Monday, January 19, 2009

January Real Estate Market Tidbits

As a kind of executive summary of my observations of the recent market action in Santa Clara County, I've assembled a list of tidbits for you. I encourage you to make comments, ask questions or even update us on what you are witnessing in your neighborhood.

> The market activity is turning around. Closings in December was higher than November, something that hasn't happened since 2001. Could this be an early sign of a bottom in this market? We'll see.

> Sell thrice, close once! With all the bank-owned and short sale homes on the market, most of them are in the lower-price ranges. Many of these homes sell multiple times but only close once! This is due to issues with either the property or the buyer's financial readiness or loan situation.

> Condos and townhouses sales volume continues to take a beating due to the improved affordability (read -- lower prices) of single family residences.

> Inventory back up. The inventory of available single family residences started upwards on January 3, 2009. All-time high levels were reached last April and after a couple of blips upwards in September and October, the trend has been lower until now. Sellers take note -- 2009 likely will be another soft year. Sellers will need to sell sooner this year and be more aggressively-priced to avoid a home languishing on the market.

> Market mix plays with median prices. Market mix is bringing down median due to more low-priced homes selling as a percent of total sales volume. Remember, we had just the opposite situation a couple of years ago with high-priced homes selling and few lower-priced homes when the sub-prime loan issues hit in the Summer of 2007. You want proof? Try this: the median prices for the 10th percentile dropped 45% while the median (50th percentile) has dropped 36% and the 90th percentile has dropped only 27%. For additional information on this, please click on my recent post on this topic Beware the Median Price Deception.

> Can't sell your $5,000,000+ home? There have been no sales of any homes above $5,000,000 in over five weeks!

> Want to sell with multiple offers? The percent of completed sales with a sold price greater than list price stands at 35% which means that more than one out of three sellers receive more than their asking price. This is attributable to sellers aggressively pricing their home in a slowing market.

> Homes that closed in December had a median days on market (DOM) of 55. Those that stayed on the market had a median DOM of almost double -- 106! This is a bigger disparancy than before as homes priced aggressively sell.

> Investors, where are the investors? Multi-unit investor marketplace has had very few transactions with only 29 closings in December, far lower than the record monthly closings of 94 a couple of years ago. Tougher lender requirements have contributed to this situation and probably can't leave out the stock market, too!

> Go, Monterey, go! Monterey County has seen more closings than San Mateo County and are at record highs. Most of the transactions in Monterey County are bank-owned or REO's after a flurry of affordable home building in the county a few years ago caused a tremendous over-supply. This has not occurred in Santa Clara, Santa Cruz or San Mateo counties.

For a more detailed analysis of the market, please click on my January Silicon Valley Real Estate Market Update.

Thanks for reading -- what are your thoughts?

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