second quarter

Silicon Valley Housing Market Trends - Second Quarter 2010 Update

In the second quarter of this year (April to June) we can really see which areas of the housing market have bounced back from the crisis and which areas are still struggling. To visualize those details, and to complement our second quarter 2010 analyses of Los Altos, Mountain View, Palo Alto, and Sunnyvale, we have created some city comparison graphs. We’ll cover total sales volume, sale price to listing price ratio, days on market, median selling price, and number of homes sold, using data on single-family homes off of MLS listings Inc.

First, let’s have a look at: 

Total sales volume clearly shows that over the past two-plus years the housing market dropped after peaking in 2008, then slowly bounded up and down, successively higher each quarter. The second quarter of this year really reflects a trend towards returned growth in the housing market of our local cities.

One additional interest to point out is that although most of the cities have not yet reached 2008 sales volumes, Mountain View has surpassed it.

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The sales price to list price ratio is one way to show buyer and seller perceptions: above 100% is a seller’s market, and buyers are paying above the listing price to win a house; below 100% is a buyer’s market, and sellers are having to reduce their listing price in order to sell a house. The closer a city is to 100% the more the market is balanced.

On a house that is listed for $1 million, a 1% change would amount to $10,000.

In both quarters this year, Mountain View and Sunnyvale have both been above 100%, a result of high demand for entry-level homes. Palo Alto and Los Altos, the more desirable and expensive of the cities, are still under 100% (Los Altos is at 98.21%, recovering from a glaring low of 93.56% in the beginning of 2009).

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The Average days on market is a good indicator of buyer demand and the overall health of the housing market. From the graph, we can see all four cities returning nearly to 2008 levels this quarter, with Palo Alto and Los Altos realizing the greatest second quarter drops. This is another signal that the market is shifting to a seller’s market, making it more difficult, once again, for buyers to get find a good deal.

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The median selling price can be used in conjunction to the earlier ratio graph. Palo Alto, Mountain View, and Sunnyvale, which are all near or above a 100% ratio, have median prices that are rising. Los Altos, however, is still far from a 100% ratio and its median sales price remains stagnate.

Currently all four cities are off second quarter results in 2008 by more than 5% -- Los Altos is even more at nearly 13% under -- so buyers can still expect to save money due to depreciated home values.

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The number of homes sold for each city has either nearly returned to 2008 levels, or surpassed it in the case of Mountain View, which is 50% higher this quarter than the same period in 2008. Part of the reasoning is traditionally more homes go on sale and are bought during the summer months. But this also a result of more sellers willing to sell their homes in a stronger market and a release of pent-up buyer demand.

Recommend Reading:

Palo Alto Housing Market – Second Quarter 2010 Update

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Because Palo Alto has a wide range of home prices, the entry-level market remained strong as buyers looked for bargains and the high-end market slowly recovered through the second quarter of 2010.

The median sales price in Palo Alto is 5.3% lower than the same period in 2008, at $1,468,000. A huge jump of 82.2% from last quarter and just 5.5% lower than in 2008 was realized in total sales volume, at $205,188,388. Average days on market is just over a month and there were 123 sales this past quarter, similar to 2008.

Palo Alto holds its title as a premier housing market with the highest total sales volume of our four comparison cities, and will continue to become increasingly difficult for buyers to enter the market as the sales price to list price ratio continues its rise to 100%.

Mountain View Housing Market – Second Quarter 2010 Update

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Mountain View serves as a good example in our four comparison cities to see that the strongest competition after the housing crisis is for entry- and mid-range homes.

The standout numbers this quarter for Mountain View are 102 closed sales, 121.7% more than last quarter and 50% more than 2008; and $98.5 million in total sales volume, 136.3% more than last quarter and 35.3% more than 2008.

Median sales prices and average days on market are creeping towards 2008 levels. The sales price to list price ratio is just above 100%, meaning seller and buyer perceptions are balanced, though slightly in favor of the seller.

Los Altos Housing Market – Second Quarter 2010 Update

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Los Altos burned through the summer months of the second quarter this year as it showed strong signs towards a sustained housing market recovery.

The median sales price slipped 1.4% from the quarter before, to $1.5 million. But the exciting news for home sellers is the precipitous drop in average days on market to 41, from 73 the quarter before, and 98 closed sales, which is equivalent to the same quarter in 2008. The sales price to list price ratio is 98.21%, meaning that more and more buyers are paying closer to list price, reflecting a shift to balanced buyer and seller perceptions. Total sales volume is $160,352,888, which is 17.3% lower compared to the same period in 2008.

Overall, Los Altos realized the greatest drop in mean sales price of our four comparison cities and has yet to recover the nearly 13% difference in price from the same time period in 2008 -- meaning home values are still depreciated in the area.

Sunnyvale Housing Market – Second Quarter 2010 Update

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Sunnyvale is one of two cities in our comparison that has turned into a seller’s market the past two quarters. Perhaps it is the urgency of the buyers to find an entry-level house (Sunnyvale has the lowest median sales price of our four comparison cities) before the effects of the housing crisis completely recede that is driving demand.

The median sales price jumped 12.7% compared to last quarter, to $851,000. Average days on market remained the same as last quarter, while number of homes sold was just higher than the same period in 2008, at 177. Sales price to list price ratio is 100.95%, meaning most sellers are encountering multiple offers over listing price.

Although the median sales price and total sales volume are still lagging compared to 2008 numbers, Sunnyvale is reporting strong numbers in other areas this quarter, showing that the city has pushed out of its slump.