Is Silicon Valley Returning To A Normal We Once Knew?
Have we reached the top of the pricing curve? Compared to last month, single family median price showed some flattening in the Home Counties. Median price was up 9% in San Benito County, 4% in both Santa Clara and Santa Cruz Counties, up 1% in Monterey County, and dropped 9% in San Mateo County. July 2013 Median prices are still in double digits compared to July 2012. Monterey single family median price is up 50% compared to last year, San Benito is up 45%, Santa Clara up 21%, San Mateo up 15%, with Santa Cruz up 5%. The flushing through of the distressed market in the Salinas Valley may be helping Monterey County get back to healthier trends.
July’s single family sales were fairly consistent to June totals. In July, Monterey County sales rose 9%, Santa Cruz 8%, Santa Clara 3%, and San Mateo sales were up just 1%. Compared to July of 2012, Monterey, Santa Clara, and San Mateo County sales remained flat, but there was a 10% gain in San Benito County, and Santa Cruz County sales jumped a whopping 28%. Rising interest rates may be slowing the “sale train” a bit, but we still hear a lot about multiple offers.
Compared to June, July single family inventory rose slightly in all Counties except in San Mateo where it dropped 3%. Inventory was up 12% in Santa Clara County, 6% in Santa Cruz County, 3% in San Benito County, and up 1% in Monterey County. While still significantly down from July 2012 levels in all Home Counties, inventory is gradually getting back to healthier levels, and we are seeing an unseasonal bump in properties on the market for this time of year.
Compared to June, July single family inventory rose slightly in all Counties except in San Mateo where it dropped 3%. Inventory was up 12% in Santa Clara County, 6% in Santa Cruz County, 3% in San Benito County, and up 1% in Monterey County. While still significantly down from July 2012 levels in all Home Counties, inventory is gradually getting back to healthier levels, and we are seeing an unseasonal bump in properties on the market for this time of year.
Re-printed with permission courtesy of the California Association of REALTORS.
Drew & Christine are local Belmont REALTORS and homeowners with more than 20 years experience.
Drew & Christine Morgan
REALTORS | Notary Public
(650) 508-1441
Disclaimer:
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.
One would have to be living under a rock to be oblivious to the reports of the hot Bay Area housing market. The San Jose Mercury released the headline yesterday that in the nine Bay Area counties the median home price rose 33% year over year this June.
One might wonder if Belmont is under performing since home prices only rose 6% this June over last. There’s actually good news for Belmont homeowners in these statistics, here’s why:
One of the main reason that home values have skyrocketed year-over-year in the nine Bay Area counties is that many of the cities in these counties had home prices which felt to levels far below where any market correction should have predicted they would land. In other words, the hardest hit areas with the most drastic price reductions are seeing the largest percentage rebound. Since Belmont’s home values fared rather well during the downturn, our rebound is more sensible.
Don’t tell that to buyers who are trying to get their first home. They’re seeing bidding wars going on which in June of 2013 made the average home in Belmont sell for 112% of the initial asking price.
Click on the graphic for a full-size screen shot
SALES
Home sales in Belmont—contrary to the nine Bay Area County trend—picked up (albeit an insignificant amount). June of 2012 saw one more home sale than last June with 27 homes closing escrow.
The only event that helped sales in June of 2013 was that in May we had a plethora of new listings—35. Year over year that was a strong seasonal influx of new listings.
INVENTORY
This new category we are adding to the monthly report is all about inventory—the number of homes available for purchase. We measure the inventory level and compare that to the number of monthly sales to arrive at a “Months of Inventory” statistic. The so-called months-supply is the number of months required to sell the current inventory of homes at the current rate of home sales. Our nation’s housing inventory is seeing levels in the 4-5 month range while Belmont’s inventory is less than one month’s worth—that’s a very tight housing inventory.
The housing inventory in June of 2012 stood at 39 homes for sale with 25 new listings hitting the market; contrasted to June of 2013 when there were only 19 homes to sell and 15 new listings. The good news that might save July’s statistics is the rally of new listings after the Fourth of July week that saw a listing hiatus.
