Median Home Sale Prices in Santa Clara County & Saratoga CA; Jan. 2002 - Nov. 2011 and Market Report and Recapitulation.
The graph shows the Median Sale price of Single Family Residences sold in Santa Clara County and the City of Saratoga, CA from January 2002 through November 2011, according to the local Multiple Listing Service (MLS; MLSlistings, Inc.). The median is the price point that divides the top half from the bottom half.
The median sale price for the County of Santa Clara has increased 12% from $493,500 in January 2002, to $560,000 in November 2011. That translates to a compounded average annual increase of +1.4%. Not too bad considering we experienced the worst real estate downturn since the Great Depression. The median sale price declined 49% from $867,000 in October 2007, to $442,000 in February 2009. The future is unknown, but it feels like we hit bottom three years ago.
Here's a brief re-capitulation.
From 2004 to 2007 our market was fueled by easy credit and lax credit standards. The customary requirement for a 10-20% cash down payment was waived. Buyers could obtain 100% financing by getting an equity line of credit instead having a cash down payment. No down payment required! To pay closing costs the buyer asked the seller to pay. "Seller to pay Buyer's Non-recurring Closing Costs" was the ubiquitous purchase contract clause in the lower-half of the market. To me, it was a deja vu of 1981. Buyers could "state" their income without needing verification, which had always been the customary procedure. Mortgage fraud abetted by Realtors acting as mortgage brokers appeared widespread. Deeply discounted "teaser" interest rates and negatively amortizing loans made the loan payments affordable, at least for a while. The floodgates to home ownership were opened wide. Heretofore unqualified buyers were able to purchase homes. These lax credit standards and 100% financing caused the median sale price to increase 33% in two years; from $555,000 in January 2004 to $740,000 in January 2006, just two years later. That's an average of $7,700 monthly.
Some of these buyers started to default on their loans when the "teaser" payments expired. That caused lax credit standards to begin tightening. It became more difficult to sell lower-end listings without 100% financing. Few buyers could qualify for traditional 10-20% cash down financing for these low-end homes with inflated prices. In 2007 the low-end of the market in San Jose collapsed. Prices in low-end benchmark "Tropicana Village" in East San Jose dropped quickly from $550,000 to $250,000 - $300,000 as lenders foreclosed, and aggressively reduced prices to attract buyers. When prices declined to $250,000, cash investors couldn't resist. Investors were eager to exit the gyrations of the stock market and low-yielding savings accounts. Many of the low-end foreclosures sold, and still sell, with multiple offers for cash. Mostly as long-term investments, not "flips". Since 2008, the low-end has been solid with no sign of further price erosion. I believe the low-end put a foundation under the rest of the market. While prices did decline for mid and upper-end homes, they did not decline nearly as much as the low-end.
For the past year home prices have been stable. Home prices in several cities are getting bid up. The cities that tend to attract high technology employees (e.g., Palo Alto, Mountain View, Los Altos, Cupertino, in particular) are experiencing multiple offers and strong buyer demand at this time.
Please feel free to call or e-mail me. The lessons I've learned from 35 years of local real estate sales benefit my clients from planning through closing a transaction.
Lloyd Binen
Realtor/Broker/DRE 572654
Certified Realty Services
19200 Shubert Drive
Saratoga, CA 95070-4046
Certified Residential Specialist (CRS); Graduate, Realtors Institute (GRI)
408-373-4411
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