Light at the end of the tunnel?
The Standard & Poor's/Experian consumer default composite index fell to 2.43% in March from 2.54% in February. All the major sectors, such as bank cards, auto loans, and first and second mortgages, reported declines. As for U.S. housing, sales of existing homes increased 3.7% in March following a significant decline of 8.9% February.
Once again if we are lulled into believing the raw numbers Belmont’s median home price shot up 14.7% over last February and an unbelievable 23% since just last month—unbelievable being the operative word.
(click on the picture to see a larger image). * Yes. Those are Mardi Gras colors…
In fact the median home price in Belmont was $917,500 in February 2011 while last February it was $800,000 and just last month it was $745,000.
But being the spoiler I am I have to report that the size homes which sold last February were only 1640 square feet in size and this February they were 2,030—24% or 390 square feet larger.
We can play around with some fuzzy math and arrive at several conclusions which all point to the fact that year over year prices have actually declined.
A home which is 23% larger yet only costs me 14.7% more seems too good to be true. Part of the inequity has to do with the issue that land remains a constant, which makes any approximation of value just that. Looking at it from several different ways one can safely arrive at a price decline of around 8.3% year-over-year.
SALES
And that perhaps is why home sale in Belmont are up 20%–well, 12 sales this year compared to 10 last year is only two more sales but hey, we have to offer full disclosure right?
In February of 2010 four of those Belmont homes lowered their asking price by on average $28,760 but this February three sellers slashed their asking price by on average $62,000.
Six homes sold for on average $51,000 less than there asking price last year while only four did so this year—for the exact same amount.
Each year two of the homes sold right at the seller’s asking price while last year two sold for more—on average $53,000 and this year six sold for on average $15,000 more.
DOM
The time it took to sell your home dropped dramatically over last year. Several factors are in play here. First there were more homes to choose from this year which helped buyers come to a decision more quickly. Both years there were many hangover listings from the previous December which carried with them the dreaded DOM stigma but this year we sold a few more of them than last year.
% Received.
The amount the seller received of their asking price 98.7% remained unchanged from last year but was up 1.4% over last month.
On an insider note, 13 of the 19 homes pending sale in Belmont right now are scheduled to close this month and we personally know that of the 19, several will be closing well over the asking price thanks to multiple offers. Yes, the word buyers hate to hear has raised its ugly head again due to the low inventory of homes to buy.
If you are considering selling your Belmont home, right now’s a pretty good time according to the activity we’ve seen.
San Mateo County Market Snapshot–Are We Treading Water?
Those of you who follow our market updates know we put our hometown, Belmont, under a market microscope every month to get a glimpse as to where the market appears to be headed.
Of course that really is living in a Petri dish when it comes to the real estate market as a whole.
Real estate is very local—what goes on in even one part of a city could be entirely different from another. That said eventually positive market trends trickle down and negative ones up.
As evidence of this phenomenon one can go back and look at our charts from 2007 when Palo Alto was still doing famously yet Daly City may as well have slid into the ocean (many homeowners probably wish it had).
Today we visit the numbers—year over year—for San Mateo County as a whole, hoping to see some trends that will give us an inkling as to where consumer sentiment is, as reflected in sales, median price, etc.
SALES
|
New Listings |
Current Inventory |
Closed Sales |
Average DOM |
Average Sales Price |
Median Sales Price |
% LP Rec'd |
Total $ Vol |
|
2011 545 |
1400 |
233 |
74 |
786,509 |
587,500 |
96.48 |
182,470,145 |
|
2010 484 |
1156 |
229 |
82 |
840,235 |
650,000 |
97.17 |
192,413,866 |
|
2009 530 |
1452 |
163 |
74 |
683,900 |
553,750 |
97.20 |
110,791,806 |
|
|
It’s easy to see that the ripples of consumer uncertainty could easily capsize the boat of recovery if the tides of low interest rates come in too fast.
Sales are certainly better than the low of 2009 and remain steady as they did in our Belmont example. But as in the Belmont report the median price showed a decline in home values since last January. That’s not necessarily a bad thing, especially if you are a potential home buyer and it doesn’t mean values are still dropping, just that they did drop year over year.
