You think that's fast? Watch this!
Part 2: San Mateo County.
Two weeks ago we marveled at the rapidity with which Santa Clara County homes sell these days, compared to Realtor.com's ten-fastest national real estate markets. Not only were the Santa Clara County single-family markets we examined regular speed demons compared to burgs like Denver (#1 in the country at 44 days on market) and Bakersfield (#7 at 58 DOM), but many came close to equaling, and in two cases exceeded, the urgency with which homes sold in 2005.
Before we look at San Mateo County, I'd like to make two startling revelations. First, days on market (DOM) in the hottest markets in San Mateo and Santa Clara Counties has been shamelessly manipulated by those well-known and ill-regarded enemies of well-ordered markets, real estate agents. Yes, it's true! If it wasn't for agent machinations, Palo Alto's days on market would not be a sizzling 10. No! It's DOM would probably be a surface-of-the-sun-scorching 2 or 3. Because agents listing homes in that highly desirable city routinely delay hearing offers ("if any", as they coyly say) until their listings have been properly exposed to the market—which generally takes all of two open houses over one week-end. With close to a hundred people clogging each open house. Plus another few days for buyers to gather their wits and their checkbooks.
Second, all is not sweetness and light in the local real estate market, even in sought-after cities like Palo Alto. No! Because condos and townhouses gather more dust than offers these days, even as single-family homes fly off the shelf. I haven't calculated DOM for local condo/townhouse markets, either because it would spoil the illusion I've created that local real estate is back! or because I don't care how fast they sell because I don't have any condo or townhome buyers now. I don't, and I don't, which says something by itself. I will say that when I calculated the DOM for $800k-plus townhomes in Menlo Park recently in preparation for a listing I was about to get, it caused me to black out and forget the number, although I think it was 45. (Mine sold in 11, apparently a source of great pride.)
So when we look at San Mateo County this week we'll act like today's buyer and forget the condo/townhouse market exists, focusing solely on SFR markets:
Local real estate is back! Well, maybe not back! back, but getting back to respectable, and in two cases, exceeding respectable. Burlingame, one of the most desirable cities on the mid-Peninsula, is moving smartly under $2M, which is most of Burlingame, and Belmont—what's gotten into sleepy Belmont?—sets a snappy pace under $1.5M, which is most of Belmont.
In fact, none of the DOMs above are exactly tortoise-like, with the exception of Redwood City west of El Camino, whose days on market these days is more than double what it was in 2005. Why? An agent who gets more than his share of listings in one of Redwood City's best and largest neighborhoods, Mount Carmel, tells me that a full 25 percent of the transactions in his market are distressed sales, either bank-owned or short sellers. That kind of malaise puts a damper on buyer spendiness and home price appreciation, even in an attractive west-of-El-Camino neighborhood. But I have a feeling that something else is going on with Redwood City west of El Camino. Note that even the east San Mateo, east Menlo Park and East Palo Alto markets, dominated for years by distressed sellers, are perking along pretty well now. Brand name (or price point) is critically important in this early stage of the recovery. Unless you're known for great schools, great infrastructure and great (or at least not-blighted) neighborhoods—or unless your homes are dirt cheap after five years of severe price depreciation—the tide hasn't risen enough to get your boat off the rocks.
When will it? Those of us busy with buyers tend to forget that the good times are still confined to a relatively small, highly-educated and extremely well-paid slice of Silicon Valley. Name-brand quality of life is extremely important to these folks, and they'll pay full price for it as they would for any solid investment. Hence, multiple offers on listings in Palo Alto, Los Altos, Cupertino and Burlingame. But we're not at the point where ultra-aggressive buyers have bumped other buyers into "lesser" neighborhoods. We're not at the point of "acceptable substitutes".
But we're getting there. Another year or two of economic recovery here in Silicon Valley may be enough to put regular people, not just the technological elite and its camp followers, back to work and back in their cars looking at homes. Then all boats will be raised.