Market Updates

San Mateo County Real Estate Market Update - First Quarter 2014

Here's an update on the San Mateo County real estate market for the first quarter of 2014. This single family home comparison is organized by school district with API score, including the median price, average $/sf, average days on market, and changes from the first quarter in 2013 and 2007.

Hope this provides some helpful insight as a buyer or seller.  

Palo Alto Market Analysis – May 2010 to May 2012

Palo-Alto-MSI-may2012
Palo-Alto-MSI-may2012

Palo Alto is a strong market which feels the ebbs and flows of the fickle real estate market less than both its more expensive and less expensive counterparts.  Palo Alto should be considered a seller’s market with a rapid turnover of its inventory with DOM averaging between 10-20 days for the last four months, and not over 50 days since March 2011.  The median price has been on a steady increase for the better part of the last year, and the sales absorption rate has been following the same trend.  Historically, Palo Alto has been a very desirable place to live and will continue to be one of the most consistent investments in all of the Bay Area for the foreseeable future.  All the market data should continue its upward trend and only time will tell how high it will go.

The MSI and DOM for Palo Alto are shown on the chart above.  The DOM has seen a mostly downward trend since May 2010 without large cyclical changes.  For the most part, the level of inventory has been decreasing since May 2010 with a slight uptick in the last couple of months.  Inventory supply is currently sitting at just over one month.

Palo-Alto-SA-may2012
Palo-Alto-SA-may2012

From May 2010 to May 2012, the sales absorption rate has been steadily increasing.  In May 2012, the current sales absorption rate was 43.5% of properties under contract and 39.0% of properties sold.

Palo-Alto-median-may2012
Palo-Alto-median-may2012

Palo Alto’s median price only dipped slightly in late 2010/early 2011, then saw an early start to its upswing in July 2011 as opposed to the September 2011 upswing start in the Mountain View, Los Altos, and Los Altos Hills.  As far as price, Palo Alto’s continuing median price increase is the most consistent of Mountain View, Los Altos, and Los Altos Hills ending in May 2012 at $1,654,500.

Los Altos Hills Market Analysis – May 2010 to May 2012

Los-Altos-Hills-MSI-may2012
Los-Altos-Hills-MSI-may2012

The Los Altos Hills market mimics the Mountain View, Los Altos, and Palo Alto with regards to median price only.  Its market data of MSI, DOM, and sales absorption are different than the other markets due to its extremely high price range driven by its premier location and exclusive homes.  Like other Bay Area markets, Los Altos Hills should continue its upward trends, though it will probably be one of the first markets to feel the effects if trends begin to change again.

Due to its higher median price range of $2,376,000, the inventory levels of Los Altos Hills fall into that of a more balanced market, and even at times a buyer’s market.  The May 2012 level of inventory is currently sitting at 2.5 months which is a drop of almost five months from April 2012.  The DOM for Los Altos Hills is not cyclical like Mountain View or even Los Altos due to the extremely high price range and more exclusive properties.

Los-Altos-Hills-SA-May2012
Los-Altos-Hills-SA-May2012

 The chart above reveals that the sales absorption rate for Los Altos Hills was unsteady between May 2010 and May 2012.  The fluctuations such as this are to be expected at this more exclusive price range.  In May 2012, the current sales absorption rate was 27.3% of properties under contract and 10.4% of properties sold.

Los-Altos-Hills-median-may2012
Los-Altos-Hills-median-may2012

The median sales price line for Los Altos Hills more closely follows the line of Mountain View with a slight uptick in late 2010 and a dip until September 2011.  At that point, the uptick pace for Los Altos Hills more closely follows the pace of Los Altos.

Los Altos Market Analysis – May 2010 to May 2012

As shown in the charts shown below, Los Altos is a highly desirable city with a strong market and high median price range.  While it does border into a balanced market occasionally, Los Alto is to be considered predominantly a seller’s market.  Given its average median price range just under $1.6 million, it is surprising that the average DOM is under 30 days and the inventory supply is just about 1 month.  With the consistent upward trend in sales absorption and median price since September 2011, we can expect Los Altos to maintain its status as a desirable place to live and will most likely see prices continue their upward trend.

Los-Altos-MSI-May-2012
Los-Altos-MSI-May-2012

The chart shown above graphs the MSI as well as the DOM for Los Altos.  The chart indicates greater fluctuation in DOM statistics when compared with those of the Mountain View market though Los Alto does still follow the seasonal real estate cycles.  Currently, the DOM is between 20 and 30 days, and the level of inventory is currently sitting at just over one month.

Los-Altos-SA-May-2012
Los-Altos-SA-May-2012

As with MSI, the sales absorption rate has also been fluctuating a bit more when compared to Mountain View though it has been trending upward overall from May 2010 to May 2012.  In May 2012, the current sales absorption rate was 46.3% of properties under contract and 40.7% of properties sold.