Interest rates are going up, and have done so rapidly in the last few months—around ¾ of a point. That hurts the ability for people to qualify for a home and with less demand there’s a potential for prices to decrease further.
But as we cautioned ourselves, we are comparing 2010–a year of government sponsored tax rebates to 2011 without. Let's see if our minnow of a recovery can weather the storm without a life raft.
Thanks for checking back in with us.
*Data San Mateo County MLS.
Disclaimer: This information is for entertainment purposes only and includes no legal, accounting or real estate advice nor is this response in tended to be specific to your situation-consult a specialist for your specific situation.
We’re only one month into 2011 and already things are interesting.
Belmont home sales in January 2011 remained brisk. There were twelve homes which closed escrow in January, one more than last year but eight more than in 2009.
It appears a small trend has developed indicating January 2009, as suspected, was the low point for real estate.
But we aren’t out of the woods yet. Depending on who’s talking to you—a glass half full or half empty person—we’re either headed into a slow recovery or its lull in the action before a double dip. Never mind the glass is completely empty person—they’ll always be waiting for the “right time†to buy a home yet never do.
The definition of a double dip is when things get worse than they were at the trough of a business cycle. Considering how bad things were at one point in this last cycle, we find that implausible—that the state of affairs could get worse but hey, we don’t read tea leaves either. Of course that’s not to say things can't remain in a state of unsteadiness for years to come.
Within this recovery there will undoubtedly be micro swings in prices and sales which are highly dependent on consumer confidence, and of course interest rates. The media will predictably pounce on these blips on the radar screen—stay tuned.
Click on the chart to see a full-sized version. And yes, those are Green Bay colors…
NEW LISTINGS
The number of new listings for Belmont in January 2011 stood at 24—six more than in 2010. The inventory levels for these same periods were 38 for 2011 and 35 for 2010. The more interesting stat is the months of inventory—how long it would take to sell all of the homes at the current pace and inventory levels—a ratio if you will.
In January of 2009 it stood at over 10 months, and the last two January’s have seen that fall to just around 3 months. On a national level the country would be thrilled to see those numbers—the nation is hovering around the 11 month levels—six months defines a stable market.
Why then did prices still fall? Simple. Consumer confidence remains weak.
Sales are on the rise because sellers have become realistic about their home’s value, not because demand has increased. The months of inventory has remained low because many sellers aren't selling their homes. In Belmont, when inventory levels reach more than 50 homes for sale we experience a buyers’ market. Yet with inventory levels currently at 38 homes for sale, why then is it not a seller’s market?
Well the short answer is it is and it isn’t. Seller’s are managing to create a faux seller’s market by listing homes low and creating a bidding war, and keeping inventory levels low (no it’s not a conspiracy it’s just that a lot of sellers either can’t sell or won’t until prices go back up). The truth is buyers can be pickier in some instances; but with inventory levels this low it means it may take a long time to find the home they want.
Did Sellers get their Asking Price?
In January 2011 five of the 12 sellers lowered their asking price by on average $43,000 in order to attract a buyer. In 2010 that number was four sellers for an average of $65,000. Here’s the kicker—in 2010 all 11 homes sold for under the seller’s asking price; for on average $50,000 less, while in 2011 only seven homes sold for less than asking and only $30K (we threw out the one that was ridiculously off base).
So prices are up right? Nope. Sellers are just more sensible.
The median price for a Belmont home in 2011 was $745,000—down from $850,000 in 2010 and the size homes selling in 2011 were a smaller which compounds the difference.
The median size home sold in 2011 was 106 square feet larger than in 2010. This means that even if the median price was unchanged, the size home you could buy for the same money increased 6%. Now let’s factor in the $50,000 median price decline which adds another 5.8% drop in value and you’re looking at almost 12% price decline year over year.
If you are a buyer you need to know that any potential savings you might reap by waiting to see if values decline further could easily be wiped out by an increase in interest rates. Now’s not a bad time to consider getting off the fence…
* Data extracted from the San Mateo County MLS
Disclaimer: This information is for entertainment purposes only and includes no legal, accounting or real estate advice nor is this response in tended to be specific to your situation-consult a specialist for your specific situation.
