RE market is hot in San Jose, CA

Buying & Selling Real Estate
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RE market is hot in San Jose, CA

Julia Tse
Professional · Cupertino, CA · Member since 2015 · 62 posts · 5 votes

Housing market here in San Jose is really HOT especially for price under $1.2 mil.  In North San Jose (95131 zip code) price up more than 10% compare to last year.  Let me give you an example, my buyer made an offer to a townhouse in this year, it listed for $748K, we offered $820K with no contingency.  Seller received multiple offers and our offer was not high enough so we did not get it.  However, appraisal came back $780K, so that buyer had to come up cash for the difference.  We had made over 10 offers in this area within a month, each one is way over the asking price, but we had no luck of getting the offer accepted.  

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Amos M.
Investor · Bay Area, CA · Member since 2015 · 19 posts · 14 votes
10y

@Account Closed

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  • Jeff B.
    Buy & Hold Owner · Redlands, CA · Member since 2015 · 5k+ posts · 2k+ votes
    10y

    Yes, Silicon Valley has been perpetually 'Hot', due to the high tech jobs and life style in the area.  The whole peninsula clear to S.F. is this way.  We were in Cupertino just 12 months before the explosion on values took place and it never came down.  In  '73 we bought for $34k and the following year the house next door went for $64k.  When we sold in '93 we closed at $325k, hence a 1031 into our current MFU 6-units.

    1Reply
  • Ricardo Meza
    San Jose, CA · Member since 2016 · 58 posts · 19 votes
    10y

    My wife and I are in the market for a SFH (we're meeting a realtor this weekend), so this is certainly discouraging. I guess since neither of us work for that fruit-logoed company, it may be time to figure out an exit strategy instead. Time will tell.

    0Reply
  • Armand P.
    New to Real Estate · San Mateo, CA · Member since 2015 · 127 posts · 12 votes
    10y

    Good Luck, Ricardo! Hope you and your wife find something you'll both can enjoy.

    Armand.

    0Reply
  • Julia Tse
    OP
    Professional · Cupertino, CA · Member since 2015 · 62 posts · 5 votes
    10y

    Good Luck, Ricardo!  North San Jose is crazy, if you go down to south San Jose, take a little bit commute to work, it is easy a little bit.

    0Reply
  • Sebastian Frey
    Real Estate Broker · San Jose, CA · Member since 2016 · 9 posts · 3 votes
    10y

    Move to Santa Cruz and telecommute.  :)

    2Reply
  • Sherwin Gonzales
    Rental Property Investor · San Francisco, CA · Member since 2015 · 236 posts · 156 votes
    10y

    I use to live in San Jose Japantown and worked in downtown San Jose about 5 years ago and both areas have been going through some revitalization over the last couple of years. In downtown, all these high rise residential towers started popping up. San Pedro square got renovated, new bars opened up, etc. I visited Japantown about a month ago and new stores are there now along with new residential housing.

    San Jose is HOT and so is the rest of the Bay Area!

    Good luck everyone and thanks @Julia Tsefor starting this thread and sharing this information!

    1Reply
  • Lauren Heart
    Investor · Northern California · Member since 2015 · 126 posts · 40 votes
    10y

    Also keep in mind the school districts my friends!  That is what has driven Cupertino, Saratoga, and Cambrian over 10% gains in the past year.  Silicon Valley has been a hotbed...and will continue to be...until tech looses some of its secondary funding from outside the U.S. that will incur a cooling period.  Until then...here's to your buying success!

    Lauren

    1Reply
  • Gloria Mirza
    Real Estate Agent · San Jose, CA · Member since 2015 · 172 posts · 66 votes
    10y

    I don't see prices dropping until we hit a recession.  Unlike the bubble that burst in 2007/2008 today's prices are substantiated by higher pay in the tech industry.  Basically prices are going up this time because incomes are.  During the housing bubble prices were going up because lending standards were so loose, people were buying homes they couldn't afford.  The market has been shaky for 2016 so it's possible we could see a recession and some easing in prices.

