Belmont Enjoys Steady Home Price Increases–2014 a Year in Review

Belmont Enjoys Steady Home Price Increases

Since the housing recovery began in earnest in 2012, Belmont has enjoyed a steady increase in home values. Since 2010 Belmont’s home values have increased 44%, while year-over-year prices continued to increase 17% in 2014.

Belmont Median Home Price

Part of the rapid increase in home values is due to historically low interest rates coming off a reduction in home values during the Great Recession. Another influence continues to be the influx of new jobs which jump started the need for housing in 2012. But the scarce housing inventory may have been the largest contributing factor by creating bidding wars and over exuberant offer prices.

To put the meager housing inventory into perspective, there were four times the number of homes for sale at the end of 2010 and 2011 than there are now, while new listings in 2014 were a quarter of what they were in 2010.

The time a home sat on the market dropped 70%, from 52 days down to just 16, while the percent a seller received increased 10% as sale prices averaged 109% of the asking price last year.

It’s safe to say that Belmont’s robust housing market has become self-evident. But how does Belmont stack up to other nearby cities such as San Carlos?

San Carlos bested Belmont in the median price category coming in at $1,425,000—11 % higher than Belmont for the year. The rate of appreciation over the past four years as also been higher as San Carlos home values increased 52% since 2010 as compared to Belmont’s 44%.

When compared to San Mateo County as a whole, a different picture develops as both Belmont and San Carlos are at the front of the pack. San Mateo County reported a 15% increase in the median home price year-over-year—with a median home value still 21% lower than that of Belmont’s. Here’s the supply and demand answer as to why home values are skyrocketing—the available homes for sale in all of San Mateo County dropped 73% over 2010 and the number of new listings dropped 21%.

We start 2015 with the lowest inventory of homes for sale since we started tracking home statistics in 1998. This will invariably create more multiple offer scenarios forcing buyers to outbid one another for their ideal home. This in turn will continue to put upward pressure on home values. And if interest rates remain stable (currently at a 1.5 year low), we expect another year of double digit appreciation, though we also expect the rate to slow as it did last year, down 2% from 2013.

Disclaimer:

Drew & Christine Morgan are REALTORS/NOTARY PUBLIC in Belmont, CA. with more than 20 years of experience in helping sellers and buyers in their community. They may be reached at (650) 508.1441 or emailed at info@morganhomes.com.

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.

If you are considering selling your home we’re somebody you should know. Be sure and include us in your interview process—we’ll show you our proprietary EXCITE listing program which has netted our sellers more than any other top Belmont agents.

 

 

 

Winter Home Prices Increase

Winter home prices increase and buck the trends of a winter slowdowns.

We’re getting close to our most anticipated analysis—the year end summary for Belmont. But before those numbers are in the history books, we are closing out the year with November’s home sales report.

The Belmont home market continues to show strong growth after a lackluster fall market. Typically we see a strong push for home sales after Labor Day and a winter hibernation period once we get past Thanksgiving. This year seems to be at odds with historical trends as seen in the median home price which has risen steadily since August.

This November in Belmont the median home price was at $1,342,000 which was only eclipsed once in July of this year. Last November the median home price was $1,089,000. That translates into a 23% increase in the median home price year-over-year.

Did larger homes sell this year artificially skewing the median home price higher? The answer is yes. The size homes which sold this November were 18% larger. If we account for this in the median home price analysis we arrive at a more reasonable appreciation level of 5% year–over-year—which of course is just an approximation.

As prices get higher, demand wanes and the rate of appreciation levels off—as is demonstrated in the above numbers.

SALES & NEW LISTINGS

The number of homes sales dropped 44% year-over year since last November. Upward pressure on home values is being fed by the lack of inventory as new listings dropped 20% as well.

PERCENT RECEIVED

The amount which Seller’s received of their asking price was essentially unchanged at 107 % of asking.

OVER-UNDER

While 72% of all home sales sold for over the asking price—unchanged since last November, this year no seller’s had to adjust their asking prices lower. Last November 20% of sellers lowered their asking price for on average $200,000—indicating a slightly more robust November this year.