For Belmont homeowners there appears to be some stability creeping into the market. Home sales were brisk this December—double what they were in 2009. Those of you who may remember the home buyer tax credit was due to end in November last year which pulled a lot of buyers from December sales into November—all across the country. Not so much in Belmont since the qualifying purchase price had to be less than $800,000. Nevertheless we went back to compare previous December sales and they normally fall in the area of 12 for the month of December. One has to go back to 2005 when the housing market was red hot to see sales figures this high.
These first two graphs illustrate the housing activity in Belmont for the Month of December 2010 and the year end averages for the entire year.
If we run we run down the usual list of market indicators, across the board there are some positive signs for homeowners.
*Highlighted homes were sold by Drew & Christine Morgan. Click on the graph for a full-sized image.
DOM
The time it took for a seller in Belmont to get a contract on their home was at 58, up only slightly from last year’s 50 and is pretty well mitigated with the doubling of sales.
PERCENT RECEIVED
Belmont sellers received 98.1% of their asking price in December 2010 as compared to 97.22 in December of 2009.
Half of the homes in December 2010 underwent price reductions for on average $58,000 before they sold. Last year 42% of sellers reduced their price by on average $69,000.
Of the 24 sales this last December two sold at the seller’s asking price, 16 sold for less than asking (by on average ($33,488), and six homes sold over the seller’s asking price by on average $17,183.
Homes which sold over asking did so on average in 26 days while homes which sold for less took more than 65 days to sell.*
MEDIAN SALE PRICE
If you’ve followed this blog for any length of time you’ve heard us talk about how deceiving the median price can be in any small sample size. Once again the median home price is a bit misleading as it has the median home price in Belmont in December of 2010 at $912,500. That’s $102,750 (12.7%) more than last year’s $809,750.
So the answer lies somewhere in the numbers but ferreting out a more accurate sense of value is difficult. The size homes which sold in 2009 were on average 277 square feet smaller than the homes which sold in December of 2010, which accounts for most of the perceived median price increase. It just so happens that the size home you could get this year was also around 13% larger than last year—effectively whipping out any gain.
Using the year-end totals helps even out some of the distortion inherent in median price figures as the graph above demonstrates. If you take an average of each month’s median home price in Belmont for 2009, the average median home price was $847,604 and for 2010 it was $908,159—an increase of 7.1%. The average size of the home which sold in the two periods also increased from 1730 in 2009 to 2000 in 2020, a 15.6% increase. So was there any home appreciation in Belmont in 2010? Probably not. It appeared that in the first quarter of 2010 homes might increase in value but as quarters two and three came to a close (immediately following the conclusion of the homebuyer incentive programs) it was clear that would not be the case. The fourth quarter managed to salvage some of the losses in the two previous quarters as you shall probably hear soon n the media.
If you are considering selling your home this year be sure and contact us for a valuation of your home. We are experts in selling peninsula properties and our record of selling every home we list for sale is unparalleled in our industry.
Note: We throw out homes we know were re-listed or underwent huge price reductions only to sell for slightly higher than their greatly reduced price.
Disclaimer: The information contained in this newsletter 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.
We love the holidays as much as anyone, but a little less red in the chart would be nice too.
Belmont home sales for November of 2010 continued the trend of the last two quarters with fewer sales and declining home values as compared to the same period in 2009.
(Click on the chart to see a full-sized image)
Clearly consumer confidence is woefully short of normal. While consumer confidence does not in and of itself control the direction of the economy it does reflect consumer sentiment. Consumer sentiment is well represented by consumer spending—when consumers are comfortable with their view of the future they tend to spend more. Considering that some estimate consumer spending to represent 2/3rds of our nation’s domestic product (GDP) suffice to say that consumer confidence is necessary for a sustained recovery. For consumer confidence to rebound there needs to be more jobs and of course the feeling that the job one has won’t go away soon either. On a positive note the consumer confidence index rose to 54.1 in November from a revised 49.9 in October. It was the highest level in five months. The index was benchmarked at 100 in 1985, a year chosen because it was neither a peak nor a trough in consumer confidence.
