Here are the highlights of August transactions and market comments for Santa Clara and San Mateo counties. Your comments and questions are always welcome. If you see something in your neighborhood that you are curious about or have a question, please don't hesitate to share with us. You may leave comments here, or contact me through my website.
> Market Overview -- Since the March-April 2009, we've seen a general improvement in market conditions but lately the market has slowed. Closings of single family residences (SFR) in Santa Clara County decreased to 864 from 1,008 last month and was down 11.7% from the same month a year ago. San Mateo County saw a slightly higher SFR closings level of 395 versus 387 last month and up 8.2% from the same month a year ago. My analysis of the transactional information reveals:
* The supply of homes available for sale (inventory) is trending upwards in both counties these past six months which is usual for this time of the year. However, the rate of increase has slowed significantly. Inventory in both counties are higher than the same month a year ago.
* 48.7% of sellers in Santa Clara County get at least list price for their homes! In San Mateo County, the corresponding percentage is 41.3%. This is an indicator that the overall market remains stronger in Santa Clara County. Also, these indicators have drifted lower and underscore a slowing market in both counties.
* Days of Unsold Inventory (DUI) continues an upward trend translating into a slowing market. DUI is conceptually the inverse of inventory turns ratio and represents a calculation using both supply and demand. A higher figure for DUI, then, means the market is becoming weaker. For August, Santa Clara County had a DUI of 81 for SFR, 87 for condos/townhouses and 176 for multi-unit properties. San Mateo County had a DUI reading of 106 for SFR's and 133 for condos/townhouses. Notice that all readings were more positive for Santa Clara County.
> Seller Markets? -- For Santa Clara County the hottest (seller) market areas are South San Jose and Santa Teresa parts of San Jose, Cupertino, and East Valley and Evergreen Valley parts of San Jose. A seller's market has shorter time on the market, fewer number of homes available for sale, higher demand by buyers with a tendency to have multiple offers and sale prices generally exceeding list prices with a potential of price appreciation.
> Buyer's Markets? -- For Santa Clara County, we see buyer's markets in Almaden Valley, Willow Glen, Campbell and Cambrian. Willow Glen, Campbell and Cambrian are my current "Best Buy" areas in the county. What makes a "buyers" market is the relationship of supply to demand -- simply put as higher supply and lower demand. The characteristics of a buyer's market is a longer time on the market, higher number of homes available for sale, lower demand by buyers which translates into a lower probability of multiple offers and a tendency for price stabilization or even price depreciation.
Where do I get "Seller's" and "Buyer's" market information? This is not an opinion or based on price levels but a calculation I make using the number of homes for sale (supply) and the number of sales (demand) in the prior month which results in days of unsold inventory (DUI).
> Median prices flatten out -- Santa Clara County median price for SFR's increased 12.4% to $629,500 from $560,000 in August 2009. The median price for condos/townhouses was $347,500 or 5.3% higher than the same month a year ago. San Mateo County's median price for SFR's was $790,000, 15.3% higher than the same month a year ago, whereas condos/townhouses was $443,750, 8.5% lower. Notice that with prices I don't use month to month changes but year over year. This eliminates seasonal fluctuations and is something that newspapers and most online pricing sources haven't figured out yet! Or, perhaps they use this intentionally to scare folks so that they can sell more newspapers! However, I advise my clients NOT to use an entire county's median price level to decide whether to buy or sell or time the market but use the trend information in a general manner. To formulate an effective strategy, I use analysis of the supply-demand characteristics of the neighborhood under consideration and advise my clients of the appropriate strategy they should employ to maximize their dollars if they are selling and maximize their house if they are buying.
> Boo! Buyers get ready -- Historically, a good time to buy is approximately at the time of Halloween. I don't see it any different this year. I recommend sellers sell now and buyers buy later in the fall.
Need help with understanding the market in your area? Give me a call or email me for a no-obligation consultation and research to arm you with market intelligence to help you make a better, more-informed decision.
Thanks for reading my blog. I'm Tom McEvoy, Realtor with RE/MAX Santa Clara Valley -- Let me know your comments, questions, observations you may have or any future topics you'd like me to address.