MEDIAN HOME PRICE
The median home price in Belmont, as mentioned above, was a more sustainable 6% increase over last June at $1,113,500, the second highest median home price ever recorded for Belmont (October of 2007 it stood at $1,135,000).
SQUARE FOOT
We always look at the size of homes selling in the two periods to see if there is an inequity but with the difference between June of 2012 and June 2013 being a meager 55 square feet smaller in 2013, it’s statistically insignificant. Why? Because appraiser don’t even account for square foot difference of less than 100 square feet.
DOM (Days on the Market)
The time it took to sell the average home in Belmont dropped dramatically from 50 days last year to only 14 this June—a 72% decrease in the time it took to sell a home.
PRICE REDUCTIONS
Price reductions are another way to catch the pulse of the market. The more sellers who have to lower their asking price expectations in order to attract a buyer says more about buyer trepidation than seller’s lofty and overzealous price expectations. In June of 2012 four of the 26 sellers lowered their asking price while this June only one seller suffered from that fate.
PRICE RECEIVED OF ASKING
The price a seller receives also tends to be a good indication of the strength of the market. In June of 2012 57% of the homes sold for more than the asking price with a list-sale price ratio of 103%. This June 88% of the homes sold for over the asking price for on average 112% of the initial asking price.
Interest rates are rising and how that will impact our local market is yet to be seen. Clearly it has knocked a few buyers and sellers off of the fence. It’s anyone’s guess how our local market will react but intuitively we believe that the days of multiple offers in the double digit range may be waning.
Drew & Christine are local Belmont REALTORS® and homeowners with more than 20 years experience.
Drew & Christine Morgan
REALTORS | Notary Public
(650) 508-1441
Disclaimer:
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.
Drew & Christine Morgan did not necessarily participate in these sales.
Let’s face it; nobody wants to purchase a home at the peak of the market. And most buyers would love to imagine they got a good deal. But with today’s local market conditions, that’s a tall order to fill.
The internet has changed the way buyers search for homes. Gone are the days of buyers waiting for their REALTOR to call each week with the latest new listings. Today, buyers have more-or-less unfettered access to the Multiple Listing Service where agents cooperate by sharing their inventory of homes for sale.
The larger question is should you purchase a home today, or wait for more inventory or prices to decline?
This graph for San Mateo County illustrates that as of June 2013 we are still not back to historic high home values—though in select neighborhoods on the Peninsula we just recently surpassed previous historic highs.
Today’s buyers are snapping up homes with a frenzied sense of urgency—and they’re paying top dollar to do so. Why? Because interest rates are still very favorable and increase a buyer’s ability to pay over the seller’s asking price—but the trend is about to change and probably for good. We predict that in Q2 of 2014 mortgage interest rates will probably be a full point higher than they are today. And that’s not pure conjecture; the Federal Reserve has not only signaled they have overtly stated that when unemployment reaches 6.5% it will begin raising the federal funds rate—and they have already begun easing up on purchasing bonds to artificially keep rates low. In this article we discussed how much more one would pay interest over the life of a home loan when rates return to normal levels–and the numbers are staggering.
If the entire country’s housing market was rebounding at the same rate of homes on the Peninsula, one can easily see that the Fed would have already reacted and raised rates.
Buyers are locking in lower than historical trend rates and in most cases paying well over what a seller is asking for a home because money is cheap.
We’ve been in business for over 20 years selling home on the Peninsula and we’ve experienced several recessions so the trends and cycles are obvious to us. Timing them is more difficult, but from everything we have seen, we believe it would be better in today’s environment to jump in and get a home today, rather than bet on more favorable conditions in the near future. If you are still sitting in the sidelines, you are betting against the odds—that unprecedented low interest rates will continue, and that home prices have already hit their peak and will soon decline. Barring any unforeseen catastrophe, that’s not a bet we would take right now.
