Los Gatos & San Jose Homes Blog

Nestled against the Santa Cruz Mountains and then the Pacific Ocean, Los Gatos California real estate features an outstanding picturesque location in southwest Santa Clara County.  Compared to Central California real estate, Los Gatos homes may be more expensive and smaller.

High-end Silicon Valley homes in areas such as Los Gatos and Monte Sereno tend to satisfy homebuyers, even though they may be smaller than similarly priced homes in eastern San Jose real estate.  Overall,American homes are getting smaller and greener.

Western Silicon Valley properties make the most of every square-foot.  Residents of Los Gatos CA homes understand the equation.  For homes in Los Gatos, Monte Sereno, and Saratoga properties, Cupertino and Sunnyvale homes, and other upscale Silicon Valley neighborhoods, a smaller blueprint has been in vogue for decades.  Silicon Valley property values far exceed the price of similar inland California homes.

Throughout America, the size of homes expanded over the last three decades.  The national average home size peaked at just over 2,500 square feet in 2007.It was 1710 square feet in 1982.  According to the Wall Street Journal (1/18/12), the average home size is expected to shrink to 2,152 square feet by the year 2015.  Referring to the “New American Home,” the article refers to information released by the National Association of Home Builders (NAHB).

NAHB showcases a high-end model home every year—a sample home that “captures emerging trends in residential building and the shifting lifestyles of Americans.”

Measuring 4,181 square feet, this year’s model is over 2600 feet smaller than last year’s home.  This year’s home is located within walking distance of stores and restaurants, reflecting the desire of homebuyers to dispense with long commutes and high gas prices.The “New American Home” will be displayed during the International Builders’ Show, the nation’s largest gathering of builders and suppliers,from February 8-11, 2012.

From a location in sunny Orlando Florida, contemporary lines of the two-bedroom model house respond to passive solar energy features.  Walls of windows are shaded by large angular overhangs and tall trees.  Flex rooms could accommodate parents or adult children who need to move home because of economic conditions.  In addition, energy efficient solar panels will help supply energy used for air-conditioning and heating.

For information on values for homes and properties in Silicon Valley, contact Steve Guzzetti of LosGatosandSanJoseHomes.com at 408-393-4647.

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The time is now for San Jose California homebuyers and existing Silicon Valley property owners in Los Gatos, Saratoga CA real estate and throughout the South Bay to save money on mortgages.  Mortgage rates just reached an all-time record low.

As Silicon Valley businesses stabilize, employees, including first-time San Jose CA homebuyers, are gaining confidence and taking action.  Mortgage companies are busily processing loan applications and refinancing applications.  In addition, there is a trend to take advantage of low interest rates to refinance 30-year fixed loans to 15-year products.

There is nothing like a bargain to give the housing and mortgage industries a boost.  A few generations remember mortgage rates a few decades ago that approached 20%.  Average rates during the second week of January for the 30-year fixed rate mortgage were 3.89%; rates for a 15-year mortgage averaged 3.16%.  The recent low average rates were reported by Freddie Mac a government-sponsored company that is in the center of the nation’s real estate market.

A recent article by Pete Carey in The Mercury News cited several examples of increasing activity.  One mortgage broker experienced a 40% increase in loan applications.The Mortgage Bankers Association reported a 4.5% increase in mortgage applications.  In addition, the California Association of Realtors reported a 24% increase in the number of first-time and time homebuyers between 2008 and 2011.

Yet Silicon Valley homeowners who are underwater or underemployed, or who are experiencing credit problems are left out until additional federal programs kick in.  When it is initiated, the Home Affordable Refinance Program may help some of them.

Apparently, many homeowners have refinanced multiple times during their mortgages.  Carey explains, “A $400,000 mortgage at 3.89 percent would be $263 a month less than one at 5 percent.”  Rates were at 5% a year and a half ago.  Over the lifetime of their loans, homeowners can save tens of thousands– or even hundreds of thousands of dollars – by opting for the 15-year fixed mortgage versus the 30-year product.

For information on values for homes and properties in Silicon Valley, contact Steve Guzzetti of LosGatosandSanJoseHomes.com at 408-393-4647.

