For February in Santa Clara County for single family residences, there were a very low number of closings which would have set a new low except for February 2008 (before the financial crisis!). Closings in one month are more times than not, sales the previous month so these were in large measure indicative of January's slower activity. As we look at inventory, the amount or supply of single family residences available to purchase in Santa Clara County stood at 776, the second lowest February other than the 721 reached in 2000!
All the while, the Silicon Valley real estate market continues to be rather slow but gaining speed as it usually does this time of the year. Last month, I noted that we saw continued buyer demand to prop up prices and I advised buyers to buy quicker rather than later for this purpose. For February, that translated into a record median price of $801,000, an increase of 12.3% from the same month a year ago. Where else can you reap an average 1% a month return on your investment? I believe this demand will continue and probably increase as we get into the strongest portion of the selling year (after Super Bowl Sunday to just before Memorial Day weekend).
I see higher prices ahead with somewhat stable mortgage interest rates. Last month there were 65.6% of the sales with sales prices greater than list prices, second highest since February 2005 (an extremely hot real estate market). Additionally, the average sale price to list price ratio stood at 104.3%, higher than the 103.9% for the same month a year ago and means that the average sale took place at better than 4% higher than list price. This continues to indicate to me that there is ample buyer demand to further push up prices in the near future as activity usually increases as we go deeper into spring. Also, when we see a sale price higher than list price it infers that there were multiple offers — otherwise why would a buyer offer more!
Silicon Valley real estate trends continue to be positive and we should see higher prices in the future. Mortgage rates have trended higher but have fallen slightly and are currently in the low to mid-4% range. The gains in the stock market help supply of the down payments for some buyers to afford the prices and most buyers using loans decide upon a fixed rate mortgage with 20% or more down payments. Along with this, almost one-third of the closings were cash transactions.
For questions, comments on the Silicon Valley real estate market or update in your neighborhood or your target area you are considering, please contact me and I’ll personally respond to assist you with the current market dynamics. Thanks for reading!