May 2009
See how local real estate is doing now.
A statistical overview, with brief commentary, of these five local real estate sub-markets:
Hand-crafted and laboriously charted statistics you won't find anywhere else, showing recent and historical trends for these seven important market indicators:
|
This month's summary: last month's "improving market with a long way to go" goes a long way but not long enough. And as usual with rallies, for every two steps forward there's one step back. But apparently more buyers have decided that, whether or not now is the perfect time to buy, the rewards of buying now outweigh the risks. |
What everyone wants to know. Look for long-term trends here, since monthly average sales price can be skewed in the short term by variations in the size, number or price range of homes sold each month within each sub-market. Also bear in mind that sales price data for the last month or so are incomplete, since not all properties in contract have closed. See also Making sense of market indicators, part 3: sales price. Commentary: the numbers continue to suggest that local real estate may have found a bottom, at least for the moment. The other indicators, below, back up the suggestion of a modest rally. Still, the weakened stock market has rolled back home prices to 2004 levels except at the low end, where the additional burden of the foreclosure crisis makes it 1999 again. And the other sub-markets aren't out of the woods yet: April top-end sales were so weak that I haven't attempted to project an average sales price. Back to top.
Perhaps a more reliable indicator of price trends than average sales price, since the average size of homes sold each month in each sub-market can vary enough to significantly skew results. However, average sales price per square foot can also be skewed by average size of homes sold each month: all else being equal, smaller homes sell for more per square foot, larger homes, less. Commentary: as with average sales price above, the available numbers suggest that prices may have come out of their freefall. As above, April top-end SFR prices aren't shown here due to insufficient data. A surprising slowdown at the low end means it too doesn't appear in this chart, since what little has sold and closed lately in this sub-market suggests a sharp rise in prices, unlikely given the huge inventory of bank-owned homes and short sales. Back to top.
The best indicator of whether the market favors buyers or sellers. Absorption = sales/inventory. A huge advantage of absorption is that it can be calculated well before the most recent sales prices are known. Absorption of less than .3 of monthly inventory generally indicates a buyer's market, although this varies to some extent by sub-market, with both low-end and, particularly, top-end SFR usually averaging lower absorption rates. Absorption of more than .4 indicates a seller's market, again depending on the sub-market, while a market between .3 and .4 is in equilibrium. See also Making sense of market indicators, part 5: absorption. Commentary: finally some reliable numbers, especially since this month I've removed all pending short sales, which have a low probability of closing, from the low end. April's absorption numbers are very encouraging, up sharply for all sub-markets except the one that's been strongest, the low end. Although other sub-markets are much improved, their absorption is still well below par for this time of year. It's not the "zombie market" of November through February, but it's not a particularly lively market either, which means a strong buyer's market for all but the most desirable properties. Back to top.
One of the most popular (because easily determined), most widely disseminated and quoted, and least reliable market indicators. Low sales always mean low absolute demand, but not always low relative demand. In other words, a market may have relatively few active buyers, but may not have many sellers either, so may still be tilted in favor of sellers. Note that, unlike other sources for price and sales data, I count sales in the month they occur, not the month they close. Using closed sales, with their typical thirty- to forty-five day lag time due to the escrow period, is like using yesterday's sales volume to evaluate today's stock market activity. See also Marking sense of market indicators, part 1: sales. Commentary: sales are up sharply for all sub-markets except, surprisingly, the low end which, despite April's slowdown, remains unusually strong. Another encouraging sign, but many buyers are still conspicuous by their absence, if not from the open houses, at least from the closing table. Back to top.
A fairly reliable indicator of whether the market favors buyers or sellers. High or rising inventory generally indicates a buyer's market, low or declining inventory a seller's market. Commentary: inventory is still at or near ten-year highs, and rising, which indicates more buyer's market in the near term. The big exception is low-end SFR inventory which, while high, continues to decline, although unfortunately this trend may be short-term: for the past few months many lenders have observed a moratorium on foreclosure. In addition, they seem to be getting smarter at doling out their still-ample inventory to the market, and I'm hearing that in some parts of the Bay Area there's actually a shortage of bank-owned homes. But the shortage is probably temporary, since Notices of Default, the first step in the foreclosure process, have reached record levels in California. Back to top.
Another fairly reliable indicator of whether the market favors buyers or sellers. Measures the monthly average number of days a home is on the market before it goes into contract. High or rising days on market (DOM) generally indicates a buyer's market, low or declining DOM a seller's market. See also Making sense of market indicators, part 2: days on market. Commentary: still high, yet another indication of a buyer's market, but trending significantly downward in four of five sub-markets, yet another indication the market is, if not heating up, at least thawing out. Back to top.
A good indicator of whether the market favors buyers or sellers, and of how exuberant buyers are. An average bid above list price indicates a seller's market and suggests multiple offers (although in the lowest price ranges it can also indicate that the buyer's closing costs were wrapped into the sales price), while an average bid below list price (sometimes even with multiple offers) indicates a buyer's market . See also Making sense of market indicators, part 4: bid. Commentary: slow sales mean not much data to work with, but it's clear that buyers still don't have their party hats on. Back to top.
condos: single-level CID (Common Interest Development) 2000 sq.ft. or less in Los Altos, Menlo Park, Mountain View, Palo Alto, Redwood City, Redwood Shores and Sunnyvale.
townhouses: two-plus level CID 2000 sq.ft. or less in the same cities.
low-end SFR (Single-family Residences): homes at least twenty years old in East Palo Alto east and west of 101; Menlo Park east of 101 (Belle Haven); Redwood City, San Carlos and Belmont east of El Camino; and San Mateo neighborhoods east of 101, plus MLS area 416 Bowie Estate west of 101 but east of El Camino.
mid-range SFR: Homes 2000 sq.ft. or less in entry-level neighborhoods of Palo Alto and Menlo Park; all of Mountain View; and Redwood City and San Carlos west of El Camino.
top-end SFR: Homes 2001 sq. or more in top-end Menlo Park, Palo Alto, Woodside and Portola Valley; Los Altos; Los Altos Hills; and Atherton.
Can't find your home here? If it's between Burlingame and San Jose, just use the price range that's closest to your home's likely value.
copyright © John Fyten 2009 Site Map Home