Many buyers on the Peninsula have been frustrated this year
with the low inventory of homes to choose from and the reason why this is so
seems to be a combination of a shortage of new listings coupled with increased
home sales over the same period last year as this Belmont Home Report graphic
[Click on the graphic for a full sized image]
This graphic for San Mateo County reveals
a similar trend. What created the current low inventory levels of homes are not
just that fewer homes were listed for sale, but rather an increase in sales
this year as compared to last. The month’s of inventory, which is the current
inventory of homes for sale divided by the current rate of sales, has dropped
in half from the same time last year.
*The percentages in both of these graphics are the
percentage change from one year ago.
The Case-Shiller study (which lags the market by three
months) shows a recent steady increase in home values. This is one of the most
accurate barometers on a macro level since rather than tracking the median
price in a given city–which can vary greatly depending on whether larger or
smaller homes are selling–it uses a repeat sales pair methodology wherein it
tracks only homes which have sold repeatedly under strict controls to eliminate
a non-arm’s length home transfer, or homes which have increased in value by
extensive remodeling. The Bay Area‘s Metropolitan Statistical
Area (MSA) encompasses five of the nine Bay Area counties which are
San Francisco, Alameda, Marin, Contra Costa, and San Mateo County. Because of
the large selection area, your area may be doing much better or worse than the
What seems to have changed from the increase you see in the
graph from last summer when the index was actually higher, is that buyers seem
to be more comfortable entering the market this year. Clearly values are still
low, interest rates even lower, and local job creation has increased the
consumer confidence level on a local level. We predicted that this market would
“bounce along the bottom” for awhile before seeing any substantive increase.
But given the strong performance on the Peninsula, we believe for now, that
we’ve passed the trough and are hopefully headed for a rationale, sustainable
steady increase in home values.
The information contained in this article is educational and intended for informational purposes only.
It does not constitute real estate, tax or legal advice, nor does it substitute for advice specific to your
situation. Always consult an appropriate professional familiar with your scenario.