Drew & Christine Morgan are REALTORS/NOTARY PUBLIC in Belmont, CA. with more than 20 years experience in helping sellers and buyers in their community. They may be reached at (650) 508.1441.
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.
It’s time to do the numbers, and I can hear the jingle playing in my head “We’re in the Money”–a little ditty from NPR’s Market Report segment which they play when the stock market is up. As each month goes by it seems Belmont home values keep setting new high water marks–not that we’re insensitive to the woes of buyers. We represent Buyers too and we know how frustrating it can be to secure a home in today’s market. The inherent problem for buyers when timing the market is that when housing prices are down, typically so is the overall economy and nobody feels much like taking on an enormous mortgage when coworkers are being laid off and empty cubicles are selling for pennies on the dollar on Craig’s list. Finally, when the economy picks up and everyone feels happy again they all starts to buy at the same time and drive up prices with overbidding. Add to that the sense of interest rate lock urgency and you have a market running full speed ahead. It’s no longer how much a home will sell for, it’s how far over asking will it go.
Can You Save Fast Enough?
This month just about every positive indicator for sellers was up. In fact they were all up except the days on the market [DOM] or the time it took a seller to sell their home—that statistic was down which really means it was up for sellers—another positive sign.
So let’s begin by dispensing with any question of where the market is today—it’s clearly rebounding and doing so at a pace like we’ve never seen—and we’ve seen a lot of ups and down in our 20+ years of selling homes.
What’s driving this rebound at a clearly unsustainable level? Ironically, the good news may be is it’s a temporary influx which may soon be abating. The days of government intervention in the market by keeping interest rates artificially low with bond purchases may be numbered—at least that’s what Wall Street thinks. When we wrote this the stock market was singing “Stormy Weather” as news of an impending slow down in bond purchases sent the stock market into a bit of a humble tumble.
Looking at Belmont home sales for May 2013, we see that there’s no more debate about how the market is doing. The only question is, how long will this corybantic pace continue?
Click on the picture for a larger size.
SALES
Home sales, after being down past month, rebounded with a 23% increase over May of 2013 were 32 homes traded hands as compared to 26 last May. The last time Belmont had that many homes sell in one month was in August of 2005 when 35 homes sold—well before the market correction which began in April of 2006 [it took well into another year for the national housing dilemma to begin to affect Belmont’s more insulated economy].
MEDIAN PRICE
Belmont home values reflected the median price topping out at $1,100,000 this May which has only been eclipsed twice in the history of Belmont home values—once in 2007, and most recently in January this year. One cannot not escape noticing that the median home price in Belmont has been over a million dollars four out of the last five months—a pinnacle in Belmont’s housing values trends as never before have we seen a sustained median home price over the million dollar mark.
So did larger homes sell this year? Each month we’re sure to look and see if that’s the cause and each month the answer has been yes, but only nominally. Certainly not enough to account for the year over year gains.
The median size home which sold in May of 2012 was 1,790 square feet. This May that increased 6.4% to 1,905 while the median home price increased 33%–from $825,000 last May to $1,100,000 in 2013.
What does this all mean? It means that a home 6.4% larger cost you 33% more this year. It means that Belmont home values are rising faster than most buyers can save money.
DOM [Days on the Market]
Statistically speaking, if you are going to get more for your home than you are asking, in Belmont that means you’ll be on the market less than 14 days. Between 14 and 21 you are considered lucky to get your asking price and rarely does a seller get their asking price after 21 days on the market.
This month’s numbers bear that out in spades as all of the homes which received more than their asking price did so in only 13 days. No home sold right at the seller’s asking price but of the few homes which were overpriced, they languished on the market for on average 22 days and received 98% of their initial asking price as compared to everyone else who netted on average 110%. Can you imagine being one of the few sellers who received 12% less for their home than everyone else? Clearly not all agents are created equal.
Of course getting too much for a home is usually the result of the same root cause—an agent who has no idea how to price a home—just that in the latter case the seller is much happier and probably never the wiser.