How does this affect the housing market? The tenuous job market is taking its toll on nervous home buyers. Buyers are still purchasing homes but fewer can qualify for a loan and when they do it’s usually for less home than before. Those who are willing to purchase a home seem to want only exceptional deals—building into their offer price a buffer against further price declines.
SALES
Home sales in Belmont remained fairly strong considering the aporetic feelings among buyers.
This November we saw 16 homes trade hands in Belmont as compared to 22 in 2009.
Of the 16 sales, six sold for on average $21,350 more than the seller’s asking price in 17 days, one sold at the asking price, and nine sold for on average $16,500 less and took 82 days to sell.
Six sellers also reduced the price they were originally asking for their home by on average by $149,342, while last year there were only three homes which had price reductions during the same period and for on average only $13,590.
MEDIAN PRICE
The median price (on paper) went up 5.4% to $843,475 from November 2009 when it was $800,000. However, in 2009 the median size home which sold was only 1,558 square feet as compared to this November when the median size home sold was 1,920 square feet—a difference of 352 square feet. At the median price per square foot that homes sold for during November, $466 and the difference in the size home sold, 352 sq. ft. one could make an argument that if all things were equal (the same size home selling in the two periods) the adjusted price for 2009 would be closer to $964,032 ((352 Sq. Ft. x $466 per sq. ft. = $164,032) + $800,000) =$964,032. This allows us to estimate that home values dropped around 12.5% year over year in the month of November. How much the median price changed for the year as a whole is yet to be determined. Remember, just because homes dropped 12.5% in the month of November, earlier increases in the year can mean at year's end the median price could be up for down from the previous year.
It’s also interesting to note that although the median size home which sold in November of 2010 was much larger, only one home sold over the one million dollar mark as compared to three in 2009.
DAYS ON MARKET (DOM)
Not surprisingly it took more time to sell a home this year than last–on average 62 days—up dramatically from 38.5 days in November of 2009. One also must be cognizant that last November the first-time buyer tax credit was in effect which skewed the numbers in favor of more sales, selling faster, and for more.
When home values are dropping, the time it takes to sell a home typically increases as sellers often price their home based on recent past sales. But when home values are falling, recent sales were worth more. Eventually most sellers get the idea that they must get ahead of the pricing curve and lower their home more than the market suggests it might be worth. This has an ancillary effect of lowering home values rapidly and perhaps more than they would otherwise drop.
Noting the huge difference in not only the number of homes which had price reductions, but the steep adjustments that were made, illustrates the difficulty in pricing a home in a declining market and underscores the importance of introducing your home to the market at the right price.
Summary
There’s always some danger in looking at a small market sample such as Belmont with only 16 sales in a given month. Seasonal factors play heavily in the statistics which is why we choose to compare each month we examine to the same month a year before. However, it’s important to note that other factors can effect comparing these two periods. For example, last November the first-time buyer tax credit was expiring, causing many buyers to rush to the bargaining table. This increased competition for homes undoubtedly buoying the prices while increasing sales.
Our leading indicators of future market conditions indicate a gradual recovery in the housing sector.
On a local level our professional staging company has reported to us that their orders for staged homes are booking up fast for January, indicating that Sellers are interested in getting a jump on the spring market.
If you are considering selling your home next year you may want to consider doing it sooner rather than later before inventory rises to levels which make price reductions necessary to attract Buyers.
If you are considering selling your current home and/or purchasing a new one be sure and contact us for your real estate needs.
Now for the inevitable disclaimer: The information contained in this newsletter 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.
With the election behind us and the stock market rallying to the excitement and anticipation of more economic stimulus and legislative gridlock, Belmont’s housing market continues to show signs of what could be viewed as stagnation at its best, or a double dip at its worst.
This October, housing sales for Belmont revealed a slower market and softening prices compared to October 2009.
(Click the picture for a larger image).
SALES
Thirteen home sales—one shy of last year’s 14, would not normally give great cause for consternation—especially since the sample size in Belmont is so small. However across the board indicators are eluding to a reluctance on the part of buyers to commit to purchasing a home.