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Los Gatos and San Jose homebuyers join others across the nation– those trying to meet the current stringent requirements to obtain mortgage approvals.  As lenders exercise caution, trying to recover from sustained foreclosures in San Jose real estate markets and those throughout the nation, quite a few buyers of exclusive Los Gatos CA homes and luxury properties in Monte Sereno or Saratoga real estate have turned to alternative loans.

Buyers are beating the bushes to find solutions.  What are some non-traditional loan options for determined buyers of Los Gatos real estate or Silicon Valley properties?  In the Wall Street Journal at WSJ.com, Annamaria Andriotis of Dow Jones reports more would-be homebuyers are turning to relatives, peer-to-peer lending sites, investors, and social-networking sites.

Many buyers are looking under every rock to find ways to come up with down-payment monies.  Low home prices and low interest rates create a sense of urgency.  Buyers are keenly aware that interest rates may start edging up any time after the spring 2012.  The Fed only promised to keep them so extremely low for two years and we are in the second year.

Intra-family loans can at times become a win-win solution.  The National Association of Realtors reports that an increasing number of first-time homebuyers are using cash gifts and family or friend loans for down payments.Even though family members may charge less than banks do, those relatives may earn a pretty good return from interest payments – better than with current rates for certificates of deposit or money-market funds.

Nonetheless, anyone considering utilizing a family loan should take some precautions.  Federal laws govern intra-family loans.  On loans of more than nine years, based on the repayment, parents must charge at a minimum of 0.2%, 1.3%, or 2.8%.  It is important for family lenders to specify the time and due dates for repayment and to set penalties, such as putting a hold on future monetary gifts or inheritance, for missed payments.  An attorney can help mediate the best plan.

Peer-to-peer websites offer fixed-rate mortgages.  The Prosper and Lending Club is one example of a peer-to-peer lending website.  Increasingly popular, these websites allow lenders and investors to screen applicants and contact them directly.  These are unsecured loans with steep interest rates ranging today from approximately 7% to 35%.

Social networking websites offer less formal ways to connect buyers with loan money.  In September 2011, the social-networking site Weemba better organized its efforts by opening a service to connect lenders directly with prospective homebuyers and other borrowers.

For information on values for homes and properties in Silicon Valley, contact Steve Guzzetti of LosGatosandSanJoseHomes.com at 408-393-4647.

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Buyers in the San Jose Real Estate Market looking for Los Gatos homes for sale happen upon many older homes.  At the same time, existing owners of Los Gatos real estate ponder the equation of staying put, remodeling now, and sometimes whether to raze their homes and build a contemporary home in its place.

The change in the economy has demanded most people make the best of the present situations.  Some Los Gatos CA homeowners have their hands full just paying their mortgages.  Many times, California homeowners cut corners by skimping on home-maintenance costs.  Others would like to move up do not feel comfortable selling their homes in the present market.  So, what changes will add value while making the Los Gatos or San Jose house more desirable.

Some of the home maintenance issues could be addressed through a remodel.  In extreme cases, when remodeling is not cost effective, the homeowner needs to start all over.  Some factors to consider include:

• Structural Integrity
• Structural Design
• Regulations
• Time
• Budget
• Property Appeal
• Desired Goals

Answers do not come easy.  Nor do they surface without thoughtful assessment.  Step by step, homeowners and their consultants can eliminate options to discover the best investment of time and money.

To avoid challenges with permitting and other holdups, numerous property owners choose not to rebuild but to redefine existing floor plans within the same footprint.  This can save tens of thousands of dollars but requires architectural assistance.  Many older homes gain a completely new feel by opening up the living areas and/or moving doorways and windows.

Common lower-cost remodels and updates generally begin with new bathrooms and new kitchens, perhaps transforming small bedrooms into large closets with dressing areas and larger bathrooms.  Other modern-day considerations incorporate work stations such as laundry rooms, pantries, homework areas, computer centers, and art shops or workshops.