On a macro-level, the San Francisco Metropolitan Statistical analysis (the SFMSA) prepared by Standard & Poor’s, and referred to as the Case-Shiller study, reported a decline from August to September of .2%. The Case-Shiller uses a repeat sales pair methodology—virtually watching the same home sell over time. Not that .2% is a monumental shift in trends, since as can be seen in the chart below, seasonal factors cause even a large area like our MSA to fluctuate to a much greater degree.

This graph compares the MSA for our area year-over-year for the past three recovery years. Note that a fair amount of each year’s appreciation (increase in the index) occurs in the first two quarters of each year.

MSA Year over Year

 

 

 

 

 

 

 

 

 

 

Disclaimer:

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 or emailed at info@morganhomes.com.

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.

 

Home Values Peaked?

Have Belmont home values we peaked for the year?

Our spring housing market always makes for exciting times—it sort of sets the pace for the year.

Typically we see prices jump the most in the spring and level off around summer. Despite the rumblings that our market is cooling off, this year appears to be no different than we’ve experienced in past trends. Any perceived “cooling off” is expressed in the rate of increases waning, and compounded by seasonal fluctuations.

In the graph below we plotted the percent a seller received of their initial asking price since 2012 when the market rebound began in earnest. This is a good indicator of the level of competition in the market. Notice how our local market competition increases most in the spring and price increases follow suit. Why is that? We have a few intrinsic theories and if you’d like the inside scoop here are our musings.

! Belmont Peaks

 

 

 

 

 

 

 

 

 

 
SCHOOLS

First there’s the school enrollment calendar. In Belmont that opens in February and ends in June. Of course getting your child into your preferred school means hitting the initial enrollment period—or at least the second one. We believe the school enrollment calendar tends to influence a buyers decision to act quickly in the spring market. HINT: You cannot enroll your child in the Belmont/Redwood Shores School District without proof of residency.

School Enrollment Period Belmont

 

 

 

 

WEATHER

Another influencing factors is that the weather improves in the spring. Buyers and sellers come out of winter hibernation and the better the weather the sooner they do so. And more buyers means more competition while inventory remains low until school ends in June. Over 65% of all new listings are listed in quarters 2&3—April through September.

COMPETITIVE SPIRIT

Let’s face it, not only are home buyers competing for great jobs they compete at the home buying game as well—and they hate to lose.

Indulge us for a moment—Imagine there are six horses racing that are competing for first place in a race. But after each race the 1st place winner must retire. This leaves the second place horse the favorite in the next race, and all things being equal he now takes 1st place and then also retires—but the finish times are getting slower. Now the 3rd place horse in the first race, is the 1st place horse in the third race but he’s clearly not as fast as the first horse was in the first race—but he still wins—and retires.

You see the home buying and bidding process follows a lot along these lines. The most aggressive bidders typically wins and get their home—now they’re out of the competition. The buyer who came in second now steps to the plate and secures the next home—and he probably bids even more than he bid the last time when he lost. This pushes the prices up and eliminates the aggressive bidders. By summer the remaining bidders are typically far less aggressive and more risk adverse so they bid less and homes close for a smaller amount over the seller’s asking price.

But that begs the question, “Why not just wait until after the bidding wars wane to put in an offer?”

Because prices are going up about $500 q day and the longer one waits the more that same house will cost. Note that as seen in the above graph, the percent a seller receives is greater in the spring while the median home price does not follow any similar plot—except up.

We’ve seen this year in and year out and yet each year we hear people deliberating on the perceived slowdown as a shift in the market, rather than a well-defined pattern repeating itself.

Click here to see our analysis for May of 2014 where we compare it to April’s numbers and every May going back to 2012 when the market took a marked uptick—is the housing market slowing down? See for yourself…

 

Disclaimer:

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 or emailed at info@morganhomes.com.

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.

 

Housing Market Free Fall?

How Can You Tell When The Housing Market Has Changed?

You look at the numbers.

