July 2010 newsletter
See how local real estate is doing now.
This month a special mid-year edition, comparing local home prices from the first half of 2010 with prices from 2009, 2008 and 2005.
As always, offering hand-crafted and carefully charted statistics you won't find anywhere else, showing recent trends for these seventeen local communities and major sub-markets:
| Santa Clara County | San Mateo County |
| Palo Alto | Menlo Park |
| Mountain View | Redwood City |
| Los Altos | San Carlos |
| Sunnyvale | Belmont |
| Cupertino | San Mateo |
| Santa Clara | Burlingame |
| Campbell | Atherton |
| West San Jose | East Palo Alto/Belle Haven |
| Central San Jose |
|
First, this month's summary: The price trends charted below tell us a number of important things about local real estate. First, they show that a one-size-fits-all "local real estate market" doesn't exist. Instead, we have different sub-markets, based on price range and housing type, moving in different directions since 2005. Second, cities and areas with highly-regarded schools have rebounded nicely from their 2009 lows. Some, such as Cupertino and entry-level Palo Alto, are as hot as they've ever been. Third, condos and townhouses have usually, but not always, been less volatile than single-family homes, and now lag SFRs in the recovery. Fourth, when it comes to SFRs, the lower the price range, the more subprime pumped them up, then deflated them when it disappeared. These markets peaked in 2005 and 2006 and began to crumble in 2007, and they're the kind of real estate market that's made lurid headlines since then. Fifth, both the SFR and condo/townhouse markets in the mid and upper price ranges have been virtually immune to distressed sellers, although not to price drops. They were brought down, not by subprime's collapse, but by the stock market crash, although their declines were comparatively modest and have stopped this year or even begun to reverse. These markets peaked in early 2008, just as more affordable neighborhoods went from bad to worse. The lessons? Different markets, different buyers, different drivers, different outcomes. The question "how's the market?" has several answers, which makes sweeping characterizations of local real estate rarely correct. |
Palo Alto's SFRs have been strong this year, particularly under $2M. The CID (condo/townhouse) market, on the other hand, continues to be weak.
Menlo Park home prices west of 101 have flattened across the range in 2010, after declining through most of 2009. For prices east of 101, see East Palo Alto/Belle Haven.
Mountain View SFRs have rebounded well this year, although they're still well off their 2008 peak. Mountain View CID (condos and townhouses), on the other hand, have been comparatively—and even amazingly—stable.
Redwood City's four main sub-markets have marched in three different directions since 2005. Redwood Shores SFRs have come back strong this year, after peaking in 2008 like many schools-driven markets, while Redwood City SFRs west of El Camino were flat between 2005 and 2008, declined, then flattened again between 2009 and early 2010. Redwood Shores CID (condos and townhouses) mimicked SFRs west of El Camino, while SFRs in the affordable neighborhoods east of El Camino, amped up by subprime lending and then crushed by its collapse in early 2007, have only just begun to recover.
Los Altos' two main SFR sub-markets, north and south, have largely followed each other since 2005, although the chart doesn't show that entry-level Los Altos—$1.5M or less—found mostly south of El Monte, has been red hot this year. Like the CID markets in other upper-middle class towns, Los Altos' small condo/townhouse market has been mostly lackluster lately. Perhaps the only thing propping up prices in these expensive CID markets is a lack of distressed sellers.
San Carlos' SFR market west of El Camino has come back nicely from its 2009 lows, while its CID (condo and townhouse) market is essentially flat.
Sunnyvale's five main sub-markets have taken four different directions since 2005. SFRs with highly-regarded Cupertino and Sunnyvale schools peaked in early 2008, were taken down briefly by the stock market crash and have rebounded sharply in early 2010. Sunnyvale SFRs within the Santa Clara Unified School District were also affected by the stock market, but have largely flattened this year. SFR prices in the affordable neighborhoods north of Central Expressway were pumped up by subprime, had deflated sharply by 2008 and lost still more air in 2009; prices have finally leveled out this year. Sunnyvale CID (condos and townhouses) have mimicked neighboring Mountain View's CID market, with prices flat from 2005 to 2008, a jolt downward in 2009 and a flattening this year, although the cumulative price decline is greater than Mountain View's.
Belmont SFRs west of El Camino is another local midrange SFR market that improved greatly on its 2009 performance in early 2010, although since the chart lacks the lower prices of a CID (condos and townhouses) market, the scale tends to exaggerate SFR price changes compared to the other charts here. Why no CID market? Belmont's miniscule condo/townhouse market makes statistical tracking difficult.