In California, where flowering trees and beautiful landscapes are the norm, property owners find that a few thousand dollars spent on exterior living areas can go a long way.  The living areas can be expanded outside through patios, courtyards, terracing, decking, replacing walkways, and lighting.

McClatchy newspapers carried an article by Al Heavens addressing the question of major appliances and insulation:”Repairing or replacing is the choice being considered by more homeowners these days.”  The article cites information from the Department of Energy, the Home Builders Institute of the National Association of Homebuilders, Consumer Reports magazine, and AARP that encourages homeowners to take this time to upgrade major appliances and heating and cooling systems.  Several of these options are discussed previously in this blog.

For information on values for homes and properties in Silicon Valley, contact Steve Guzzetti of LosGatosandSanJoseHomes.com at 408-393-4647.

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The Los Gatos San Jose real estate market in northern California will be affected by several important factors during 2012.  Although these variables play off each other in unique ways, affecting overall housing prices in each of the Silicon Valley communities – Los Gatos homes, Monte Sereno properties, Saratoga CA homes, San Jose homes, and north to Sunnyvale real estate and Palo Alto – no one is able to predict individual transactions in the South Bay.

Each home sale in Los Gatos or San Jose will differ just as each buyer and seller, realtor and mortgage lender rings distinct options to the real estate transaction.  Nothing is static.  Even while we speak, regulators are revamping the way mortgage companies collect loan payments.  This will affect fees and charges passed on to borrowers.  In addition, more regulations will restrict banks when loans fall into delinquency.

In spite of the fact that mortgage rates remain extremely low, economic instability and difficulty qualifying for loans has been affecting the real estate markets throughout California and the nation.

On January 5, 2012, the Wall Street Journal newspaper outlined five key issues “that will help determine whether prices stabilize and sales improved in the coming year.”  These include confidence and jobs, foreclosures, rents, mortgage credit and rates, and regulation.

The demand for home purchases is strongly tied to employment opportunity.  Thank goodness, the large Silicon Valley companies are holding their own during this period of time.  Yet many sectors have been affected negatively over the past five years, and many homeowners have succumbed to foreclosure.

Across the nation, however, home prices are down 30% from the peak.  But homeowners are not confident that the prices have yet bottomed out.  And for good reason.  The Journal article refers to another 3.4 million loans that are moving into foreclosure or serious delinquency, according to Barclays Capital.  Lenders are already in possession of 440,000 foreclosed properties.

As housing prices have gone down, property owners have been able to raise rental rates to capture the market of persons unable to acquire loans.   Government entities may soon test the idea of turning foreclosed properties into rentals.

Throughout the housing crisis, the federal government continues to feel like it must fix everything: mortgage rates, taking over the mortgage industry, initiating mortgage-backed securities, loan-modification programs, and the latest refinancing ideas.  Major regulations caused by the Dodd Frank Act are putting lenders on pins and needles.  When lenders are paralyzed, homebuyers are affected.

For information on values for homes and properties in Silicon Valley, contact Steve Guzzetti of LosGatosandSanJoseHomes.com at 408-393-4647.

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The California Association of Realtors® (C.A.R.) released figures for November 2011 in mid-December.  The report included information about home sales, median prices, and resale housing, median days to sell homes, and a snapshot of unsold inventory by price range. Apparently, both distressed and non-distressed properties are selling and that is the case for sales of homes in San Jose California.

C.A.R. president LeFrancis Arnold was encouraged by the report.  “The continuing strength in home sales is encouraging and should keep us on track to match or exceed last year’s sales pace.”

C.A.R. Chief Economist Leslie Appleton-Young expressed concern about the October 1, 2011 legislation that lowered the conforming loan limits for Fannie Mae and Freddie Mac sponsorship.  Appleton-Young says this may have impacted the purchasing of moderately high-priced homes.

