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The number of California homes that sold for a million dollars or more last year rose to the highest level in six years, and Silicon Valley neighborhoods continue to rank among the highest on the list of these high-end home sales.
A report from real estate information service DataQuick indicates a total of 39,175 California homes sold for a million dollars or more last year, up 45.1 percent from 26,993 in 2012. It was the highest number sold since 42,506 in 2007, according to DataQuick.
Hillsborough, Saratoga, Menlo Park, Cupertino, Los Altos, Woodside and Los Gatos, which are located in the five districts served by members of the Silicon Valley Association of REALTORS® (SILVAR), were on the list of communities with the highest number of million-dollar home sales in the state. Hillsborough had 436 million-dollar home sales last year, with the most expensive home selling for $13.3 million; Saratoga, 332 million-dollar home sales, the most expensive purchased for $12.3 million; Menlo Park, 321 million-dollar home sales, the most expensive purchased for $5.5 million; Cupertino, 317 million-dollar home sales, the most expensive sold for $3.8 million; Los Altos, 267 million-dollar home sales, the most expensive purchased for $14.3 million; Woodside, 273 million-dollar home sales, the most expensive sold for $12 million; and Los Gatos, 243 million-dollar home sales, the most expensive sold for $4.8 million.
David Tonna, president of SILVAR, attributed the rise in high-end home sales in the region to a robust economy and rising home prices. “We are fortunate to have an economy that has made a comeback quickly, thanks to tech companies that are growing, some by leaps and bounds. The high demand for homes and lack of inventory has led to the appreciation of many homes,” explained Tonna.
Statewide, 840 homes sold for more than $5 million last year, an all-time high and up 20.3 percent from the previous high of 698 in 2012. In the $4-$5 million range a record 596 homes sold, up 29.3 percent from 2012. In the $3-$4 million range, a record 1,455 homes sold, up 31.3 percent from 2012. In the $2-$3 million range sales totaled 4,492, a record and up 37.4 percent from 2012. In the $1-$2 million range, 25,352 sold last year, up 42.5 percent from 2012.
The DataQuick report indicated the most expensive confirmed purchase in 2013 was a 15,355-square-foot, 8-bedroom, 14-bathroom beachfront Malibu mansion which sold for $74,500,000. The largest was a 25,447-square-foot, 16-bedroom, 18-bathroom mansion in Indian Wells that sold for $2,250,000.
According to the real estate information service a record 10,602 homes that sold for $1 million or more were bought with cash, up from 7,791 in 2012. Cash was used more frequently the higher up the price scale. Of those who did finance their purchase last year, the median down payment was 30 percent of the purchase price.
It is expensive to live in the heart of Silicon Valley, but buyer demand for homes, including million-dollar homes, continues to be strong. Real estate information service DataQuick lists the following Silicon Valley communities among the highest ranked areas for million-dollar homes sales in California in the second quarter.
- Hillsborough topped the list with 134 sales in 2012 Q2, up from 118 in 2011 Q2, with the most expensive home purchased for $5.28 million.
- Saratoga ranked second with 126 million-dollar homes purchased in 2012 Q2, up from 93 in 2011 Q2, with the most expensive of purchased at $5.35 million.
- Cupertino ranked fifth (after Manhattan Beach and Newport Beach in Southern California) with 105 million-dollar homes sold in 2012 Q2, up from 88 in 2011 Q2, with the most expensive home purchased for $2.45 million.
- Los Altos ranked sixth after Cupertino with 102 million-dollar home sales in 2012 Q2. The most expensive home was purchased for $6 million. Los Altos had 81 million-dollar home sales in 2011 Q2.
- In Los Gatos, the most expensive home purchased cost $4.66 million. There were 67 million-dollar homes purchased in the zip code of 95032, up from 44 in 2011 Q2. In the Los Gatos zip code of 95030, 62 million-dollar homes were purchased last quarter, up from 31 in the second-quarter last year.
Despite the hype over Facebook’s IPO, Menlo Park and Palo Alto made the list, but had fewer million-dollar home sales in second-quarter 2012 than the same time last year, according to DataQuick. Menlo Park had 100 million-dollar homes sold in second-quarter 2012, down from 124 last year, with the most expensive home purchased for $4.8 million. Palo Alto had 62 million-dollar homes sold, down from 69 in 2011 Q2, with the most expensive home purchased for $3.15 million.
Silicon Valley Association of REALTORS® (SILVAR) president Suzanne Yost, who is an associate broker with Alain Pinel Realtors in Los Gatos, is not surprised that many of the communities located within SILVAR’s five districts made the list. “Silicon Valley’s economy is healthy compared with other parts of the state because it is the heart of innovation, with many successful tech companies,” said Yost.