Los-Altos-Median-May-2012
Los-Altos-Median-May-2012

The median price in Los Altos is showing a healthy, and likely sustainable, upward trend over the last two years.  When discussing Mountain View, Los Altos, Los Altos Hills and Palo Alto, Los Altos is the only market that did not see a dip in late 2010/early 2011. Since September 2011, this upward trend has become a bit more pronounced with the median price in May 2012 being $1,786,500 which is more than $300,000 higher than May 2010.

Mountain View Market Analysis – May 2010 to May 2012

An analysis of the charts below reveals that Mountain View, though it is more volatile than some of the more expensive markets in the area, is consistently considered a seller’s market. Mountain View is quickly absorbing all of its homes for sale and currently has one of the lowest month’s supply of inventory (MSI) in the Bay Area at .5 months. Only time will tell how long this astoundingly low inventory supply will affect the other key statistics though it can only be assumed that days on market (DOM) will decrease while sales absorption (SA) rates and median prices will increase given historical data.

Mountain-View-Market-May-2010-to-May-2012
Mountain-View-Market-May-2010-to-May-2012

The chart shown above graphs Mountain View’s MSI as well as the DOM.  Traditionally, DOM is cyclical in nature decreasing in the spring and summer, and increasing in the fall and winter, and the Mountain View market is no exception.  For the most part, the level of inventory has been decreasing since May 2010.  It is currently sitting at an astonishing low inventory level of .5 months.

Mountain-View-May-2012-Sales-Absorption
Mountain-View-May-2012-Sales-Absorption

As you can see by the chart above, the sales absorption rate in Mountain View has been steadily increasing from May 2010 through May 2012.  In May 2012, the current sales absorption rate was 64.6% of properties under contract and 54.6% of properties sold.

Mountain-View-May-2012-Median-Price
Mountain-View-May-2012-Median-Price

Over the course of the last two years, Mountain View had a swing in median price of about $200,000 as shown in the above chart.  The solid line showing average median price  has been relatively stable with a slight dip in late 2011.  Since February 2012, Mountain View has seen a stable median price just over $750,000.

Bay Area Real Estate Analysis: Real Estate Terms Defined

There are several key statistics that are used to determine the health of any real estate market – average days on market, month’s supply of inventory, sales absorption rate, and the median sales price. Days on market (DOM) describes how long a home is active on the market before its status changes to pending.  The average days on market is determined by adding each listing’s days on market in a month, then dividing by the number of active listings for sale at the end of that month.

Median Home Prices and Sales in the Peninsula

The San Jose Mercury News has a nice breakdown (below) of the median sales price and number of sales for each zip code in the Peninsula (Santa Clara County, San Mateo County, and Santa Cruz County). You can also see the percent change comparing this January to the same period in 2010. In the Silicon Valley (Santa Clara County) the median sales price for all homes was $460,000, a 2% drop from the same period last year. But looking at resale homes, we saw a 1.9% increase to $529,000. Looking at number of home sales in the area, there were 1,424 sales for all homes, a drop of 10.9% from last year; in resales, 987 sold, which was 5.6% less than last year. We'll soon see in the spring and summer months of 2011 if it picks back up, when the majority of sellers and buyers are on the market.

Overall, Los Gatos Los Altos zip code 94024 had the highest median sales price of $1,569,000, but Palo Alto/East Palo Alto zip code 94303 had the highest $/SqFt at $883. On the other side of the scale, San Jose zip code 95133 had the lowest median sales price at $230,000, and Gilroy zip code 95020 had the lowest $/SqFt at $195.

Bay Area Real Estate in the News: Foggy With a Chance of Sun

Fog around Golden Gate Bridge and city skyline

DataQuick released their December 2010 monthly report for the Bay Area recently hitting the headlines with "Bay Area Housing Ends Year With Many Looking but Not Buying." But amongst the headline there were also bits of sun hinting of more to come for Bay Area real estate.

Here's what John Walsh, DataQuick president, said:

“While the dicey economy and employment concerns are major factors, tight mortgage credit is also a big issue right now, especially for the upper half of the market. There’s a lot of pent-up supply and demand out there, which will start to meet when the lenders re-open their spigots a turn or two,” he said.

Silicon Valley Housing Market Trends – Fourth Quarter 2010 Update

Since the crash, the Silicon Valley has recovered faster than the nation on average. Narrowing the range to our four comparison cities - Los Altos, Mountain View, Palo Alto, and Sunnyvale - we have an above average group even against Santa Clara County (see graph below). Experts at DataQuick, an independent real estate analysis company, report that the median sales price and home sales have fallen in the Bay Area from a year ago. The same is true in our example cities. But in a post-crash economy the most important factor real estate professionals, buyers, and sellers are looking for is a stable market.

