Not All Bad News!

On the front page of the Business + Technology section for May 6, 2008, San Jose Mercury News real estate reporter, Sue McAllister, published an article "More Bad News!". The gist of the article was that, according to Zillow, San Jose area home prices fell about 8% from a year ago. What's more, half of the 2006 home buyers owe more than their homes are worth.

In the article was a chart from Zillow that portrayed each Santa Clara County zip code and the range of their median price change from the first quarter of 2007. Now the chart was colorful to be sure but the differences to me were striking. Here are my thoughts on the article/released data:

• To be sure, some zip codes, most notably in the north part of Sunnyvale, East portion of San Jose and Gilroy are experiencing a major downward movement in prices and are listed in the "down 13-19%" category.
• Some zip codes are moving the other way! These are located in Palo Alto, Mountain View, Los Altos, Sunnyvale, Cupertino, Saratoga and a portion of Los Gatos. These are categorized as "up 1-10%" from a year ago.
• There are several zip codes that weren't listed in any price change category due to no data. Most notably these are located in Palo Alto where the market has been hot. Who knows, perhaps Zillow didn't want to release that zip codes 94301, 94304 and 94305 increased more than 10%. I found it quite interesting, though, that an active market area in the above zip codes had "no data recorded".
• To me, there is an issue with one-size-fits-all headlines as they most often paint a picture with too broad of brush. Obviously, a homeowner who lives in in one of the zip codes experiencing an increase over last year would be scratching their head.
  

To the best of my chart interpretation, I've listed each zip code and the corresponding median price change category. For more information, please visit www.mercurynews.com or view the full report at www.zillow.com.

Santa Clara County Zip Codes
Zip Code		Median Price Change
94022		Up 1-10%
94024		Up 1-10%
94035		ND
94040		Up 1-10%
94041		ND
94043		Down 3-7%
94085		Down 13-19%
94086		Down 7-13%
94087		Up 1-10%
94089		Down 13-19%
94301		ND
94304		ND
94305		ND
94306		Up 1-10%
95002		ND
95008		Down 7-13%
95013		ND
95014		Up 1-10%
95030		Up 1-10%
95032		Down 1-3%
95033		ND
95035		Down 7-13%
95037		Down 7-13%
95046		Down 13-19%
95050		Down 7-13%
95051		Down 3-7%
95054		Down 7-13%
95070		Up 1-10%
95110		Down 7-13%
95111		Down 13-19%
95112		Down 7-13%
95113		Down 7-13%
95116		Down 13-19%
95117		Down 3-7%
95118		Down 7-13%
95119		Down 7-13%
95120		Down 3-7%
95121		Down 13-19%
95122		Down 13-19%
95123		Down 13-19%
95124		Down 3-7%
95125		Down 3-7%
95126		Down 7-13%
95127		Down 13-19%
95128		Down 3-7%
95129		Up 1-10%
95130		Down 1-3%
95131		Down 7-13%
95132		Down 7-13%
95133		Down 7-13%
95134		Down 7-13%
95135		Down 7-13%
95136		Down 7-13%
95138		Down 3-7%
95139		Down 7-13%
95141		ND
95148		Down 7-13%
		ND = no data

In researching the current market value for either buyers or sellers, I proceed to review all recent sales as well as those homes that have sold but not closed escrow (sale pending). Current list prices are not as relevant due to the fact that some sellers have "sticky" prices that are obviously too high for their particular market. The outcome of my research is what I call the home's "relevant range" or the value most likely to produce a transaction in a reasonable length of time. By the way, my research to obtain the relevant range is normally done on a finer level and even at a neighborhood level as entire zip codes could mask what is occurring in a particular part of a zip code.

If you have any questions or feedback, please leave me a comment or send me an email. Thanks for reading!

Median Price Comparison Tables for Silicon Valley

Here are some calculations I made comparing March 2008 with March 2007 median prices for both single family and condos and townhouses. These data are from the MLSListings statistics of actual transactions in both months. Newspaper articles utilize data from DataQuick, a firm that compiles property transfer information for it's subscribers. The problem with DataQuick information is that they first combine all transfers of single family homes, condos and townhouses, mobile homes. In addition, DataQuick includes transfers that are NOT sales like transfers in a divorce and family transfers where parents transfer property to their children where there is no money changing hands. For example, in a divorce a court may order a spouse to transfer a home to the other spouse for $120,000 when the market value of the home was closer to $800,000. In a family transfer where there is no property tax reassessment, these values are recorded at a zero value. These "transactions" or transfers are part of DataQuick's database and are counted as $120,000 and $0, respectively! DataQuick provides subscribers like the San Jose Mercury News this information. MLSListings, on the other hand, captures only actual sales transactions that are based on a buyer willing to step up and put money toward the purchase of a home -- a far more reliable an indicator of market value.

In the tables below, notice the wide variances between the types of properties as well as within the different counties. Another interesting comparison is the difference between the percentage changes from the lowest 10% and the highest 10%, especially in Santa Clara and San Mateo counties but also evident in Santa Cruz and Monterey counties.

Single Family - Median Prices	Santa Clara	San Mateo	Santa Cruz	Monterey
Lowest 10%	-20.2%	-10.1%	-22.9%	-46.1%
Median 50%	-1.8%	+0.6%	-14.0%	-35.7%
Highest 10%	-4.0%	+15.1%	-11.2%	-25.6%

Condo/Townhouse Median Prices	Santa Clara	San Mateo	Santa Cruz	Monterey
Lowest 10%	-16.8%	-3.1%	-29.8%	-25.5%
Median 50%	-1.9%	-6.9%	-11.2%	-5.8%
Highest 10%	+18.5%	+6.4%	-18.0%	-21.9%

For my latest market update report please refer to http://behindtherealestatescenes.blogspot.com/2008/04/april-silicon-valley-real-estate-market.html

Please let me know if you have any questions or have comments.

Thanks for reading!