Here are my observations of the recent market action in Santa Clara, Santa Cruz, San Mateo and Monterey counties. You are encouraged to leave your comments and questions or even update us on what you are witnessing in your neighborhood.
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Blame it on November -- Remember I said last month that
"The market activity is turning around." There is a theory that we experienced higher closings in December because of the calendar. In looking at November, we didn't have any time to close transactions after Thanksgiving Day as county workers are still stuffed after the holiday. Whereas, there was a full week after Thanksgiving Day 2007. Everybody knows that Thanksgiving Day falls on the fourth Thursday of the month, right?
Can we also blame the calendar for less Christmas and Holiday sales? Maybe. Just think of this. In 2007, there were 32 days between Thanksgiving Day and Christmas. Last year, there were only 27! That's more than 15% fewer selling days.
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Sucked in by the touts you've heard that you can make a killing in real estate by buying property 40-50% under market? There are free seminars you can attend that "teach" you to do this. The catch -- you'll have to sign up for their $3,000 course because, of course, there's too much to provide you in the seminar. Folks, prices have already adjusted in many areas by 40% or more from their recent highs. What a willing, able buyer pays IS the market price!
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Want a property tax adjustment? Well, who doesn't! But, hold the phone. There are now firms that will charge you a fee of up to $179 for something that you can do for the county standard filing fee of $30! Santa Clara County is one of only a few counties out of 58 in California that are proactive when it comes to adjusting fair market values so they make the property tax rolls as accurate as possible. You'll receive a card from the county in a few months and if you think the assessment is too high, go to the
Santa Clara County Tax Assessor's website. You can click on Assessment Appeals under Quicklinks to read how to apply, important dates for homeowners, etc.
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Closings of condos and townhouses continue to take a beating due to the improved affordability (read -- lower prices) of single family residences. January saw increased closings of single family residences of 68% over the same month a year ago. Condo and townhouse closings were up a mere 7%. If you don't like to mow lawns, in my professional opinion, there are currently better deals in condos/townhouses.
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Buyers wait for sellers to reduce list price. One of the indicators I follow constantly is the average sales price to list price ratio. This ratio, currently standing at 98.7%, means that the average transaction sells at only a 1.3% discount to list price. Buyers will wait until sellers adjust their list prices rather than put in ridiculous offers. High list prices, relative to the current market, on some homes are one big reason that some buyers wait, and wait, and wait!
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Market mix plays with median prices, revisited. As we said last month, market mix has helped to bring down median prices due to more low-priced homes closing as a percent of total closings. For instance, closings in East, Central and South San Jose (the more affordable areas in Santa Clara County) made up 12% of the total a year ago compared to 32% in January 2008. What would have occurred if we were to adjust for this significant change in mix? Well, the median price would have decreased about $200,000 due to this factor alone and real price depreciation would have accounted for the other $100,000 of the decrease. For the record, the median price in January 2008 was $743,500 whereas the median for January 2009 was $450,000.
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Another revisit? Can't sell your $5,000,000+ home? With the risk of bringing up another point raised last month, there have been no sales of any homes above $5,000,000 in now over nine weeks! There are 35 of them on the market as of 2/11/09, up from 27 the month before.
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Want to sell with multiple offers? The percent of completed sales or closings with a sold price greater than list price increases again and now stands at 37.4%. This means that more than one out of three sellers received more than their asking price. Oh, and 8.3% of sellers received list price.
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Record of sorts. Homes that closed in January had a median days on market (DOM) figure of 67, a record high. Compare that to those that were available to purchase having a median DOM of 100! This means that homes priced aggressively, well, sell.
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Investors, where are the investors? Multi-unit investor marketplace has had very few transactions with only 20 closings in January. Tougher lender requirements have contributed to this situation and probably can't leave out the stock market, too!
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Go, Monterey, go! Monterey County has seen way more closings than San Mateo County and again set another record high. 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. Still, this means that there are buyers, buyers with money and buyers with money who can get loans!
Thanks for reading -- what are your thoughts?