We’ll leave you with this one watercooler statistic. Did you know that in May the average Belmont home sold for $100,000 more than the asking price!
Drew & Christine Morgan are REALTORS/NOTARY PUBLIC in Belmont, CA with more than 20 years of experience. They may be reached at (650) 508.1441 or info@morganhomes.com
Disclaimer:
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.
Drew & Christine Morgan did not necessarily participate in these sales.
Does the Belmont school enrollment window force buyers to pay more for a home in the spring?
We see it every year in a growth market. Belmont home values skyrocket in the spring with multiple offer bidding battles, then the market calms down during the summer and trails off into the winter before starting the whole cycle over again.
Why the spring?
It has been postulated that since much of the driving force for competitive neighborhoods is the school A.P.I. scores, it only seems natural that folks would want to be settled into a new home and secure their home school attendance before the open school enrollment period ends.
The first (and most coveted) open enrollment period—the one which will give your child the best chance of getting into their home school—begins in mid February and ends at the end of that month. That’s a pretty short window to time a home purchase. But assuming one did, then the optimal time to purchase a home would be in December and January so that a close of escrow would occur prior to the end of the first open enrollment period. Since the district will accept a purchase contact as well (as proof of residency), one really needs to only be “in escrow” to get their child enrolled so a February home “sale” may also qualify for the first enrollment period.
If school enrollment periods have an impact on home prices through competing offers, one would expect the percentage that a seller receives of their asking price to be higher in December through the end of February to coincide with the initial open enrollment session.
The next enrollment period begins immediately following the first one at the end of February—the start of March—and goes all of the way until the middle of June. This second enrollment period is less desirable than the first one yet a much larger window of time—it also happens to coincide with the highest percent of asking prices received by sellers.
The final enrollment period begins the Monday after the last one ends and continues until school starts—which this year will be delayed until September 11th.
We plotted these two trends on a single graph to try and visualize a pattern. Clearly there’s a pattern of spring sellers enjoying the highest percentage of their asking price but the school enrollment window may have little effect on the amount a seller receives. If the enrollment window were the majority driving factor then the most competitive bidding should be in December and January as well as a bit into February. Yet in this graphic we find the highest percentage seller’s receive each year to be around May—well after the second enrollment period begins.
Of course May sales were likely consummated in April but still that’s well outside the early March 1 second enrollment opportunity.
There are a lot of other factors that come into play during the spring buying season and open enrollment periods, not the least of which is that the weather gets better.
Rather than there being one trigger that sends buyers into a purchasing panic, we’d venture an experienced guess that it’s a combination of factors that makes the spring home buying season so rewarding for sellers and attractive to buyers: The weather gets better, more homes become available so more buyers enter the market, football season has ended and Sundays are once again free to view open houses, tax season is around the corner and buyers are looking at huge tax bills while wondering how they could mitigate that with a mortgage, and the summer is approaching when many sellers want to get into a new home before the next school year begins.
Another interesting hypothesis that we have put forth involves simple frustration on the part of home buyers. It goes like this, buyers start looking for a home around early spring in earnest. They’re new to the game and thus miss out on multiple homes in multiple bidding situations. At some point they are so frustrated buyers go into winter hibernation only to thaw out the following spring more determined than ever not to end up empty handed again. It’s these buyers that step to the plate and pay whatever it takes to get the ideal home—often paying considerably more than past sales justify. And the cycle begins again.
Note: In order to plot the enrollment periods on this chart, we arbitrarily attributed a value of 100 to the first most coveted enrollment period, a value of 50 for through the next period, and finally 25 for the last open enrollment period. We assigned no value for walk-in periods of enrollment (e.g. Sept-Feb).
As the graph illustrates, there’s only a quasi relationship of enrollment periods and the high percentage of selling prices, which once again, we feel has more to do with it being spring than the schools.
In this second graphic we used data for the same periods in 2004-2005 and again in 2012-1013 to see if last year was an anomaly. Note how similar the two period’s data points are even though they are separated by nearly a decade.