Agents are a funny lot. Their perspective of the housing market around them has a lot to do with how busy they are at the moment—how many listings they have (or don’t) or how many times they’ve recently been beat in a multiple offer situation.

On broker tour day where we try and see all of the new listings in one fell swoop and we can’t help but bump in to our colleagues during tour. Actually a lot of important networking goes on during our tour, but along with the hope of discovering a “coming soon” treasure, is the hyperbole about the state of the market. It varies dramatically from agent to agent and house to house as we make our way up and down the peninsula.

When an agent’s listing lingers on the market too long they often blame it on “a slowdown in the market”, rather than try and figure out if they did something wrong or the seller overpriced their home. And of course if one of their listings recently flew off the shelf, a slowdown in the farthest thing from their mind.

And when seasonal fluctuations, which are otherwise easily predictable take hold, many agents are in a tizzy that the market has finally topped (or bottomed) out.

When we hear this wild conjecture it’s in at least my nature to go back and do some research to see what the real pulse is of the market.

So here’s how the patient was doing at the end of May 2014 for Belmont:

Belmont May 2014

 

[DARK GREY HIGHLIGHT INDICATES OUR LISTING]

SALES

The number of homes which sold in Belmont during May of 2014 were 19—down from 32 a year ago. So what happened? Well as it turns out May of 2013 was one crazy anomaly as also seen in 2010. Homes sales in Belmont have averaged 24 sales per the month of May since 1998. But in our current market, homes sales are down because new listings are down, not because people are afraid to buy a home.

SALES May 2014

 

 

 

 

 

 

 

NEW LISTINGS

While the number of new listings dropped from 35 last May to 31 this year, the 16-year average is 37 new listing per month in May.

New Listings

 

 

 

 

 

 

 

DOM [Days on Market]

This unremarkable statistic remained essentially unchanged at 11 days in May of 2013 to 12 days in 2014.

MEDIAN HOME PRICE

The Median home price in Belmont for May 2014 was $1,300,000 which bought one a median size 2,070 Sqft home. This May saw an increase over 2013 of 17% [raw numbers]. Of course the homes which sold this year were 8.6% larger so the real median home price increase was probably closer to 8.4% year-over-year. And if you use the actual square foot calculation model for adjustment that whacks it down even further to a 7.6 realized increase year-over-year. So the rate of home price increases appear to be slowing.

Median May

 

 

 

 

 

 

 

 

PRICE REDUCTIONS?

Only two sellers had to lower their price before their home sold which is exactly twice as many as last year.

PERCENT RECEIVED of ASKING

110% in 2013 to 111% in 2014. The all-time high was 115% over asking in April the month before.

Percent Received of Asking is probably the statistic most aligned with defining a hot or cold market so we track this number closely—though there’s one inherent flaw in reading too much into this and the median home price changes. Here’s why…

As prices increase fewer and fewer people have the wherewithal to purchase a home at all, let alone throw an extra $100,000 over the asking price.  Couple that with the recent housing rebound out of a historic slump, and one can see that in the initial rebound years, the median price trend skyrocketed along with the percent seller’s received over asking until the home values breached new high territory. Hence we end up with statistics demonstrating the rate of appreciation slowing and the amount buyers can afford to go over asking waning. In all respects one could call that a slowdown, but being hit by a train going 50 mph rather than 100 still smarts.

percent received May 2014

 

 

 

 

 

 

 

 

 

How the Numbers Rolled

In May 2014 85% of the sellers received over their asking price—down from 88% last May and 14% received less than asking in 2014 as compared to 12% in 2013. None of the homes in either year sold at the seller’s asking price.

 

Disclaimer:

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 or emailed at info@morganhomes.com.

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.

 

Home Prices Expected to Jump

In the summer of 2007 our preferred lender Steve Herbert from the now defunct Washington Mutual called for an emergency meeting in our Belmont office. His agenda, the sky was about to fall on the lending industry. Of course what followed was the collapse of dozens of financial institutions and decline in the housing industry not seen since the great depression.