Only time will tell if our California real estate markets in Los Gatos, Saratoga, Monte Sereno, and San Jose will be negatively affected by loan constrictions, as they have been in many locales.  In Santa Clara County California real estate sales registered a -0.70% change from October to November 2011 and a -10.40% change year-over-year.  Median price figures for existing single-family homes Santa Clara County are as follows:

• November 2011 median price of $560,000
• October 2011 median price of $549,000
• October 2010 median price of $575,000

Some expensive areas of California experienced home-price declines, including Santa Cruz and Santa Barbara.  Nonetheless, the December 15, 2011 C.A.R. Press Release explains that California home sales in general have posted increases in November as well as year over year.  All figures are seasonally adjusted.

• Sales of existing single-family homes were up 2.1% in November.
• November home sales were up 2.3% from the same.  Of 2010.
• California median prices for single-family homes in November were up 1.0% from October but down 5.2% from November 2010.
• The report’s Unsold Inventory Index for existing single-family homes was 5.0 months in November, down from 6.2 months in November 2010.
• The median number of days to sell a single-family home was 56.6 days in November 2011 up from 54.8 days in 2010.

The housing market benefits from low interest rates in spite of other challenges.  Interest rates for 30-year fixed mortgages averaged 3.99% during November 2011.  In November 2010 the average interest rate was 4.30%.

For information on values for homes and properties in Silicon Valley, contact Steve Guzzetti of LosGatosandSanJoseHomes.com at 408-393-4647.

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The real estate market in Los Gatos, Saratoga, and greater San Jose seems to benefit from the improving California economy.  Two southern California think tanks report increased job growth.  Los Gatos and San Jose home sales ride in the wake of significant successful tech companies in Silicon Valley and Bay Area exports.

Dean Calbreath in Sign On San Diego on December 7, 2011 quotes UCLA senior economist Jerry Nicholsburg.  “In coastal California, exports and technology growth has been key to recovery.”  Nicholsburg claims investment and exports will drive coastal economies in 2012.

However, the job growth is not expected to significantly affect non-coastal regions of the state.  Unemployment in the Inland Empire and Sacramento areas bobbles over 10 percent.  The UCLA report forecasts better recovery will not kick in until late 2013 to 2016.  According to that report, nonetheless, each of California’s major regions is outpacing the national job growth rate for the past two months.  Some areas are showing much better improvement since July.  The national rate averages 1 percent.

The second report was released in early December from Chapman University in Orange.  Reported by the Union-Tribune, the Chapman team expects stronger broad-based employment growth next year.  Chapman forecasts “jobs being added in every major industry except finance and government.”

The Union-Tribune reports that the Chapman economic team forecast the addition of 237,000 jobs in 2012 – or 56,000 more jobs than have been added in 2011.  The trend will gain momentum after Q2 2012, says the Chapman report.  Their study expects recovery in the services industries and industries that produce goods as well as a full spectrum of other positions.

California’s exports are expected to lead the way.  The state exported $40.5 billion in goods and services in Q3 2011.  Part of the reason California’s exports will continue to grow while other areas of the nation are seeing lower export numbers, is because California’s top 10 trading partners are more aligned with the Pacific Asian arena versus Europe.  Only Germany and the Netherlands are involved with the European Union.

The California construction industry during 2011 experienced 0.9 percent job growth.  The report forecasts 2.5 percent average declines in home prices throughout the state except for coastal areas that will be stabilizing for the first time in years.  Part of the reason for the price declines is the difficulty of buyers securing loans.

The economic team from Chapman University correctly predicted the beginning of the 2007 recession and return to economic growth in 2009.  The improving forecast for California could be affected by the budgetary difficulties at the federal government level as well as difficult economic problems in Europe.

For information on values for homes and properties in Silicon Valley, contact Steve Guzzetti of LosGatosandSanJoseHomes.com at 408-393-4647.

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Weighing California home sales—from Los Gatos and San Jose real estate to Sacramento and San Diego—the California Association of Realtors (CAR) forecasts “sideways” housing sales in 2012.  Due to the lukewarm economic recovery, future uncertainty, and mortgage funding challenges, CAR expects only one percentage point increase in California home sales.

Western Silicon Valley property sales, fostered by the hiring at several accessible companies, should trump the state average, however.  The Silicon Valley real estate market includes upscale neighborhoods of Los Gatos real estate, Monte Sereno homes, Saratoga homes, and then north to Sunnyvale real estate, Cupertino and Palo Alto.