Yost added, “Our members have reported a surge of foreign buyers. They are attracted to the region’s weather, diversity, excellent schools, good mix and proximity to shopping, entertainment, the arts and services. We’re not that far from San Francisco, close to the freeways and airports. Buyers know they can’t go wrong and they are willing to pay the price for these amenities.”
SILVAR has five member districts, allowing members to work closely with their communities. They are the Menlo Park/Atherton District (including Portola Valley, Woodside and East Palo Alto), Palo Alto District, Los Altos/Mountain View District (including Los Altos Hills), Cupertino/Sunnyvale District and the Los Gatos/Saratoga District (including Monte Sereno).
More than 140 golfers enjoyed a beautiful Monday on the golf course at Cinnabar Hills Golf Club in San Jose and even raised over $5,000 doing it at the Los Gatos/Saratoga District Charity Golf Tournament.
The District would like to thank the generous sponsors for a very successful event:
Lunch Sponsor: Thrasher Termite & Pest Control – Janet Thrasher
Appetizer Sponsor: First American Home Buyers Protection Corporation
Beverage Cart Sponsors: Tour Factory Bay Area, Darrell Monda, and State Farm Insurance Agents Yvonne Kendall and Laura Peterson
Hole Sponsors: Alain Pinel Realtors (Los Gatos), American Home Shield, Cort Furniture Rental, JCP/LGS Disclosures, Law Offices of Peter N. Brewer, Princeton Capital, Property I.D., and Von Kaenel Real Estate
Tee Bag Sponsor: Harrell Remodeling, Inc.
It was a pleasant day on the golf course and everyone appeared to have fun during the cocktail hour and program. Special items were also raffled, including the cash prize of $480, which was won by Phil Castaneda. A very special thanks goes to SILVAR Board Director John Tripp for overseeing this very successful event, as well as the Los Gatos/Saratoga District Council members for putting this event together.
The following are the golf tournament results:
First Place: (Score 56) Doug Evans, Matt Paulo, Tom Gibbons and Michael Geary. They received a certificate for a foursome of golf with carts at Half Moon Bay Golf Links, donated by Coldwell Banker – Los Gatos.
Second Place: (Score 57) Gregory Howell, Doug Hollingsworth, Rich Hamilton and Justin Estrada. They received a foursome of golf at Cinnabar Hills donated by Cinnabar Hills.
Third Place: (Score 59) Peter Ye, Dave Park, Charles Kim and Walter Kim
Closest to the Pin: (Canyon 5) Bob Cranmer-Brown 3’0”, (Mountain 6) Nick Pagonis 0’7”
Long Drive: (Canyon 1 Men) Doug Evans, (Canyon 1 Women) Connie Prince, (Mountain Men) Ron Minearo, (Mountain Women) Wendy Tomaro
The Third Place winners and winners of the Closest to the Pin and Long Drive each received a $72 gift certificate to Cinnabar Hills Golf Club.
Over 100 members attended Wednesday’s Los Gatos/Saratoga District meeting and listened to longtime appraiser Roger Miller from Taketa, Miller & Associates. Miller’s message was one of “guarded optimism” regarding 2011, but he is especially positive about this spring.
“Things are starting to turn around,” Miller remarked, and proceeded to share his data.
* At this time last year, there were 95 listings in Los Gatos; as of Tuesday evening, Miller indicated there were 111. A year ago, Saratoga had 73 listings; as of Tuesday night, it had 71.
* Pending sales in Los Gatos at this time last year were 39; they are 43 this year. Saratoga had 20 last year; it has 36 this year.
* 2010 home sales were up in Los Gatos 22 percent from 2009; Monte Sereno, up 42 percent; and Saratoga, up 25 percent.
* Homes priced at two million dollars and under are in a very strong market – 92 percent of last year’s home sales in Los Gatos were under $2 million; Monte Sereno, 65 percent; and Saratoga, 81 percent.
If a listing is under $2 million, if it’s priced right and in the Los Gatos school district, it will sell in one to two months or less. “If your listing is under a million (dollars) in Los Gatos and it hasn’t sold, there’s something wrong,” Miller told REALTORS®.
There is no question prices have dropped, some by as much as 20 percent, and others more, depending on the area. Miller said a home bought at the end of 2007 or at the beginning of 2008 would sell roughly for the same price today.
