On Friday afternoon, I met with a project manager and associate project manager from a developer who is involved with a project or two in downtown San Jose. The projects that this developer is involved with are very much still in the design phase and likely a few years away.
The meeting was essentially a brainstorming session for the developer to see what amenities and features buyers in the local market are looking for as the developer embarks on designing the next new high rise luxury condos for downtown San Jose.

What defines a “luxury” unit? Stainless steel appliances and granite countertops? Walk-in closets? Do buyers want a private balcony or are they ok with common area outdoor space? How much square footage are buyers looking for? Would they buy a three-bedroom condo?

And what about the community that they are buying into? What do buyers look for in a “luxury” complex? What common area amenities are important to buyers today? Do buyers want a complex pool and spa? Theater room perhaps?

This was the second such meeting that I’ve had with a developer who is working on a project in downtown San Jose. I would love to hear what you, as potential buyers and residents of downtown San Jose, are looking for in a new condo. I’m sure the developers would love to hear your input as well. Tell us what you are looking for and maybe you’ll be able to “help” design the next new luxury high rise in downtown San Jose.

Another development in downtown San Jose is also now offering its buyers $50,000 of incentives. City Heights joins The Works in offering purchasers up to $50,000 worth of incentives. The $50,000 incentive can be applied towards appliance or flooring upgrades, closing costs, property taxes, or interest rate buydowns. The incentive at City Heights can even be applied towards the purchase price up to $20,000.

Units at City Heights start in the $400,000s.

I’ve talked about seller incentives in the past. They sound like a great deal, but may be too good to be true. Are they good for you? What do you think?

It may be a little late for September’s statistics but better late than never. As always, these statistics represent Central San Jose’s (Area 9 which includes downtown San Jose) condos, townhomes, and lofts. Looking at the numbers for September wasn’t easy, mostly because they aren’t very pretty. The median sales price actually went up in September 2007 but, wow, the number of closed sales was cut almost in half.

2007 . . . . . . . Inventory . . . . . Closed Sales . . . Median Sales $ . . . . Total Sales Volume

August . . . . . . . 157 . . . . . . . . . . 23 . . . . . . . . . $480,323 . . . . . . . . . $11,047,450

September . . . . 162 . . . . . . . . . . 12 . . . . . . . . . $490,000 . . . . . . . . . $5,986,500

I also added one more column to the statistics this month (Total Sales Volume) because it is so dramatic. Over $5 million drop in total sales volume from the August to September. This isn’t really all that surprising given the correlating drop in closed transactions in September but noteworthy nonetheless. The quarterly statistics don’t paint a prettier picture for the year to date either.

2007 . . . . . . . Inventory . . . . . Closed Sales . . . Median Sales $ . . . . Total Sales Volume

Q1 . . . . . . . . . . 136 . . . . . . . . . . 80 . . . . . . . . . $511,750 . . . . . . . . . $41,179,976

Q2 . . . . . . . . . . 170 . . . . . . . . . . 78 . . . . . . . . . $520,000 . . . . . . . . . $40,441,220

Q3 . . . . . . . . . . 162 . . . . . . . . . . 65 . . . . . . . . . $495,000 . . . . . . . . . $32,207,653

As you can see, while the first six months of the year were fairly steady, the last three months have declined in the number of transactions. The buyers are still out there, they are just taking longer to make decisions and trying to feel out the market.

*These statistics are generated using information from the RE Infolink MLS, but have not been verified and are not guaranteed. RE Infolink disclaims any resposibility for the accuracy and reliability of these statistics. This information should not be relied upon for real estate transaction decisions.

The San Jose Rock ‘N’ Roll 1/2 Marathon is set to hit the streets of San Jose this Sunday, October 14. According to the Weather Channel, the forecast for San Jose is a beautiful sunny day. You can’t ask for much better weather than that if you are one of the runners running the race or a spectator checking out the festivities. There is expected to be over 13,000 participants involved in the 13.1 mile race, along with 16 bands playing live music at 14 different venues and a post-race concert at HP Pavilion.

The race will start at Santa Clara and Almaden, go through the northern portion of downtown before heading towards Japantown, circle back towards downtown, and then over to the Rose Garden and Cory Neighborhood areas. Be warned, however, that there will be a number of street closures in the race area which includes downtown San Jose.

For additional info on the race course, street closures, and race activities, check out San Jose Rock ‘N’ Roll 1/2 Marathon website, www.rnrsj.com.

The California Association of Realtors (”CAR”) released yesterday its “2008 California Housing Market Forecast”. The numbers that you will hear and read about in the media consistently are these:

1. The median price of existing homes is expected to decline 4% to $553,000 in 2008; and
2. Sales are likely to fall 9% in 2008.

The drop in the median home price would be the first decline in more than a decade. Much of this is due in large part to the subprime fallout that we continue to hear about. But what does this all mean if you are looking either to buy or sell a home soon?

Well, read between the lines. Or at least, make sure everything you hear and read about is accurate. According to CAR Vice President and Chief Economist Leslie Appleton-Young, “Geographically, more affordable regions such as the Central Valley and Inland Empire will experience greater softness in the resale market because of the large number of new homes coming onto the market in recent years . . . Higher priced regions of the state, such as the San Francisco Bay Area . . . will react more to affordability constraints.” Excess inventory from overbuilding is what she is referring to. And furthermore, “By price-range, the highest-priced markets - those with medians over $1 million - will show less stress. The lower-priced markets will continue to face fallout from the subprime crisis, tigher underwriting standards, and competition from new home developments where price-cutting has been even more severe.”

The Bay Area and downtown San Jose has not been insulated from the rest of the real estate market. The local market has slowed and prices have also slowly declined. The more desirable areas and locations are obviously less affected by the market downtown, as described by Appleton-Young.

With the new luxury high-rise residential units set to hit the market in the beginning of 2008, namely Axis and Tower 88, it will be very interesting to see how sales will be affected by the market conditions. Will consumers absorb this new inventory and how they will react to the pricing? And how will this new inventory affect current home sales?

Maybe BART coming to downtown San Jose is still a pipedream and a long ways away, but at least there is some discussions currently underway which may eventually lead to downtown San Jose really becoming a public-transportation friendly destination. The Santa Clara Valley Transportation Authority (VTA) is having a series of public scoping meetings to discuss the BART extension to the South Bay and in preparation for conducting an Draft Environmental Impact Statement (EIS). At the scoping meetings, the VTA will discuss the three alternatives currently under analysis, as well as the environmental and community impacts of a BART extension.

The three alternatives are (1) No-Build, (2) Berryessa Extension Project (extending BART from Warm Springs, Fremont to Berryessa, San Jose, and (3) Silicon Valley Rapid Transit Extension (extending BART to from Warm Springs, Fremont to Milpitas, San Jose, and Santa Clara). The third option would include stops in downtown San Jose and Diridon.

The San Jose scoping meeting will be held:

Thursday, October 11, 2007
San Jose City Hall, Wings 118-120
200 E. Santa Clara Street
San Jose, CA 95113