November 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:
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This month's summary: a few more signs of recovery, and where there isn't, at least the status is quo. Prices for low-end single-family homes continue to climb out of a very deep hole, and midrange single-family saw a big jump in sales. As for the rest of local real estate, it keeps bumpin' along, which is at least a moral victory: things could be a whole lot worse and, last year at this time, they were. |
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: More status quo. Prices are flat, except for affordable single-family homes. Don't read much, if anything, into the top end's rising trend line. 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 average sales price. However, average sales price per square foot can itself also be skewed by average size of homes sold each month: all else being equal, smaller homes sell for more per square foot than larger homes. Commentary: Prices continue to rebound from last winter's lows but stay within a fairly narrow range except at the low end, where that rising trend line is definitely not a statistical anomaly. 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: Like price, absorption continues to fall within a fairly narrow range, except for the bank-owned homes that make up the bulk of affordable single-family homes, which continue to rocket upward. Short sales, hard to sell and harder to close, seem to have displaced bank-owned homes as the primary source of inventory at the low end, which may account for the drop in absorption there. And note that encouraging up-tick in midrange absorption. 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: That big jump in the midrange is the big news this month. Does the $8000 tax credit get all the credit? Given that it begins to phase out at just about the income level needed to afford a midrange home in this area, it seems unlikely. Could it be that the well-paid technical elite that's driven midrange sales for years in this area has decided that the worst is over or almost over? Based on my recent experience, the answer is a qualified "yes". As I've mentioned before, the chart slightly understates condo and low-end SFR sales, since I've removed all pending short sales (which have a low probability of closing) until and if they close, so expect to see some modest upward correction to these two numbers. 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: The usual year-end decline in inventory is setting in, as all but the most motivated sellers either take their homes off the market or defer bringing them on. The one exception is the midrange, but at least for the moment, there seem to be more than enough buyers to offset this rise. At the low end, bank-owned inventory seems to be giving way to short sales, good for homeowners trying to fend off foreclosure but perhaps a challenge to maintaining the current sales momentum in that price range unless banks suddenly become a lot more simpatico to distressed borrowers. 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 a mixed bag, but it's not always easy to make sense of this (or any) indicator. What looks bad can sometimes be good. A great example is that sudden spike in townhouse DOM , caused in part by a handful of short sales that finally managed to get into contract. 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: Bids slipped a bit at the low end, but note that the midrange broke into positive territory for the first time since last summer. Again, this is big news: now it isn't just low-end SFR that's carrying the market. 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.ft. 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.
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.