    1Reply
  • J. MartinPro Member
    Rental Property Investor · Oakland, CA · Member since 2011 · 3k+ posts · 2k+ votes
    10y

    Silicon Valley Job Growth and RE Price Appreciation

    @Gloria Mirza, I agree with you on job losses and/or recession before price decreases..

    You can see there seems to be a pretty close correlation to the rate of job growth and the rate of real estate price appreciation in Silicon Valley. As the rate of job growth declines (deceleration; jobs growing at a slower rate), the rate of RE price appreciation slows. It appears we may have reached peak job growth of just under 6% in the Summer of 2015, and has declined to a growth rate of below 5%.

    And surprise surprise.. There is a relationship between the stock market and Silicon valley RE prices too! (and of course jobs and stocks related also..)

    Stock Market and Silicon Valley RE Prices

    It will be interesting to see if the recent pullback in stock prices has a measurable impact on home price appreciation when the Spring comes back around. @Julia Tsewill you hop back on in the Spring and let us know what the market is like? I will keep an eye on days on market and months supply, along with prices. I feel like a lot of investors in the Bay Area are keeping a close eye on the 2016 Spring season..

    Silicon Valley Jobs, RE growth, Economic Conditions, and CA Leading Indicators

    While it looks like we can still expect appreciation in 2016 in Silicon Valley RE prices, I would expect the rate of appreciation to slow. Why? It looks like Silicon Valley job growth has peaked and is decelerating, economic conditions are declining from cyclically elevated levels, the stock market drop cannot help, and the CA leading index looks like it tends to towards the end of a cycle.. This tends to slow house price appreciation, based on what I can see..

    And when unemployment rises again, price appreciation will likely slow to close to zero or go negative, although the timing on job losses is certainly uncertain!

    Sound crazy @Account Closed?

    @Sebastian Frey, I'm talking to an agent about some land down in Santa Cruz :) I love the redwoods!!

    1Reply
  • Account Closed
    Investor · San Jose, CA · Member since 2012 · 2k+ posts · 3k+ votes
    10y

    Hi Julia,

    It's nice seeing you on Biggerpockets. Why let others determine your destiny? Didn't Mike Ferry say list to last? If you have a buyer looking for a particular area, why not do a direct marketing campaign?

    Jill will have a listing coming up in early or mid April. It's a 3,000 sq. ft. SFH on a 14,000 sq. ft lot in 95132. It's my college buddy's house. House is fully renovated. I guess it will go for $1.2-$1.4M.

    I'm also thinking of selling my duplex this April or May. Jill will also list it if I end up selling it. We're currently shopping for a buyer for our building near Japan town at 710 N 2nd St. off-market. Give me a ring if you have a buyer who's willing to pay a crazy price for our building. If not, we're not selling.  :>) 

    Real estate is a relationship business. If you can develop a good relationship with other agents, getting deals should be easier IMO. You might consider giving Jill a ring sometime next month regarding the property on 95132. She may give you an inside track on getting the deal. Her goal is to get the highest price and best terms for the seller. I'm sure she would be more than happy to give you the right information if your buyer is willing to compete.

    Best of luck.

    1Reply
  • Account Closed
    Investor · San Jose, CA · Member since 2012 · 2k+ posts · 3k+ votes
    10y

    @J. Martin,

    Not crazy at all. I expect the lower end RE market to outperform the mid and high end markets in 2016 through first half of 2017. Mid-end market, $800k-$2M will have some decent gain while $3M+ market will underperform going forward.

    The data has shown softness in the $3M+ homes in Palo Alto since 4th quarter 2015, which coincided with the pullback in VC fundings. 

