Here are the highlights of January's transactions and market actions for Santa Clara and San Mateo counties. Your comments and questions are welcome. If you have an update as to what you are witnessing in your neighborhood, please don't hesitate to share with us. You may leave comments here, or contact me through my website.
> Market steady improvement with seasonal swings -- March 2009 saw the trend change in Santa Clara County -- a trend that continues to date, interrupted only by the seasonal aspects of the holiday season from Mid-November through early January. Closings in Santa Clara County were 593 versus 938 in December 2009, but an increase over 568 in January 2009. Even though median prices continued to decrease from December, seasonal factors outweigh the direction as smaller homes sell this time of year -- fully 7% smaller since last month and 8% smaller in San Mateo County. My analysis of the transactional information reveals:
* The supply of homes available for sale (inventory) has turned upwards after more than a year of continual decline. Part of this is seasonal as sellers are rushing to get their home listed in the early part of the year. Santa Clara County inventory of available single family residences increased 19% from last month and San Mateo County's inventory has increased 12%.
* The sale price to list price ratio continues above 100% and stands at 101.3% in Santa Clara County and stands at 99.3% for San Mateo County.
* The Days of Unsold Inventory (DUI) continues to show improvement with minor fluctuations. Current levels show a vast improvement from year ago levels -- as readers will remember that a lowering of this amount translates into a faster market. For January, Santa Clara County had a DUI of 58 for single family homes, 44 for condos/townhouses and 100 for multi-unit properties. San Mateo County had a DUI reading of 72 for single family homes, 67 for condos/townhouses and 107 for multi-unit properties.
> Super-heated Seller's Markets? -- Still! For Santa Clara County the hottest market areas are East Valley, South San Jose, Milpitas, North Valley, Evergreen (lower priced homes only!) and Cupertino. For San Mateo County, Foster City remains the hottest market followed by the Bay-side communities of Belmont, San Carlos, Redwood City and San Mateo. The characteristics of a seller's market are shorter time on the market, fewer number of homes available for sale, higher probability of multiple offers with many sale prices exceeding list prices and a tendency towards price appreciation.
> Buyer's Markets? -- Yes, there's a couple of them, too. For Santa Clara County, we see buyer's markets in Los Gatos/Monte Sereno and Saratoga, with them both improving. Los Gatos/Monte Sereno exhibits the highest Days of Unsold Inventory in the county at 149 due mostly to low demand and is my current "Best Buy" area in the county, followed by Saratoga and the very high priced areas of Palo Alto and Los Altos Hills. To refresh you, characteristics of a buyer's market are longer time on the market, higher number of homes available for sale, lower probability of multiple offers or even an offer with most sale prices below list price. The tendency is to have price depreciation or stable prices at best case under this market condition.
Where do I get "Seller's" and "Buyer's" market information? This is not an opinion thing 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). Additionally, this is not based on price levels but a supply-demand relationship. Generally, we see that the hottest markets are currently those in the more affordable price areas but Cupertino and the Cupertino Schools area of Sunnyvale which have much higher prices are extremely hot.
> Median prices -- Santa Clara County median price for single family homes now stands at $531,650 versus $450,000 or 18.1% increase from December 2009. The median price for condos/townhouses was $321,000 or 16.7% higher than December 2009. San Mateo County's median reached $640,000, 15.3% higher than the same month a year ago. 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! I advice my clients to NOT use an entire county's median price level to decide on whether to buy or sell 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.
> Sellers Be Sooner Still -- I continue to maintain my recommendation for sellers of higher-priced homes, especially those above $1 million that they should consider selling sooner and having an initially more-aggressive list price as the market usually softens when we get into the winter season. Sellers need to be positioned properly otherwise they risk languishing on the market.
For those considering a purchase of a home in an expensive area like Los Altos Hills, Los Gatos/Monte Sereno, Saratoga, an opportune time for negotiating is upon us! Some motivated sellers are reducing their list prices but as you may know, not all sellers have to sell. Some sellers have "sticky" prices and some sellers have to sell and are highly motivated, thus reducing their list prices more aggressively. Some sellers can't believe their home has fallen in value from what they thought it was worth. As many of my consistent readers and subscribers know, markets are not made between agents.
Thanks for reading my blog. I'm Tom McEvoy, Realtor -- Let me know your comments, questions, observations you may have or any future topics you'd like me to address.
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