Los Altos Real Estate Blog

Good News!  Real estate recovery in Saratoga, California

Luxury real estate markets all over the San Francisco Bay Area, particularly Silicon Valley, all seemed to be immune to the economic crisis that started in 2006.  The town of Saratoga, my current town of residence, was a very appealing destination for buyers who wanted large lots and big homes are a more reasonable price than more expensive towns such as Los Altos Hills.  During the boom years the high-end market saw massive amounts of new construction along with remodeled homes being sold like hotcakes as the high-tech industry generated a lot of buyers.  In fact, a lot of homes built on speculation were completed right around the time real estate in surrounding markets was showing signs of weakness.

The Saratoga real estate market continued to climb in 2007 when it peaked with an average selling price of $1.854 million and 2008 was relatively flat.  That year, with 344 closed sales, relatively low inventory compared to earlier boom times, and strong demand Saratoga had a good chance of riding out the economic storm.  However, the economic disaster was overshadowing and overpowering.  The problems came in two forms; overbuilding of speculative homes (especially high-end) and a big drop in demand.  The slowdown hit downtown Saratoga hard as businesses folded over the years.  Construction of homes came to a grinding halt along with any improvements planned for downtown or nearby areas.  Saratoga, like many other high-end real estate markets, came to a crashing halt.

In 2009, Saratoga hit a very rocky bottom.  The high-end of the market stopped almost entirely while many new homes came on for sale.  With sales almost as good as 2008, buyers were left wondering what had happened.  The average sales price dropped to $1.557 million because none of the prestige properties were selling.  In addition, offers were well below asking prices at 94.31%.  Nobody was buying in Saratoga and anyone who was could basically set their price.

The real estate recovery for Saratoga started in 2010 and continues to today.  The market took a nice pop in the first half of 2010 but dropped a bit in the second half.  With improved news, lower interest rates, and a booming high-tech industry, we're seeing that trend continue the recovery in the first half of 2011.  With many fewer new listings, similar inventory levels, and nearly identical unit sales, Saratoga is experiencing renewed interest. The high-end listings are coming back on the market and a few are getting sold.  As with other high-end markets, there are only a handful of sales but the numbers are encouraging.  All it takes is a couple of homes sold at $5million or more and the market could really take off.

Overall, Saratoga is up about 8% from it's lows and resisting a push to go lower.  As long as inventory remains low and demand stays the same, the market should see continued appreciation and stay on the road to a fully recovery.