Prices in our four cities have remained stable, yet deprecated, for the past two years. What will really excite the housing market is a return of high-cost homes and increased buyer confidence found in areas such as gains in employment and relaxed credit standards from banks. While some have seen this as an opportunity to find a house for less, most of the market is collectively holding its breath.

So with anticipation of what 2011 brings, lets review how 2010 was for our four real estate cities.

Median Selling Price Q4 2010
Median Selling Price Q4 2010

We've also talked about the median selling price over the years here and here, and we're getting further away from the dump in housing prices that occurred late 2008. Like we mentioned in the opening, what people are looking for is stabilization, but also, at what price will that occur.

This quarter, Palo Alto nearly dropped to its lowest price since the bust, unusual for a strong market, but is expected when top-tier homes are not being put up for sale until the market improves. There is obvious demand in this city as it has the lowest average days on market of our comparison cities (see third graph). Currently, Palo Alto is around 2005-2006 levels, which is about 4% lower than the fourth quarter in 2006 compared to the same quarter in 2010.

But where Palo Alto struggled in the past two quarters, Los Altos has risen two straight quarters. Although the news is tempered by its current fourth quarter median sales price, which is about equivalent to its first quarter in 2006.

At a price point $500,000 or so lower are Mountain View and Sunnyvale. Continuing to be the most stable city of the group, Mountain View has reliably hovered at a median price of $900,000 for single-family homes -- equal to the first half of 2006.

Sunnyvale reflects the current movement of Santa Clara County, and moved back to levels found near the end of 2004.

Sales Price to Listing Price Ratio
Sales Price to Listing Price Ratio

The sales price to listing price ratio gauges buyer and seller expectations. (Consider that a 1% difference here on a million dollar home is equal to $10,000.) The first thing that jumps out is Palo Alto is the only city in our comparison where homes are selling higher than their listing price, a ratio above 100%.

With Palo Alto and Los Altos trends reversed from our last graph, Los Altos increased its median price but the majority of the home sales in the city have made pricing adjustments to fit the mood of the conservative buyer. Mountain View, which also saw a bump in the median price, faced a dramatic drop of about two percent to 98%, down from 100%. This could be a correlation with more aggressive sellers entering these markets, but they are not getting the bites they saw in 2008.

Sunnyvale remained similar to the previous quarter, nearing a balanced market between buyer and seller.

Interestingly, Santa Clara County has not realized a ratio above 100% for some time, unlike our four comparison cities. Going back to our 2000 to 2010 report, the county broke 100% in the beginning of 2004, peaked above 104% for single-family homes in spring 2005 and fell under again mid-2006. As a comparison, the average ratio for our four cities remained above 100% from 2004 until late 2008.

Average Days on Market Q4 2010
Average Days on Market Q4 2010

Average days on market is another good indicator of market health. So much so that sometimes buyers and sellers put unreasonable weight into days on market of a house listing. But in markets where emotions can play a large role in a purchase, it is not unexpected and something to be dealt with.

This graph mostly looks like a mess of weaving colored lines, with no consideration to housing prices. Signs of a bubble popping through a climbing average days on market were felt in Santa Clara County as a whole late 2005, whereas most of our four comparison cities kept an average days on market below 40 until 2009. The days on market of the county and our cities are more closely aligned now that the market has cooled, as we can see they are following a similar trend since late 2009.

Number of Closed Sales Q4 2010
Number of Closed Sales Q4 2010

In the number of closed sales graph we were able to put our four comparison cities on the left vertical axis and also include Santa Clara County homes sales using the right vertical axis. While county sales are not comparable in number to city sales, displaying both can help compare overall trends to the individual cities.

Traditionally, home sales dip during winter and peak during spring and summer. But looking at 2010, Palo Alto pushed up, Los Altos dipped, Mountain went up, and Sunnyvale followed the winter plunge. Buyers are out there combing for good deals, especially in valued markets such as Palo Alto. Though previous years have shown that the biggest dip happens during the first quarter of year, so we'll have to wait and see if these cities continue to break the trend.

One positive emerging trend occurring for all our four comparison cities and county alike, is a steady increase of sales, most clearly seen when you compare first quarters.

 

Palo Alto Housing Market – Fourth Quarter 2010 Update

palo alto real estate market fourth quarter 2010.png

Palo Alto, the feather in the cap of Silicon Valley real estate, struggled with its median sales price, falling two straight quarters after reaching its peak in second quarter of this year since the housing bust. The fourth quarter of 2010 was lower than the same period in 2008 ($1,350,000) and in 2009 ($1,370,000). This is due to two factors: the real estate market adjusting to pre-bubble prices, and fewer expensive properties being listed because of the deprecated values.

On the positive side, sales are up overall, beating all previous quarters this year and the fourth quarters of 2008 and 2009. The sales price to list price ratio is also one of the most balanced of our four city comparison, and with a ratio just above 100%, the only one favoring the seller.