current interest rates and a pent-up demand from buyers who were previously afraid to buy a home due to the economy.

“The houses are getting snapped up so fast, and the sellers aren't in a hurry—they don't have any fear of their homes decreasing in value.” she says. Yost observes that the sellers aren't necessarily taking the first offer that comes along. “Sometimes there are 17 bids on one house, and 21 on another, 5 to 10 percent over the asking price,” she says. “Buyers feel more comfortable about the economy, and can see prices going up. Interest rates are good right now, but if rates go up, prices go up, so they want to buy now.”

Steve and Christine Perry of Coldwell Banker also see it very much as a sellers' market, due to supply and demand. “There is a high demand because the stock market is doing better, and the interest rates are so low,” Steve Perry says. “The inventory in all of Almaden is only 40-plus homes for sale, so we're seeing six-10 multiple offers on homes. If they're priced well, they're selling within 10-30 days.”

Sellers' market
Perry notes that not only are there a lot of first-time buyers in the market, but also people upgrading their homes. “Consumer confidence is up. Even we are moving our home within Almaden,” he says. “But once spring comes along, the inventory and prices will increase.”

Realtor Matt Tenczar of RE/MAX Associates says that in Almaden, compared to last year, home inventory is down by 60 percent, yet sales are up by 40 percent. “Compared with Blossom Valley and Cambrian, you have the same thing, and that's where your demand is coming from,” he says. “Santa Clara County is that way in general. The low interest rates, and the threat of their increase, is driving first-time home buyers in Blossom Valley and Cambrian, so a lot of those houses are selling quickly, and those people are moving up to Almaden to buy houses. They're buying everything beneath the sun.”

Tenczar also believes that Almaden home sales regularly see a surge at this time of year in part because of the San Jose Unified School District cycle. “You have to be in your house before May 15 in Almaden Valley to most likely get into an Almaden school,” he says.

Looking at other local areas statistically, Blossom Valley has 116 sale pendings, with only 55 houses currently available, according to Tenczar, who offered the following statistics: in Cambrian, 61 houses are available for sale, with 104 sale pendings. In Evergreen, there are 106 available listings, with 137 sale pendings. Willow Glen's inventory is also at 101, with 109 sale pendings. Tenczar notes that San Jose overall currently has 1,248 homes for sale, with Santa Clara County coming in at 2,617.

“In January, there were 819 home listings, and 449 sales, at an average price of $569,753, with an average of 52 days on the market,” he says. In February, Tenczar believes that the inventory was less, the sales were up and the days on the market were half of January's.

“This year seems to be more intense than the past two,” he observes. “Almost all of my homes sold with multiple offers in Almaden, Blossom Valley and Cambrian. Buyers are smarter now with their purchases as opposed to 1999, when they purchased homes for $100,000-$150,000 over their list price, but you are still seeing $10,000-$20,000 being offered over the list price now. I've seen as many as 12 to 15 offers on a house. Homes are listing and being sold in the same week. I had two houses sell in the first week, and they turned around and sold them to other buyers. It is a sellers' market.”