September 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: it's an open house for a single-family home listed at $425,000 and buyers are packed in like sardines, their cars parked for a block in either direction—and a guy is standing outside insisting "it's still a buyer's market". It's not good to be stuck in 2008, at least if your goal is to buy an entry-level home, not armchair quarterback the real estate market. The midrange and top-end aren't nearly as sizzling, but continue to show steady progress. |
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: Note that healthy jump in average sales price at the low end, something every active buyer in that price range can confirm. And they say real estate recovers from the bottom up. 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 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 be flat except at the low end. 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: Much the same as last month, with demand climbing out of a very deep hole. Again, absorption for bank-owned homes is higher than even that rocketing low-end SFR trend line indicates, while the market is still soft for almost anything else except the occasional well-priced, no-excuses home. 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: More of what we've seen all summer, with sales flattening after a decent recovery earlier this year. 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: Inventory continues to decline, keeping pressure off prices and, in the case of low-end SFRs, putting pressure on the buyers swarming that end of the market. Whether or not there's a "shadow inventory" of bank-owned homes, banks have finally figured out that it's better to under-price homes and dole them out than overprice homes and dump them. 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: Midrange homes continue to sell fairly quickly. Bank-owned homes sell even faster, although the banks' fondness for having two rounds of bidding, including a second, "highest-and-best" ultimatum to buyers, drags out the DOM number for low-end SFRs. 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: Offers continue to edge closer to list price, indicating a modestly recovering market, except at the low end, where the recovery is anything but modest. 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.