Lending standards were tightened during this three year downturn and money was lent to only AAA clients. Credit was hard to come by and loans such as stated income for self-employed people were nowhere to be had.

Fast forward seven years and in our meeting today, Steve Herbert stood in front of our group of three offices and announced that the lending standards have been significantly reduced.

Fisher Investments foretold this turnaround over a month ago in our meeting in Woodside with their Financial Investment Group.

We’re seeing it every day—new offers from banks wanting to lend their money with generous programs to help people with less than 20% down, self-employed, or less than stellar credit scores.

What does this mean for you?

If you are considering buying a home the good news is credit will be easier to get—finally. The bad news is that will increase the number of buyers who can qualify for a loan—increasing your competition. This will invariably put even more upward pressure on prices. Just when we thought the rate of appreciation might begin to wane, looser lending standards are tantamount to adding fuel to the fire of home values.

Putting your home search on hold in fear that values are unsustainable may be a fool’s game as less strict lending standards just prolonged the recovery before any market downturn.

We’re into the housing recovery for two years now and we expect that when a correction does occur—and if history repeats itself the cycle will—price declines may only wipe out the last several years of increases. Perhaps five or seven years from now as prices continue to have climbed to new highs will they begin to drop. Based upon past real estate boom and bust cycles, we doubt they will drop back to today’s prices.

This graph illustrates San Mateo County Home Price Trend vs. the City of Belmont. Notice home values are more volatile when viewing a wide swath such as San Mateo County with its dramatically varying cities including Atherton and Daly City. Belmont on the other hand was more insulated during the downturn than the SMC index. Belmont home prices essentially dropping in 2009 to lows equivalent of those of five years previous but within several months after the low in 2009 they had recovered to levels seen in 2006 and by October of 2013 they has eclipsed their previous high in 2008.

 

Bel smc graph for merdian price trend

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Of course while we will benefit both personally and professionally as will many of our clients from these more broad lending standards, we could have managed at the current levels which would in all likelihood result in a more stable housing industry and helped avoid more bubbles like we saw in the last decade. And while some specific regulations will help restrict similar dire consequences from occurring, there are others (sub-prime mortgages for example) that will once again allow those who perhaps should not yet own a home to get one–and lapse back into trouble–we’ll see.

Disclaimer:

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 or emailed at info@morganhomes.com.

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.

Belmont Home Sales Off To A Frenetic Start

 

It seems the Belmont housing market is off to another strong start in 2014.

In every category we track, homes sales in February of 2014 were stronger than in 2013.

Belmont February 2014

SALES

Sales were at a dead tie with last year. Considering there were fewer homes to sell, that’s a strong indicator of the urgency on the part of buyers to get a home before the prices (and/or interest rates) rise any further.

[click on the image for a larger picture]

NEW LISTINGS

This February Belmont had 20 new listings compared to 23 in 2013.

INVENTORY

The number of available homes for sale this February was only 14—down from 17 last year during the same time.

DAYS ON THE MARKET (DOM)

The average time it took a Belmont home seller to sell their home this February was only 11 days, down from 17 last year.

PERCENT RECEIVED

Sellers for Belmont homes received on average 109.32% of their asking price compared to last February when they received 107.37%—still far above the state average.

MONTHS OF INVENTORY

The total months it would take to sell of the current inventory dropped from 1.55 months last February to 1.27 months this year. The national average is 5 months of inventory.

All indications are for another strong year—as we predicted. Next report we’ll wrap up Q1 with March’s numbers.

If you are considering a move this year, the spring time is a great time to get top dollar with competitive offers.

WRAP-UP

SELLERS—

GOOD NEWS—you can sell your home quickly at the right price. Most homes are selling over asking if priced according to our current market conditions—that is to say most homes sell for +/ 10% over asking so pricing at what your homes is worth makes it overpriced to buyers.

Not all agents get you the same results—interview wisely.

BAD NEWS—this seller’s market won’t last forever. More homes are coming on the market because more sellers have equity to move. The days of paying too much for a home and windfall profits are nearing the end.