Belmont Percent Received of Asking
Disclaimer:
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.
Drew & Christine Morgan did not necessarily participate in these sales.
You know the market is heating up when agents actually start to list homes at the insane prices some buyers have been paying. We’re not in the business of trash talking overpriced listings but suffice to say there were a lot today—both in Belmont and San Carlos.
But as you probably know we’re here after the Tuesday broker tour to bring you the Best Bay Area Deals, the “Shiny Penney”—the one home that stood out above the rest.
Where we bring you the best of tour each Tuesday.
Today we broke with tradition and found two homes of interest. Both homes are well priced and each offers a unique living setting.
2217 Thurm Avenue is . They are calling it a 3 bedroom two bath home. What makes this home unique is the setting—you feel as though you are at your own retreat. It sports open beam ceilings which makes the southwestern style motif work so well. Listed by the Gillmartin Goup.
Just Listed in Belmont– 2217 Thurm
2217 THURM AVENUE, Belmont 94002
Status:
Active
MLS #:
81316043
Class:
Single Family Residential
Orig Price:
$938,000
List:
05/10/2013
Area:
Haskins Estates Etc. (361)
List Price:
$938,000
Original:
05/10/2013
County:
SAN MATEO COUNTY
Sale:
Complex:
COE:
Beds:
3
Baths:
2 (2/0)
Expires:
08/29/2013
Approx SqFt:
1,630 (Assessor)
Off Mrkt:
Approx Lot:
7,150 Sqft (Assessor)
DOM:
4
Built/Age:
1956(Assessor)/57
Green doc:
No
Another home worth honorable mention is the home at 2763 San Carlos Avenue. While San Carlos Avenue can be a busy street, you don’t feel that way when you are in this home. It’s set up from the street on a small bluff and the owners have done an excellent job of orienting the living area so that you feel secluded. Then of course there’s the backyard fireplace and grill that makes for great evening outdoor entertaining. Listed by Premiere Properties.
2763 San Carlos Avenue – Just Listed
2763 SAN CARLOS AVENUE, San Carlos 94070
Status:
Active
MLS #:
81315791
Class:
Single Family Residential
Orig Price:
$888,000
List:
05/09/2013
Area:
Beverly Terrace Etc. (351)
List Price:
$888,000
Original:
05/09/2013
County:
SAN MATEO COUNTY
Sale:
Complex:
COE:
Beds:
3
Baths:
2 (2/0)
Expires:
12/31/2013
Approx SqFt:
1,240 (Assessor)
Off Mrkt:
Approx Lot:
7,000 Sqft (Assessor)
DOM:
5
Built/Age:
1954(Assessor)/59
Green doc:
No
Disclaimer:
Drew & Christine Morgan are REALTORS/NOTARY PUBLIC in Belmont, CA. and may be reached at (650) 508.1441.
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.
Drew & Christine Morgan did not necessarily participate in these sales.
We’ll do a quick re-cap of the Belmont housing market for April 2013, since by now unless you’ve been living under a rock you’ve heard that the Peninsula housing market is back in full swing; and some would argue the swing is becoming dangerous to ride.
We’re probably a few years away from that precipice and we seriously doubt that the current run up of home values will continue at the frenetic pace we’ve seen in the last year. If the rate of appreciation settles down to sub double digit increases year-over-year the market will be more sustainable.
If you are some place where you can hear our audio accompaniment, we’ve recorded a short piece which helps explain some of the perplexing numbers for Belmont home values in April of 2013.
That’s a long way of saying we’ll be brief in our analysis this month. We’ll start with the big news which is probably not what you’d expect to hear…
[click on the sales for a full size chart]
SALES
Sales year-over-year dropped 30% in the month of April. In April of 2012 24 homes traded hands while in 2013 only 17 homes closed escrow.
New Listings
New listings were up 40% in 2013 over 2012 for the month of April.