Cupertino's SFR market has been extremely strong this year, like other schools-driven markets. Cupertino's relatively small CID (condo and townhouse) market looks much like nearby Mountain View and neighboring Sunnyvale's CID markets: a model of stability, at least comparatively, with a relatively modest recovery in 2010.
San Mateo, like other local cities with a broad range of prices and housing types, has seen its various sub-markets perform differently since 2005. San Mateo SFRs west of El Camino peaked in 2008, lost ground after the stock market crash, and leveled off in 2010. SFR's in the more affordable neighborhoods between El Camino and 101 took a hit earlier, after subprime's collapse in early 2007, continued declining through 2009 but have rebounded sharply in early 2010. SFRs in the even more affordable neighborhoods east of 101 took even bigger hits through 2009, but have seen incremental gains this year. Finally, San Mateo's condos and townhouses continue to lose significant value.
Santa Clara's four main sub-markets indicate how even the sub-markets of a relatively small city can move in significantly different directions. SFRs within the buyer-magnet Cupertino school district have performed like other schools-driven local markets, peaking in 2008, declining in 2009 and recovering (unusually well) in 2010. More affordable Santa Clara with Santa Clara Unified schools, not generally highly regarded (with some exceptions) was hit both by the subprime bust and the stock market crash, but prices have leveled off this year. Even more affordable Northside Santa Clara, north of 101, was affected even more strongly by subprime, both on the way up and way down, but was relatively unaffected by the stock market; prices have continued to lose ground, but at a modest rate. And finally, CID (condos and townhouses) have performed almost identically to SFR-with-Santa Clara-schools prices, which is to say, not as well as the CID markets of neighboring Sunnyvale and nearby Mountain View.
Burlingame's three main markets have moved largely in tandem since 2005, peaking in early 2008, declining after the stock market crash and essentially leveling off in early 2010. Like other mid-Peninsula upper-middle class communities, foreclosures and short sales have been rare.
Campbell (or actually, MLS Area 15 including Campbell and adjacent West San Jose neighborhoods) has seen its SFRs and CIDs (condos and townhouses) fare differently since 2005. Schools in this area are often good and occasionally great, and Campbell SFR prices followed prices in similar schools-driven markets, peaking in early 2008, then dropping about 11% during the stock market crash. Prices have seen solid gains in early 2010. Campbell CID was somewhat affected by the subprime implosion, more so by the stock market's distress, but prices have leveled off this year.
Atherton has been unaffected by subprime and even by record-low interest rates, and hugely affected by the stock market.
West San Jose comprises a number of different neighborhoods, with the four above the most significant. West San Jose with Cupertino schools peaked in early 2008, as did other schools-driven markets. Willow Glen's schools aren't as consistent, and prices were flat through 2008, dropped with the stock market crash and rebounded in early 2010. Cambrian schools generally test well, but its lower price range made it more susceptible to the varying fortunes of subprime buyers. Cory prices took a huge hit when subprime collapsed, then essentially leveled off this year.
East Palo Alto east of 101 and the adjacent Menlo Park neighborhood of Belle Haven have been the local poster children for the ills of out-of-control subprime. Home prices took a shellacking when subprime disappeared in early 2007, and they've only recently pulled out of their death spiral.
Central San Jose, the neighborhoods adjacent to the revitalized downtown, have taken different turns since 2005. Beautiful old-fashioned Rose Garden held its value fairly well during the subprime crisis, but was strongly affected by the stock market downturn. Central San Jose's other SFR sub-markets, some of this area's most affordable, oldest and often, unfortunately, rundown, were steamrollered by subprime. The CID market, comprised mostly of nice newer condos, also suffered greatly from both subprime and the stock market. Prices for all four markets have leveled out this year.
Methodology: These graphs are based on data from the Multiple Listing Service, corrected to eliminate anomalies at both ends of the price range that skew average sales price. The data has also been adjusted to compensate for the often substantial differences in average property size from year to year that can also skew averages. The base year, 2005, is often called the recent market's peak, although many local markets peaked in early 2008. To show the our market's recovery from the lows of 2009, I've included price data from the first half of 2010.
Thinking of buying or selling? Please contact me at jfyten@cbnorcal.com. This is not a solicitation if your home is listed with another broker. My Department of Real Estate license number is 01044243.