BUYERS—don’t think if you read the above that you can wait out the market. That’s a fool’s game as although the rate of appreciation will wane, it’s still in positive territory for the foreseeable future.

Disclaimer:

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 or emailed at info@morganhomes.com.

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.

Belmont Home Values–Are They Sustainable in 2014?

Belmont Home Values for 2013–A Market Re-Cap

This year-end summary is where we bring you the re-cap for Belmont Home Sales. To say the least, Belmont sellers had a good year. After watching their home values drop for five years in a row (until 2011), they finally enjoyed some relief in 2012 and in 2013 as Belmont home prices reached a new high never seen before.

Here’s how it all stacked up.

This graph shows the median price in Belmont from 2012 through 2013. Many postulate about whether the market has returned to its previous high. To answer that, we looked at the median home trend in Belmont going back to 1998. Belmont’s median home price was over the million dollar mark for every month last year—save March. The closest we came to that was back in 2007 when we hit a period over the million dollar mark only twice. In many areas of the east bay and the country as a whole, they are still shy of the highs seen in 2006.

Belmont Median Price Trend 1012-2013

MEDIAN HOME PRICE

The median home price in Belmont last year, as reported by the Multiple Listing Service [MLS] in aggregate form, was up 19.5% from $949,230 in 2012 to $1,133,917 in 2013.  But not all areas fared the same.

 

 

 

 

 

 

This map show which areas of Belmont increased more year-over-year than others. If this seems odd to you, read the post we did on Which City is More Affordable—Belmont or San Carlos where we discuss some of the idiosyncrasies that have an effect on micro-regional values.

Belmont 2013 areas median Adjusted

 

If you’re like us and you are wondering why some areas of Belmont saw so much more appreciation than others, we took another step and looked into the size of homes selling in the respective areas during the two periods to see if that could account for the variance.

The red percent displayed on the map is the raw median price reported by the MLS and the blue percent is an adjusted percentage taking into consideration that either smaller or larger homes sold in the two periods.

These are our findings:

 

Areas

2012

2013

Variance

Raw Increase

Adjusted
Hallmark

2150

2280

6%

30%

24%
Skymont

2020

1830

-9%

20%

29%
Belmont CC

1840

1870

2%

15%

13%
Carlmont

1800

2029

13%

40%

27%
Sterling Downs

1190

1220

3%

27%

24%

 

This of course would indicate a raw median home price in Belmont of 26% and an adjusted one of 23.5%–much closer to the numbers reported in aggregate form from the MLS.

INVENTORY

The big brouhaha last year was over the lack of inventory. There were only seven fewer homes listed for sale in 2013 but 23 more sales than in 2012. Of course, this created fewer homes for buyers to choose from, which then led to bidding competition and prices going up at exponential rates.

DOM (Days on the Market)

The time it took to sell a home in Belmont last year almost dropped in half from 2012—from 37 to only 21 days.

PERCENT RECEIVED OF ASKING

The “Sizzle Factor”, or “How Hot Is the Market?” reached a new high with the average Belmont home seller receiving 108% of their asking price compared to 102% in 2012.

What can we expect in 2013? Probably more of the same. The median home price rate of appreciation should slow, as many homes which were under market value have regained much of their lost appreciation. We’d take a guess that appreciation will be closer to 14%-16% on average for Belmont—down about 5% from what we will imagine was the height of appreciation increases in 2013—we’ll see.

The factors to watch which could alter this trend will be the waning bond purchases by the FED which will serve to raise interest rates and may take away the ability for buyers to bid so much over the asking price in the latter part of 2014.

This begs the initial question of are these homes values sustainable and the answer is that depends. If the economy continues to improve and the rate of appreciation slows, than the short answer is yes—for now. But recent developments in China’s economy could have an impact on the rate of future appreciation and the U.S. economic rebound. Remember, what started the whole Bay Area recovery was jobs. If that changes, the game we know today could be over very soon.

 

Disclaimer:

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 or emailed at info@morganhomes.com.

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.