    Based on the data I'm seeing now. I'll stick with my above prediction. If I'm right, I'll make money. If I'm wrong, I'll make MORE money. If you want to know what the hell I meant by that, you'll have to buy me and David lunch. If you don't like my answer, or if my answer doesn't make sense to you, I'll pay for lunch. Deal?  :>)

    0Reply
  • Shone Freeman
    Campbell, CA · Member since 2015 · 14 posts · 9 votes
    10y

    @Account ClosedI'd like to know what you meant by that!  And I'm available to meet you for lunch anytime...  ;)

    0Reply
  • Account Closed
    Investor · San Jose, CA · Member since 2012 · 2k+ posts · 3k+ votes
    10y
    Originally posted by @Shone Freeman:

    @Account ClosedI'd like to know what you meant by that!  And I'm available to meet you for lunch anytime...  ;)

    Shone,

    Hmm..... I had coffee with @Amos M.this morning, and he got the answer already. Not sure if it made any sense to him. I'll let him chime in and get his take on it before I share it here. No need to meet for lunch. 

    0Reply
  • Amos M.
    Investor · Bay Area, CA · Member since 2015 · 19 posts · 14 votes
    10y

    @Account Closed

    3Reply
  • Account Closed
    Investor · San Jose, CA · Member since 2012 · 2k+ posts · 3k+ votes
    10y

    @Shone Freeman,

    @Amos M.is one smart individual and definitely a calculated risk taker. That's my perception of him when we talked this morning. Amos, as you could see, I'm rich in time, not so much financially.

    As mentioned above, I believe the housing market in the Bay Area will do well through summer of next year followed by a recession and a housing correction. 

    I'm raising capital and getting ready for the bottom of the next housing market, which I believe to be around 2020. If the market only corrects 10-15%, I can pick up these properties at the courthouse steps for 70 cents on the dollar. 

    Given the fact that B of A is getting loose on their lending standards, this will likely give leg to the lower- and mid-end housing markets. If B of A does well with their new 3% down program, other banks will likely follow their footsteps.

    If history is any indication, the higher we go, the harder we fall. If we fall 25-30%, I can pick these properties up at the courthouse steps for 55-60 cents on the dollar. So would I rather be right with my prediction, or would I rather be rich? I guess you know the answer.  :>)

    Best of luck with your RE endeavor. 

    1Reply
  • James Paine
    San Diego, CA · Member since 2015 · 136 posts · 62 votes
    10y

    Bubble, Bubble, Bubble. 

    0Reply
  • Amos M.
    Investor · Bay Area, CA · Member since 2015 · 19 posts · 14 votes
    10y

    @Account Closedthanks for the kind words master yoda!

    0Reply
  • Shone Freeman
    Campbell, CA · Member since 2015 · 14 posts · 9 votes
    10y

    @Amos M.and @Account Closedthe advice is to be very careful or abstain from investing in this market until the correction is in full swing, right?

    So are you planning to sit it out or so you have other ways to participate actively in the meantime?

    0Reply
  • Account Closed
    Investor · San Jose, CA · Member since 2012 · 2k+ posts · 3k+ votes
    10y
    Originally posted by @Shone Freeman:

    @Amos M.and @Account Closedthe advice is to be very careful or abstain from investing in this market until the correction is in full swing, right?

    So are you planning to sit it out or so you have other ways to participate actively in the meantime?

    Shone,

    It's not an advice, but more of my gut instinct based on historical data. I never feel qualify to give any advice. I believe our housing market is frothy, but we are not in bubble territory. If loose lending is introduced back into the market, there's a high probability we will get there take in the next couple of years.

    My partner and I are opportunistic buyer and seller. We will buy for the right price, and we will sell for the right price regardless of where we are in the cycle of the housing market. We just lost a 6-unit off-market deal because we and the seller were $50k apart. We're currently negotiating for another 6-unit deal off-market. We've made about 8-10 offers YTD, but nothing has materialized.  It seems like we're always in the market.

    Please note that this is one man's opinion. My observation and prediction are only for entertaining purposes. Please consult with a qualified expert(s).

    0Reply
  • Julia Tse
    OP
    Professional · Cupertino, CA · Member since 2015 · 62 posts · 5 votes
    10y

    Thank you all.  I will keep an eye on the market and continue provide feedback to everyone.  