In light of comments like that of John Paulsen who made a fortune betting on the sub-prime market collapse proclaiming “this is the best time to buy a home in fifty years, exclaiming that, "If you don't own a home, buy one. If you own one home, buy another one, and if you own two homes buy a third and lend your relatives the money to buy a home†clearly job security is the number one reason buyers are waiting before taking on any new debt.
MEDIAN HOME PRICE
The October median home price in Belmont was $864,200 and appears to have dropped only slightly from October 2009 when it was $865,000. Once again though larger homes sold this October. The median size home sold was 2010 square feet as compared to last year when the median size home sold was only 1760 square feet. Put another way, this year you could buy a home 250 square feet larger (14%) for the essentially the same price as last year.
DOM
The average time it took to sell a home in Belmont this October also went up from 38 days last year to 46 this October.
% RECEIVED
Seller’s also enjoyed getting 99.6% of their asking price last year while this October dropped to 98%.
PRICE REDUCTIONS
Six of the 13 sales this year had lowered their price on average $92,000 to attract a buyer while last year only three sellers reduced their asking price for on average $40,000.
This October while three homes sold for on average $29,000 more than their asking, last October six homes sold over asking for on average $23,000.
The last thing any seller wants is to get less than their asking price and this year more sellers were disappointed as nine homes sold for on average $34,000 less compared to last October when only seven homes sold for on average $30,000 less than their asking price.
In October of both years just one home sold at the seller’s asking price.
COMMENTARY
This fourth quarter slowdown in real estate is not all that unexpected. It’s a fairly mild hiccup at this point which may be attributed in part to election jitters but certainly it’s exacerbated by our own government when they announce they are re-visiting the home mortgage deduction. Of course every year some committee wants to reexamine if they could do away with it to be replaced by a flat t tax, but to do so in a year when the government is spending billions of dollars trying to stimulate the economy, and particularly the housing sector, one wonders why they wouldn’t just table any further debates on the home mortgage deduction until after they economy was on track.
September means fall has arrived and nowhere did we see more falling than in the number of home sales in Belmont for this time of year.
(click here for a full-sized image).
Here are the details:
MEDIAN PRICE:
Once again we had an increase in the median price over last September. The median price in Belmont for September 2010 was $865,000—an increase of 8% over last September’s $795,000. And this was once again mitigated (or negated) by the size homes which sold in the two periods.
This September the size home sold in Belmont was 1,900 Square feet compared to last year when it was only 1,600. The 300 square foot differential accounts for approximately $144,000 in price variance if you multiply it based on the $480 per square foot that homes sold for over the two periods. Effectively the size home which sold was 18.75% larger but only garnered an 8% higher price tag.
Does this mean that Belmont’s median price is still dropping? Well it certainly means it has dropped in the past two months—but price drops this time of year tend to be seasonal.
NUMBER OF SALES:
Sales of homes in Belmont last month were down by 33% from a year ago. And a year ago sale were down from normal levels. Now 33% wouldn’t mean a lot if we had only three sales a month but we had 18 last September and only 12 this year.
This is no doubt a hangover from the housing stimulus bill that ran out earlier this year and attracted many of the buyers to move earlier in the year.
PRICE STABILIZATION:
It could be temporary, but of the homes which sold, three sold for on average $10,000 over asking (even though one only sold for a dollar more), two sold for the seller’s asking price and seven homes sold for less—by on average $66,000. Compared to last year when no homes sold for more than the seller’s asking price, eight homes sold under and 10 sold at the asking price, this is relatively good news.
DOM:
The time it took to sell the homes increased over last year—up from 45 days to 73.
INVENTORY:
With 64 homes available for sale in Belmont right now prices are sure to remain flat unless buyers begin to feel more comfortable with their job stability, or in some cases, the prospect of a job at all.
PERCENT RECEIVED:
Once again the numbers are down from last September. A year ago the seller could happily receive on average 98% of their asking price and this year that number dropped to 96.65%.
September is typically a month that begins the fall push for housing before buyers go into their winter hibernation mode with brisk sales and sellers typically getting more for their home than during the summer months. This was clearly not the case this September so it will be interesting to see how the October numbers come in.
