Many nation-wide websites would have you believe that you can understand the real estate market by simply plotting trends by city, zip code, or by tracking sales activity within 1 mile of any given property. While this qualifies as a popular and an easy answer, it’s not a very good one and usually provides far from accurate results.
Silicon Valley covers all of Santa Clara County, most of San Mateo County, and parts of Alameda and Santa Cruz Counties. Within each county there are vast differences, of course, but sometimes those vast differences occur even within one zip code or smaller area. Sometimes even within one block!
Age and type of construction
For example, the photo above is of a historic ranch style home made of adobe. One micro market may simply be “Historic homes in Santa Clara”. But another could be “Adobe houses in Santa Clara County” – since there are only a handful of them in our area, there won’t be enough old adobe ranch houses to compare just within Santa Clara. But what you would not do is compare this house to one on the same block which is a 1965 ranch style home made of wood. It’s only a little bit helpful that they are close together in location. The probable buyer for either house is most likely to be quite different from one to the next.
School districts, zip codes, and city boundary lines
Perplexing to many newcomers is the odd way that our school districts relate to zip code and city boundaries. Schools are often – but not always – a major driver in home values. If you want to buy a home in Los Gatos, you could find yourself in the Union School District, the Campbell School District, the Los Gatos Union School District – and that is only in zip codes 95030 and 95032! Should you buy in the Los Gatos Mountains, which have a Los Gatos mailing address, you’d be in the Lakeside Union School District or possibly the Loma Prieta School District. (Many people moving here expect all homes in Los Gatos to have “Los Gatos Schools”.) Sometimes, most of one school district covers one zip code, but a sliver or smaller area may have a different district. That’s a micro market and is important to factor that in.
Equally unhelpful can be the way that zip codes are drawn. The 95138 zip code is partially in South San Jose / Santa Teresa in a very flat area and partially in a valley of the Evergreen foothills near Silver Creek Valley, where homes have a far higher price tag. Sometimes “the market” is truly only part of a zip code, or a combination of a few. Members of the multiple listing service can search the map by areas we draw onto it – carefully excluding some pockets and including others. It’s time consuming but infinitely more accurate.
Individual property features can greatly throw value one way or the other. In the past I have done studies on the impact of having an in-ground pool on sales price and the difficulty of selling. I learned that for homes with an acre of land, a pool is expected, and not having it made selling the property far more difficult (the “months of inventory” at that time was about eight times as long as opposed to homes with a pool). Likewise I studied the effect of having a pool on a lower priced home with a small yard, and of course to many home buyers that was a detriment and it showed up in the results. The online sites won’t compare just properties with pools – but a good real estate professional will! The homes-with-pools category is a micro market.
There are so many factors which must be included when assessing property values, appreciation, and so on. Please resist the urge to rely on the popular online valuations, as they are more often than not way off. Instead, hire a great real estate professional to work alongside you in crunching the numbers and making sense of them. Please call or email me to discuss working together on your sale or purchase!