Among small towns, Saratoga, California has experienced one of the largest gains in home prices over the last year. This is based on data provided by Zillow.
24/7 Wall St., a popular news website among investors, recently created a list of small towns where home prices are rising the fastest. They based their rankings on data provided by Zillow, the online real estate database. In particular, they used Zillow’s proprietary index for measuring home values — the aptly named Zillow Home Value Index (ZHVI). The authors of the report defined a ‘small town’ as having 30,000 to 50,000 residents.
The real estate market in Saratoga, California had the third-highest price jump among small towns, based on this ranking. According to Zillow, the median home value in the city rose by more than 14%, from August 2011 to August of this year.
It begs the question: Is the ZHVI an accurate indicator of home values? You can be the judge of that. It has its flaws, as similar indices do. But back to the story. Here is what’s happening in the Saratoga real estate market.
Fact Box: The Housing Market in Saratoga, CA
- Saratoga, California is located within Santa Clara County.
- The city falls within the San Jose metropolitan statistical area (MSA), and is part of Silicon Valley.
- The city’s current population is estimated to be just over 30,000.
- According to the ZHVI, the median home value rose by 14.4% from Aug 2011 to Aug 2012.
- In August, the median home price in the city was $1,620,200 (source: Zillow).
- Last month, the median list price was $2,249,500 (source: Altos Research).
- As of August 2012, the median sales price was $1,285,000 (source: DataQuick).
- The most expensive home sold in Q2, 2012 went for $5.35 million (source: DataQuick).
Saratoga’s median home price was just over $1.6 million in September 2012, according to Zillow. That’s the second-highest median value for any city or town with 30,000 or more residents. Beverly Hills was number one in that category.
Growing Demand for Limited Supply
So what’s driving appreciation in Saratoga? As with many other cities in California, there have been changes on both the supply and demand sides of the equation. Saratoga is a small, high-priced housing market. At the time of publication, there were only 124 houses listed for sale on Realtor.com, and only 36 homes had been sold during the past 30 days. So there’s not much inventory to go around. It’s a tight market.
But perhaps the biggest factor affecting this market is the growing level of demand we have seen in recent months. Statewide, there has been increased demand for high-end homes in particular, which are the types of properties you find in Saratoga. When you combine an uptick in demand with a limited supply, you will typically see a jump in prices. It’s a fundamental of housing finance. That appears to be what is happening within the Saratoga real estate market.
According to Trulia, the median sales price in Saratoga rose 8.6% over the last year or so. Home sales rose by nearly 24% during the same period.
Disclaimers: This story includes housing-related data from third-party providers. These sources have been named, wherever applicable. We make no claims or guarantees about the accuracy of third-party data. We encourage home buyers to do thorough research at the local level, before deciding to invest in a property.