 

Which City Is More Affordable–Belmont or San Carlos

Belmont vs San Carlos Home Values

NOTE: This post is in response you a question posed on the Belmont Patch:

Q.    How does Belmont’s property prices rise compare with nearby San Carlos’ which has the Laurel Street downtown and the industrial area?

A.  To answer this question as posted on the Patch by Gladwyn d’Souza, we had to do compare home sales and price points in Belmont to San Carlos over a period of time to see if any trend appeared.

We chose 2006-2013, which effectively covers the period right before and through our local housing recession and into the recovery.

We’ve spent a week looking at the numbers and trying as best we could to put them into a comprehensive perspective without analysis paralysis setting in.

The short answer is Belmont is lagging the home price appreciation of San Carlos. But there’s a lot more to it than that. If I’m reading into the question correctly, (since we received more than one request for this analysis) essentially people want to find out if having an industrial and downtown area creates more value in the local housing market and if that influences the rate at which homes appreciate—which is a slightly different question than just trying to answer if homes near a downtown cost more—this question includes do homes go up in value at a faster rate than surrounding areas. If I am paraphrasing that incorrectly, I apologize.

Unfortunately, the Patch limits how long we our response to a post can be so we are including this link to our own blog page where we can give the answer justice as well as add the appropriate graphs and documentation. We invite you to join us here for our in-depth answer.

Let’s begin by answering the question do the homes values go up at a faster rate…

We need not involve Belmont for this part of the analysis—not yet. That actually serves to complicate the answer because first we need to know if the homes near downtown San Carlos are indeed going up at a faster rate than homes which are not near downtown. This methodology eliminates  unnecessary variables created by comparing two cities which could unjustly influence the results—issue such as weather, governance, schools, transportation, shopping, etcetera—to name a few.

Our Multiple Listing Service allows us to break down sales by rather arbitrary but effective boundaries. For example we can look at the White Oaks area in San Carlos and compare it to the homes just north of Holly on the Belmont border, or homes which are more sequestered in the San Carlos hills on Crestview.

White Oaks SQFT LOT $/SQFT Median Price Rate of App Size Diff Adjusted Rate $/SQFT

2011

1600

6000

$538

$932,000

2012

1501

6300

$629

$950,000

1.9%

-6.6%

8.5%

16.9%

2013

1775

5760

$759

$1,352,000

42.3%

15.4%

26.9%

20.6%
SCL Hills Rate Size

2011

2175

8058

$498

$998,000

2012

2090

8400

$546

$1,105,000

10.7%

-3.9%

14.6%

9.7%

2013

2170

8300

$629

$1,380,000

24.9%

3.8%

28.7%

15.2%

 

As one can see the raw rate of median home price appreciation is considerably higher in the White Oaks than in the San Carlos Hills. And when we compare the price per square foot we arrive at the same conclusion—that homes near downtown in San Carlos coast more per square foot and are going up at a faster rate. However, the adjusted rate takes into consideration the variation in the size of homes selling in these two areas. We factored that in as best we could—admittedly it’s not a perfect system but, for example, in the White Oaks on 2013 we surmised that if the raw rate of appreciation was 42.3% over the prior year, but the homes were 15.4% larger, then we are not comparing apples to apples. So to be consistent we subtracted this variance from the rate of appreciation for an “adjusted rate”. Normalizing these two variables offers up a much more stable rate of appreciation and probably closer to the actual difference in these two areas—which isn’t much.

Clearly it appears that people are willing to pay more to be closer to a downtown as is evidenced in the Bel-Carlos map below illustrating the price per square foot people are willing to pay. Does that fully answer the question of are homes near downtown selling for more—or appreciating at a higher rate? Certainly not. The reason is complex and two-fold. First, homes in areas which were harder hit by the housing market collapse are enjoying a higher rate of appreciation—counterintuitive perhaps to their respective locations—because they have a greater distance to rebound—in other words, the values dropped further and faster in these areas hence they are rebounding at an inverse rate.

