Real Estate Articles
REALTOR®: County Assessor Tells Realtors Subprime Problem Not Too Serious in Silicon Valley
Many areas across the state have been negatively impacted by the subprime problem and resulting foreclosures, but the Silicon Valley region's housing market appears to have escaped the "bloodbath," according to Santa Clara County's assessor.
Santa Clara County Assessor Larry Stone told Realtors at a recent Realtor tour meeting of the Silicon Valley Association of REALTORS® (SILVAR) he does not believe the subprime problem is as serious in Silicon Valley as in other parts of the county. However, since home sales and home values are down in some areas of the county, he announced his department is taking a proactive stance and will be lowering the values of some 26,000 properties in order to reflect the lower market value.
Proposition 8 requires the assessor to take into account any factors causing a decline in value of a property, and consequently reduce a property's value. The reductions are temporary and recognize that the current market value of a property has fallen below its current factored Proposition 13 base year value. When and if the market value of the previously reduced assessment increases above its Proposition 13 factored base year value, the assessor will once again enroll its Proposition 13 factored base year value.
Stone recalled the same situation occurred when the economy was down in 1995, but at that time, the county assessor placed 98,000 properties in Proposition 8 status.
Stone reported the county's high-end residential market is still very strong and property values in many communities in Silicon Valley have held well because of their good schools. The property value of a house can vary dramatically depending on school district boundaries and on which side of a school boundary a property sits, according to the county assessor.
"People understand the value of a school district and its impact on property values," he said. "Depending on the quality of the school district, there could be as much as a $100,000 to $125,000 difference in property values if the school is excellent or mediocre."
Stone also recognized the high productivity of the Valley, but noted the amount of warehouse space that businesses need has declined tremendously due to technology and outsourcing.
"We are the most productive place in the country, but technology has contributed to the downturn after 2002," he said. "While the software industry is what saved our economy in the late 1990s, it requires less space."
Stone said the biggest problem affecting housing market today is credit availability. The underwriting standards are stricter, and as a result, transaction deeds this year are down 30 percent and new construction has decreased by 20 percent. The market for lower-end homes and for condominiums/townhomes has softened, especially in Morgan Hill, Gilroy, Milpitas and East San Jose, which are areas in the county experiencing the biggest problems of foreclosures and subprime loans.
Santa Clara County's assessor continues to maintain a positive outlook about the Valley. He said the county's commercial and industrial sectors "are very hot right now." Office space is up, rents are up 32 percent, and vacancies are down 25 percent. Investment continues to be strong in the Valley, with $7 billion invested in Silicon Valley property in 2007.
"Silicon Valley still follows the boom and bust. The challenge is to find new things," said Stone. "Everything happens in Silicon Valley first, fastest, good, bad, up and down."
Stone invites Realtors and homeowners to visit the department's Web site at www.scc-assessor.org for the latest news and information on property tax laws and regulations.
The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.
The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.
Variations of this article have appeared in local area newspapers.
For further information, please contact Rose Meily at SILVAR Public Affairs, email , or phone (408) 200-0109.