The 2012 California Housing Market Forecast predicts sales of 496,200 units.  That will follow approximately 491,100 sales in 2011 and 491,500 sales in 2010.  In a September 20, 2011 News Release, CAR president Beth L. Pearce sites unforeseen global economic challenges to the consumer confidence, job creators, as well as the availability and cost of home loans, as retardants in the housing industry.  The resistance is enough to slow down sales, even during this period of extremely low interest rates and affordable home prices.

CAR also expects sellers who have been waiting on the sidelines to list their homes in 2012.  The new mix of homes on the market could lower some buyers out of hibernation.Foreclosures and distressed sales will also play big roles in 2012.  However, with many current uncertainties no one is predicting continuing job growth, consumer spending, or a broader economic recovery just yet.

The forecast for 2012 increases the median home price 1.7% to $296,000 that will follow a projected overall decrease of 4% in 2011 two $291,000.  Both rates probably adjust for the double-digit rise that occurred in 2010.

Unknown housing policies, monetary and fiscal policies, and federal policies, combined with a “contentious political climate,” may also affect the outcomes in the 2012 housing market.

Statistics on re-sales of Existing Single-Family Homes went from 625,000 in 2005 to 346,900 in 2007 and to approximately 491,100 in 2011.  During the same time frame, median home prices went from $522,702 in 2005 to $560,300 to $291,000 today.  But most experts believe the earlier figures are snapshots of the real estate bubble.

Headquartered in Los Angeles, the California Association of Realtors is one of the largest state trade organizations in the nation.  The organization is dedicated to the advancement of professionalism in real estate.  It serves the 160,000 members and their clients.

For information on values for homes and properties in Silicon Valley, contact Steve Guzzetti of LosGatosandSanJoseHomes.com at 408-393-4647.

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Many San Jose and Los Gatos homeowners have at least briefly pondered installing solar panels and other solar equipment.  As a group, residents of Silicon Valley properties—from Palo Alto and Sunnyvale homes to Saratoga and Los Gatos real estate—are keenly aware of the need to reduce the carbon footprint and minimize energy usage.  Sunny California obliges the idea of solar energy.

We all know that solar systems help reduce energy bills for residential and commercial San Jose real estate.  Unfortunately, solar panels and systems are still very expensive.  It is true that many local, state, and federal agencies and utility companies offer financial incentives, discounts, carbon exchanges, etc., for property owners who will install and use solar energy.

These incentives cover only a small fraction of the cost though.  According to the Department of Energy, it costs an average of at least $20,000 to install solar panels—in addition to the incentives.

If property owners can afford that cash outlay, they may investigate the possibilities of installing solar systems.  Maybe it is best to do it for the peace of mind of living green rather than saving money.  Investments in solar systems take approximately two decades to pay for themselves in energy bill savings.

Cost is not the only factor to consider.  Existing real estate will need to possess good, open south-facing roof features to hold the solar panels.  The established neighborhoods of Los Gatos CA homes are clustered together between mature trees that may block the sun from reaching solar panels.  A building needs sufficient surface area.

So, Silicon Valley property owners with a properly facing roof surface and one without obstructions may consider installing solar panels as an energy adjunct.  Another way to introduce solar power is to lease a partial system such as solar water-heating equipment.

For example, the City of Santa Clara developed a solar water-heating program in 1975.  The Santa Clara Water & Sewer Utilities Department supplies, installs, and maintains solar water-heating systems for heating swimming pools, process water, and domestic hot water.  Under the city plan, the renter pays an initial installation fee and a monthly utility fee, which varies according to the number of solar panels being leased.

Someday, the technology will be improved to the point where it becomes more affordable.  Today, homeowners need quite a bit of will power and determination to proceed with the idea of retrofitting their homes.

Even without solar panels, a typical new home may be 30 percent more energy efficient than a similar older home. Talk to us about new homes in the area.  For information on values for homes and properties in Silicon Valley, contact Steve Guzzetti of McElroy Properties in Los Gatos at 408-393-4647.

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