If there are many foreclosures and REOs in a neighborhood, the market will certainly be affected. This is not much of an issue in the Los Gatos area, according to Miller. There continue to be multiple offers in Silicon Valley – one home just received six offers recently. There are also a number of high-end homes that have sold in the $4 million and above range in Woodside, Atherton and Los Altos Hills.
Miller advised REALTORS® to always do a true history on comps and always check the absorption rate. In Los Gatos, for homes priced between $1 and 2 million, the absorption rate is three months; between $2 to 3 million, seven months; between $3 to 4 million, seven to10 months. In Saratoga, the absorption rate for homes priced under $1 million is one month; between $1 and 2 million, two months; between $2 and 3 million, eight months. Between $3 and 4 million, 5.5 months.
Miller said REALTORS® should NOT have to deal with out-of-town appraisers, unless the report is co-signed by an appraiser who knows the area. Speak with the bank manager; it is important to know the bank you are dealing with, he stressed.
There’s more optimism in the air, according to Miller. Here are some signs:
*Stocks have improved.
* The unemployment rate has gone down a bit – the unemployment rate in the San Jose-Sunnyvale-Santa Clara MSA was 10.7 percent in December 2010, down from a revised 10.9 percent in November 2010, and below the year-ago estimate of 11.5 percent, according to the Employment Development Department.
* Google is hiring 6,000 new employees nationwide and 2,000 locally.
* Heavier traffic these days points to more activity and more people being employed.
“Everything is starting to turn,” Miller repeated.
Miller, who is well-known for his expertise in the business, said he is very confident that the housing market in the region will do well this spring. But time is of essence. He told REALTORS® if they have sellers who are sitting on the fence, “tell them to get their house on the market now, within the next two weeks.”
“Housing affordability has never been better, but the high unemployment rate, slow job growth and difficulty in obtaining credit, especially for high-cost homes, continue to be stumbling blocks to a complete housing recovery,” according to Jeff Bell, president of the Silicon Valley Association of REALTORS®.
Uneven Recovery, but Sales Clearly “Off Bottom”
The National Association of REALTORS® reports today that sales of existing homes in October declined 2.2 percent to a 4.43 million annual rate from 4.53 million in September. The national median existing-home price for all housing types was $170,500, down 0.9 percent from October 2009.
NAR chief economist Lawrence Yun said the recent sales pattern can be expected to continue, but he believes sales will steadily improve to healthier levels of above 5 million by spring of next year. “The housing market is experiencing an uneven recovery, and a temporary foreclosure stoppage in some states is likely to have held back a number of completed sales. Still, sales activity is clearly off the bottom and is attempting to settle into normal sustainable levels,” he said.
Overly tight credit is making it difficult for some creditworthy borrowers to qualify for a mortgage. “A return to common sense loan underwriting standards would go a long way toward achieving responsible, sustainable homeownership,” said NAR President Ron Phipps.
Home Builder Confidence Up, but Obtaining Credit Is a Problem
Home builders are also complaining that tight credit is getting in their way. Nationwide housing starts declined 11.7 percent to an annual rate of 519,000 units in October. Despite the decline, the National Association of Home Builders reports builder confidence is up slightly, as builders are starting to report some improvement in buyer demand and quality of buyer traffic.
“The great concern is that this positive momentum will be stifled due to builders’ inability to obtain financing for new construction at a time when inventories of completed new homes are very thin,” NAHB Chief Economist David Crowe said in a press release.
In addition to tight credit, worry continues about the high unemployment rate, slow job growth and looming shadow inventory. Distressed homes accounted for 34 percent of sales in October, according to NAR. There’s also the threat of foreclosures mounting as a growing amount of homeowners remain out of work and those who have borrowed against their equity default on their mortgage.
GDP Growth Better Than Anticipated
On the upside, the Commerce Department reports the economy grew at a 2.5 percent annual rate in the third quarter, more than previously calculated, due to increased shipments abroad and business spending for equipment and software.
Santa Clara County October Median Up Slightly
Although October home sales fell, Santa Clara County saw a slight year-over-year gain in its October median home price. According to a California Association of REALTORS® report released today, the October median price for a single-family home in Santa Clara County was $637,750, was up 8 percent from the same time a year ago. October sales of single-family detached homes in the county were down 24 percent from October 2009, when the first-time home buyer credits was available.
C.A.R. reports DataQuick statistics, which are based on county records data rather than MLS information, ranked the Silicon Valley cities of Los Altos, Palo Alto, Cupertino and Los Gatos among the top 10 cities with the highest median home prices in California during October 2010. The October median home price in Los Altos was $1,700,000; Palo Alto, $1,050,000; Cupertino, $1,022,500; and Los Gatos, $1,000,000.