There are a lot of buyers still sitting on the fence. It’s our opinion that at the end of the year Belmont’s median price will be higher than in 2009 and we expect that to continue at a tepid pace through 2011.
If you are a buyer thinking of making a move, statistically the winter is the best time to snag a deal. Call us is you’d like to get started early!
Belmont homes sales in July are just the thing headlines are made of.
Last month the median home price in Belmont was $ 975,000 and July it dropped 9% to $885,000. That doesn’t bode well for the positive home sales headlines, but rest assured the median size home that sold last month was also 18% larger. Comparing July sales this year to that of last July, in 2009 the median home price dropped 4.4%, but once again the size home which sold last July were 16% larger. What good does it do to report the median price when it varies from month to month so dramatically? Adjusting for the size home which sold can give us an indication of whether values are going up or down based on examining the price as adjusted for the size home selling. Clearly the values have gone up, even though the median price appears to have fallen.
Sales
The number of homes which sold did disappoint us. This July saw only 20 homes close escrow as opposed to 32 in June and 31 last July. Since the “sales†,or homes which closed escrow in July were no doubt actually “sold†in June, we also looked at the number of pending sales in July—homes which will close escrow in August. That stood at only 15 which is right in line with the last two years’ performance.
DOM
The time it took to sell a home this July was 27 days, down from 46 in June and 34 last July. That’s a good number to track to see where the momentum may be headed.
Percent Received
Sellers will be happy to note that on average they received $35,000 over their asking price with the average seller getting over 100%. Only four of the homes lowered their asking price—with one caveat these numbers are slightly skewed because one home received an offer $100,000 over their asking price. Nine sellers still accepted an offer less than asking—on average $23,000 less, with six sellers receiving what they were asking.
Inventory
Inventory levels remain high for this time of year. The number of available homes for sale is at 71; up from June’s 66 and last July’s 57. More supply would typically put downward pressure on prices, and 71 homes for sale his higher than normal. However, the increase is still well within healthy standards. The months of inventory—the time it would talk to deplete the inventory of homes for sale at the current rate they are selling—is at 3.7, a far cry from the national rate of nine months. This was helped by fewer home being listed for sale in July—only 27.
We attribute the increased inventory to several factors. Some sellers may need to sell their home and they’ve waited as long as they can, and/or sellers want to move and take advantage of lower interest rates on a move-up or retirement home. In any case more sellers are selling and some buyers are buying.
If you are thinking of selling your home this year the window of opportunity is upon us. The second wave buying season gets into full swing just after Labor Day. That gives us just enough time to get your home ready to show at its best. Give us a call for an interview if you are in the mood for a move.
SALES
Home sales in Belmont held their own as 25 homes sold in the month of June. Last month as you may recall 34 homes sold, the most in as many months. In June of 2009 20 homes sold and last year there wasn't a looming deadline to close escrow for a tax credit.
(click on the graphic for a full size picture)
Speaking of tax credit, don’t forget we’ve effectively extended the $8,000 tax credit by offering any first time buyer 1% of the purchase price as a credit towards their closing costs for anyone who buys a home through us and closes escrow between now and September 30th 2010.
MEDIAN PRICE
The median price took another jump up from $848,500 last month to $975,000—a 15% increase. The size homes which sold during the same period were about 10% larger so there was still some upward pressure on prices not just the fact that larger homes were selling.
DOM
The time it took to sell a home in Belmont was up from 25 days last month to 46 days in June; a pattern that more-or-less holds true each year as folks have graduations and vacations on their minds in lieu of house hunting.
INVENTORY
The number of homes for sale has stayed relatively flat at 66 as compared to 60 in May and 62 one year ago. And the number of new listings appears flat too at around 30 each month. As long as sales continue at this pace inventory should remain in check.
With interest rates hitting the lowest point since records were kept it has helped spur refinances and it remains to be seen if it will spur more fist time homebuyer sales. If you are considering buying a home on the peninsula with rates and values at what appear to be the trough, you may want to consider getting that home you’ve always wanted but perhaps held off for until more favorable conditions—they’re here.
Don't forget we update the market statistics for San Mateo County, San Carlos, Redwood City and Redwood Shores each month on our web site at MorganHomes.com.
