The Sunnyvale Sun

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Median home prices still rising despite some slowdown in sales

By Cody Kraatz

While the rest of the country is reeling from a mortgage and real estate crisis that experts say will peak in 2008, Silicon Valley real estate has generally held up well because of relatively high housing prices and the desirability of the area.

Real estate experts say that even with slower sales, median prices in Cupertino and Sunnyvale have been rising.

However, there are pockets in Silicon Valley with higher rates of foreclosures and short sales--homes sold for less than they were bought for. Homes in these largely entry-level neighborhoods, including condominium and townhouse complexes, Rancho Rinconada in Cupertino and Lakewood in Sunnyvale, are harder to sell right now.

"There were homes there in the Columbia neighborhood in Sunnyvale that were screamin' eight months ago, but now they're sitting," said Mark Richardson, an agent with MGM Real Estate in Sunnyvale.

Realtors say that some houses are poorly priced, adding to the slowdown.

"If you try to be greedy, it won't sell," said Dave Clark, of Coldwell Banker in Cupertino, referring to the slower pockets of northern Sunnyvale.

It's tough for entry-level buyers these days too, because lenders have tightened their pocketbooks and stopped making generous and risky loans to people with bad credit or who can't afford to put much money down.

"The entry level folks... just don't have the products to pick from anymore in terms of loans," said Richardson. "A lot of that has to do with fear," he said, because lenders are still getting burned by loan defaults.

Many defaulting buyers were sucked in by low introductory interest rates, and when those rates reset years later they cannot afford it and are forced to sell and cut their losses, putting a lot of homes on the market. These homes tend to be the smaller, more affordable houses, condominiums and townhouses.

"All of those people [with poor credit] who could have bought a house six months ago now cannot afford to buy a house, and that's primarily affecting the lower entry- level market," while the higher end remains untouched, said Clark. "It's a tale of two markets."

All of this means that while it's not a particularly great time to sell a home, it may be an excellent time for qualified buyers to think about buying because there are plenty of homes for sale in most areas.

Sunnyvale

The Sunnyvale real estate market runs the gamut from high to low, hot to stagnant.

Richardson, who volunteers to coach at-risk youth at the after-school boxing program at Columbia Middle School, said some sad stories about foreclosures and short sales. But people are generally reluctant to because they are uncommon in an area where many people are financially secure.

"It's a completely split market. It's almost bipolar," he says.

Illustrating that split, Sunnyvale had 13 short sales listed out of 173 single-family houses, condominiums and townhouses for sale on Nov. 28, and 11 of them were north of El Camino Real, according to Zip Realty's website.

Also, there were 135 pre-foreclosure, auction and bank-owned properties for sale in Sunnyvale on Nov. 28, mostly in the Columbia and Lakewood neighborhoods north of Central Expressway, according to the website RealtyTrac. In comparison, Cupertino had 26 in total.

But in north Sunnyvale, it's a different story. Clark recently put a house on the market in the Lakewood neighborhood, roughly bounded by Lawrence Expressway, Highway 101 and Route 237, for $598,000.

He expects the three-bedroom, one-bath, 1,008-square-foot house to sell very quickly with multiple offers because he fixed it up, but if he hadn't he would expect a lower price. Six months ago, no fixing up would have been needed, said Clark.

Meanwhile, the 94087 ZIP code of south Sunnyvale behaves much like the highly desirable and fast- selling Cupertino market because it's in the highly ranked Cupertino Union School District and Fremont Union High School District.

Recently, Clark counted 15 homes for sale out of 11,000 in that ZIP code, "an extremely small amount of inventory," he said. This means there will be multiple offers and houses will sell like buyers have no clue there's a real estate crisis on.

Cupertino

The housing market in Cupertino has been largely unaffected by short sales and foreclosures, primarily because the median single-family home costs around $1 million.

The premium over the median Santa Clara County home price comes from the premium school districts that living in Cupertino provides.

"The market is driven by schools here," said Dale Anne Collings, a Cupertino resident and agent with Coldwell Banker in Cupertino.

Cupertino had only two short-sale homes on the market out of 55 single-family houses, condominiums and townhouses for sale on Nov. 28, according to Zip Realty's website. Both were slightly more than 1,000 square feet, priced at $750,000 and $788,000 and located in Rancho Rinconada near Lawrence Expressway and Bollinger Road, an area known as an entry to Cupertino real estate and for "scrape-and-builds."

The 26 pre-foreclosure, auction and bank-owned properties in Cupertino were mostly in Rancho Rinconada and near Stevens Creek Boulevard east of De Anza Boulevard, according to RealtyTrac.