Despite the seasonal slowdown of home sales, the surge in prices continue due to lack of inventory. But gone are the days where the homes were getting 20 offers. Instead homes are getting 5 offers which are better aligned with the List price of the homes. What that in mind we wanted to document the Top 7 trends in Los Gatos real estate for 2015.
Lack of Inventory: The total number of Active Listings to the Number of Sold homes are remaining steady with only 2 month of inventory in 95032 or 950303 zip codes. data indicates that Los Gatos and surrounding towns have only 1-2 month of unsold homes available for sale.
Steady Mortgage Rates: The mortgage interest rates are holding steady despite the uncertain stock market. The FED was expected to raise the short term interest rates in September, but with the recent stock market corrections and soft unemployment data, the odds are weaker.
Reduced investor appetite: The percentage of cash sales has declined from the 41% to 31% in June 2015. With the huge jump in prices, Los Gatos investor would need to tie up $2M for 12-18 month to rehab and flip a property. That has made the math for fix-and-flip in Los Gatos much less attractive, so we are witnessing less all-cash escrows.
Buyer Expectations: The buyers who are spending more than 1.5M for homes in Los Gatos are expecting a move-in ready home. At this price range buyers don’t want to spend their weekends in Home Depot after their purchase.
Smaller, Greener Home: According to the National Association of Home Builders, the average size of a new home is 10 percent less than the typical home five years ago. In fact, Millennial buyers are providing the push for home builders to downsize. They are also expecting much more energy efficient homes from builders.
Overpricing Risk: With the seasonal slowdown of the market, the pricing of homes in Silicon Valley including San Jose, Campbell, Los Gatos is now become critical. Homes which are overpriced are staying on the market and are not selling. A home on Topping Drive in Los Gatos is suffering such a fate. After being listed for $2.99M in Late May, the home is still on the market despite $500,000 price drop.
First Time Buyers: With the median home prices in Los Gatos above $1M, there are few 1st time home buyers who can afford to buy a move-in-ready home without substantial down payment. In fact, the young couple who moved next door to us in Los Gatos had to get help from their parents to buy the fixer upper for $1.62M in February 2015.
What are you noticing in your Los Gatos neighborhoods? Are the homes