Current Inventory
The inventory of homes available for sale in April of 2013 dropped 27% over last year at the same time.
Months of Inventory
The time it would take to sell off the entire current inventory of homes at the current rate of sales was virtually unchanged from 1.78 months of inventory last April to 1.76 months this year.
Do some of these numbers seem paradoxical? More new listings and fewer sales—is the market cooling off? If you’d like a more detailed discussion you may visit our blog page for a short podcast where we explain the correlation these numbers have to each other.
MEDIAN PRICE
The median home price in Belmont increased around 12% to $955,000 over last April when the median price was $849,500.
Reading between the lines—we see that the size home that sold in 2012 though was also 2,070 square feet as opposed to the homes which sold this April which were only 1,520 square feet. Effectively this means in 2013 you get a home in Belmont that is 26% smaller but cost you 12% more. That’s a serious increase in prices in just one year which we discuss more in the audio portion.
PRICE REDUCTIONS
Another indication of the hot Belmont housing market is reflected in the number of price reductions—or lack thereof. There were no price reductions in April for any Belmont home which sold.
In April of 2012, out of the 24 sales 10 homes sold above the asking price, 4 sold at the asking price and 10 sold below. In 2013 all but one home sold over the asking price.
PERCENT RECEIVED
Sellers in Belmont received on average 111% of their asking price in April of 2013 as compared to 99.6% last April.
If you are a seller who has been waiting for the market to rebound, it just did.
Data from the Multiple Listing Service for San Mateo County – MLS Listings, Inc.
Disclaimer:
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. Drew & Christine did not participate in all of these sales.
Time permitting, we like to spotlight the best home from our weekly Broker tour day. One which we feel is exceptional in one way or another.
Sometimes it’s the amazing view, the fantastic kitchen or the stunning location or landscaping–and other times, it’s about the value.
Today’s Best of Tour in our opinion is the home at 31 Willow Glen Way in San Carlos courtesy REIGN Real Estate.
It offers a great secluded west-side San Carlos location and the home has many opportunities for sweat equity. It’s ideal for somebody that wants to move in to a home today and add more value later my making this diamond in the rough a true gem.
If you can get this home anywhere near it’s listed price of $849,000 one should feel elated they got a great deal.
(Note: No open home time have been posted for this home as of yet).
New York, April 30, 2013 – Data through February 2013, released today by S&P Dow Jones Indices for its
S&P/ Case-Shiller Home Price Indices, the leading measure of U.S. home prices, showed average home prices increased 8.6% and 9.3% for the 10- and 20-City Composites in the 12 months ending in February 2013. The 10 and 20 City Composites rose 0.4% and 0.3% from January to February.
“Home prices continue to show solid increases across all 20 cities,” says David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices. “The 10- and 20-City Composites recorded their highest annual growth rates since May 2006; seasonally adjusted monthly data show all 20 cities saw higher prices for two months in a row – the last time that happened was in early 2005.
“Phoenix, San Francisco, Las Vegas and Atlanta were the four cities with the highest year-over-year price
increases. Atlanta recovered from a wave of foreclosures in 2012 while the other three were among the hardest hit in the housing collapse. At the other end of the rankings, three older cities – New York, Boston and Chicago– saw the smallest year-over-year price improvements.
Looking at the home sales in Belmont during the first quarter, one can see from this spreadsheet that every seller who listed their home received over their asking price. They were only a few exceptions. One was a home that was a short sale which we took out of the mix since those list prices are arbitrary, one was an off-market sale. We discounted any home that had been listed since last year to reflect the more robust 2013 season.
[click on the image for larger print]
The percent that sellers are receiving over their asking price is mind boggling. It all has to do with the short supply of homes and the large numbers of buyers trying to take advantage of the historically low interest rates.
Of course that could change. Interest rates could rise making homes more expensive, or with rising prices, more “Equity Sellers” will develop as homes which were under water can now be sold for a profit. More inventory of homes means more competition for sellers as buyers will have more homes to choose from.
Disclaimer:
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.