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @J. MartinMy dad started in the land business in the Santa cruz mountains  Loch Lomond area in 1964.. bay area folks were buying lots for weekend homes.. ton of land in those hills. and if your lucky enough to score a mid size acreage with redwood you could log it as well and make a bunch.

    In my timber days I looked at one 8 acre property out of felton that had over 2 million board feet of redwood on it.. at 1000 a thousand that's 2 million in timber... but the greenies we could never get a cutting permit.. and had to decamp to Oregon.. to put it in perspective in the commercial douglas fir timber grounds you need close to 80 acres to get the same MBF yield..

    there are legal lots of record up virtually every drainage coming out of santa cruz and going up the coast towards half moon bay and along skyline..

    Podcast Guest on Show #222
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  • Julia Tse
    OP
    Professional · Cupertino, CA · Member since 2015 · 62 posts · 5 votes
    10y

    Another at Lowney Way San Jose Ca 95131 listed for $750,000. One weekend open house with over 200 families came, received 7 offers and 3 are cash offers, final price is $875,000.

    0Reply
  • Albert Ng
    Rental Property Investor · San Jose, CA · Member since 2015 · 401 posts · 221 votes
    10y
    Originally posted by @Account Closed:
    Originally posted by @Shone Freeman:

    @Amos M.and @Account Closedthe advice is to be very careful or abstain from investing in this market until the correction is in full swing, right?

    So are you planning to sit it out or so you have other ways to participate actively in the meantime?

    Shone,

    It's not an advice, but more of my gut instinct based on historical data. I never feel qualify to give any advice. I believe our housing market is frothy, but we are not in bubble territory. If loose lending is introduced back into the market, there's a high probability we will get there take in the next couple of years.

    My partner and I are opportunistic buyer and seller. We will buy for the right price, and we will sell for the right price regardless of where we are in the cycle of the housing market. We just lost a 6-unit off-market deal because we and the seller were $50k apart. We're currently negotiating for another 6-unit deal off-market. We've made about 8-10 offers YTD, but nothing has materialized.  It seems like we're always in the market.

    Please note that this is one man's opinion. My observation and prediction are only for entertaining purposes. Please consult with a qualified expert(s).

     Minh, have you ever consider referring those off-market deal that you don't want to others for a finder fee?

    0Reply
  • Account Closed
    Investor · San Jose, CA · Member since 2012 · 2k+ posts · 3k+ votes
    10y

    @Albert Ng,

    No I have not.  In fact, I had referred a couple off-market deals to a couple local BP members.  So far, they haven't bought anything. The agents/brokers we work with have a list of qualified buyers.  Fortunately, we're at the top of the list.  There had been deals where we passed at a lower price, only to watch the next buyer closed at a higher price.  There were times we thought about wholesaling the deal, but that would make our agent/broker look bad.  If you think about it, our agents/brokers are looking out for us so it's only fair we look out for them too.  It's a two-ways street.

    The reason we have been able to get better deals than other buyers is because we are PROVEN DEAL CLOSERS.  Once we gave it a nod, the deal would be closed regardless.  How many buyers out there are proven closers?  A bird in hand is worth more than two in a bush as they say.  With that said, we're having a couple of warm deals in the oven now.  Should know something by next week.  

    Let me ask you and everyone else this...I have two business opportunities in front of me.  One is something I don't care for, but it has the potential to yield $30k/month after 2 years of hard working 12-14 hours/day.  The trend for business could last 10 years or longer, but it could also end within 5 years.

    The other biz is something I love, but it doesn't pay as much.  However, I only have to work 2-4 hours/day.  It's a wealth building business, and it yields $1,500/month.  The good thing is that it has the potential to yield an additional $1,500/month year after year.   So it yields $1,500/month after year 1, $3k/month after year 2........$7,500/month after year 5. However, my net worth would increase at a rate of $300k/year.  So $300k after year 1, $600k after year 2....and $1.5M after year 5.  I can do this for as long as I want.  Which business opportunity should I choose?  Sacrifice two years of my life to potentially make $30k/month, or having fun working a minimal schedule and collecting pennies while I'm building up my net worth?  :>)

    1Reply
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