It was a case of home owners sitting out the market. New listings of single-family homes in Sunnyvale were at a 10-year low in August, dropping from 107 in August 2006, to 79 this year. In fact, total inventory levels also dropped slightly, from 130 single-family homes to 127 over the same period. Sunnyvale's average number of new listings during the month over the last ten years is 105 and it's an illustration of why real estate is local. National news headlines from around the country correctly talk about aggregate numbers that are lower because of deflating markets --- and many Silicon Valley home owners here who might have considered listing their homes, but could afford to wait, sat out.
But ultimately, real estate is about location, supply, and demand. And while supplies were down, demand was actually both "normal" and "up". The ratio of closed transactions to new listings in August 2007 was 73%. The 10-year average is 74% and it was 58% last year. How did that increase manifest itself? Besides a fourth consecutive year of over-asking closing prices in single-family homes, have a look at the difference in the cost of Median Homes year-over-year.
Median Home 2007 - $930,000
The umbrella wasn't included in the number, which was $41,000 over the asking. The Median Home in Sunnyvale is the 3 bedroom, 2 bathroom ranch at 956 Kintyre Way, a 51 year-old home.
And while it shows in the plain styling of its exterior, the inside was completely remodeled to today's expectations, with a new appliances in a completely renovated kitchen, hardwood floors, a pair of redone bathrooms, new paint inside and outside, and energy-saving double pane windows. The lot is 6,572 square feet and comes with underground sprinklers and new landscaping. All the work and upgrades paid off because the home took 6 days to go.
Compared With Last Year - $865,500
Kintyre's styling is in complete contrast to one of last year's Median Homes, the ultra-modern, 20 year-old, 1465 Yukon Drive, which sold for $870,000, 16 days after being re-listed (45-day CDOM). The listing describes the home as "charming", which I always interpreted as a real estate code-word for "small", but this home is 2,068 square feet on the inside.
"Charming" might more accurately describe the lot for a home this size, which is 3,920 square feet. Ratios aside, the claim to fame for this 3 bedroom, 2.5 bathroom --- I think you could call it a chalet bungalow --- is the Cupertino schools, Nimitz Elementary and Cupertino Middle, plus Fremont Union's highly-rated Homestead High School.
999 Glenbar Ave. is the other Median Home in Sunnyvale for August 2006. As a 47 year-old home, Glenbar has a more traditional exterior but a completely modernized interior, with recessed ceiling lights, granite and stainless steel in the updated kitchen, new bathrooms, refinished hardwood floors, and maple vanities.
Its 1,524 square feet contain 3 bedrooms and 2 bathrooms, but it has a more traditional lot size at 6,098 square feet. Unlike its fellow Median Home, Glenbar sold for above its $844,888 asking, for a rounder $861,000. It went in 13 days.
Market Snapshot - September 7, 2007
There are 114 single-family homes and 72 townhomes and condos listed, for a total of 186 available residential listings. It's been generally good news for Sunnyvale, so let's focus on the homes where things aren't so good.
Of the common interest developments, 19 have undergone a reduction and 6 have had their asking price increased. Here's a map plotting where the homes that have been reduced are. As you can see, there's no single area, but they do share some characteristics.
First, they're smaller condos, many in the sub-1000 square foot range. They have an average list price of $484,540 for an average of 1036 square feet. The smaller condos are sitting because the ability of buyers in this range was largely hurt by the sub-prime implosion, the trend towards requiring higher down payments, and now by jumbo rate increases.
Second --- with the exception of the cluster around #10 which is that complex of lower-end condominiums that I mention in the Threats section of my notes on the Expressions of Sunnyvale and Belmont Terrace --- the small condos are either on or one block over from a major road east of Mathilda (and further from Mountain View). Buying near a major road isn't ideal but it's really a combination of these two factors that has hurt this set of properties.
Of the 114 available single-family homes, 47 have undergone a reduction, with those 47 having an Active CDOM number of 84.7 days on average. I was surprised until I pulled up a map. You can't tell every person's situation from there. Some people might have been too aggressive with their original mark. Others might be in a bad financial situation. But there are clusters in Sunnyvale towards and north of the 101.
Same issues here as with condos. Homes at the lower-end have a shrinking set of buyers; home owners in more affordable portions of the city have a higher probability of being in financial distress.
Net-net, the amount of "really good" inventory has been relatively low and those sellers have reaped the benefits. But higher jumbo interest rates are pushing the effective cost of homes higher, so home owners should keep that in mind when listing a home towards or below the median --- the minimum bar buyers have to jump over is getting higher.
Conversely, buyers need to keep in mind there might be less inventory than it seems, particularly above the median. Buyers will get some relief because of the publicity of the loan implosion and the time of year, but only certain sellers will need to entertain lowball offers.