Case in point, the Sterling Downs area of Belmont. Known for its superior microclimate weather, this area is home to many original floor plans  which consisted of a 1,010 Sqft three bedroom 1 bath home. At that size, the price point for these homes was less than surrounding larger Belmont homes and much more affordable to the first-time homebuyer—many of the very homeowners who found themselves in financial trouble when the housing market imploded. In Sterling downs in 2011 there were only 10 sales—two of which were distressed sales. Simply put—many could not afford to sell and take a loss in 2011. In 2012 the number of sales shot up to 19 but eight were distressed sales, while in 2013 a whopping 33 sales were logged and only 1 was a distress sale. It’s easy to see with values plummeting more in Sterling Downs than others areas of Belmont it’s no wonder they are bouncing back at a higher rate. And they just happen to be closer to downtown…

Sterling Downs SQFT Lot $/SQFT Median Price Rate App Size Adjusted $/SQFT Inc.

2011

1469

5387.5

$443

$667,000

2012

1190

5330

$539

$650,000

-2.5%

-23.4%

20.9%

21.6%

2013

1190

5000

$673

$825,000

26.9%

0.0%

26.9%

24.8%
Belmont Heights SQFT Lot $/SQFT Median Price Rate App Size Adjusted $/SQFT Inc.

2011

2500

9639

$515

$1,221,000

2012

2150

9600

$539

$1,121,050

-8.2%

-16.3%

8.1%

4.7%

2013

2480

8990

$613

$1,400,000

24.9%

13.3%

11.6%

13.7%

 

The second factor skewing the results is that homes which are smaller sell for less per square foot.

Is price per square foot the most accurate statistic for analysis to reflect the true picture of an areas worth? Not really, and here’s why. Larger homes sell for less per square foot because land, not factored into the calculation, accounts for more than 50% of a home’s worth. Therefore a relatively small 1,010 square foot home in Sterling downs will sell for more per square foot than one in Belmont Heights (Hallmark Area) which average 2,010 square feet in size, yet the median price is far less in Sterling Downs.

Empirically speaking, we know that people pay a lot of money for very small homes near downtown San Carlos—finding the data to clearly illustrate the phenomenon has proven more difficult.

Now for the bigger question of how does the rate of appreciation in San Carlos compare to that of Belmont’s?

Belmont vs San Carlos Median PriceTrendWhat the numbers illustrate is that San Carlos has a higher median home price than that of its neighbor to the north, Belmont, and as long as we’ve lived here (which is now going on over 21 years) it always has.

 

 

 

 

 

 

 

 

San Carlos Increse over BelWe’ve noticed in both recent market corrections (1989 and 2007), that as the market cools, so does the discrepancy between the two city’s median home price. And when there’s a bull housing market, San Carlos begins to pull away at a higher rate of appreciation. Of course as in nature, a sort of market equilibrium begins to set in when values are too far apart to lessen the disparity in home prices—akin to water filling a void.

 

 

 

 

Here we see that not only do you pay more to live in San Carlos you also get a smaller home for the money. And since the lot sizes in the two areas are relatively similar, larger lot sizes in one area which could affect values can be ignored.

Median Price SQFT %Median∆ %SQFT∆ Adjusted ∆
Belmont 2013

$1,088,000

1840
San Carlos 2013

$1,210,000

1765

10.1%

-4.2%

14.3%

The raw data show that the median home price in San Carlos in 2013 was 10.1% higher than Belmont’s, but since one also gets a home 4.2% smaller we adjusted the true estimated median home price differential to be close to 14.3%. Calculating it another way, if we take the difference in the size of homes selling and multiply it by the price per square foot of San Carlos homes we get an additional $52,000 of appreciation bringing our median home price increase in San Carlos over Belmont closer to 16% for the year.

So it appears that the same home in San Carlos will cost you about 14-16% more–no matter where in San Carlos it is located.  The next question to attempt to answer is why?

Imagine if Belmont and San Carlos had no border? After all, the city borders exist on maps but in reality the imaginary borders are crossed frequently as Belmont and San Carlos residents have unfettered access to their neighboring cities amenities (except at the end of Hallmark Drive and Crestview).

What if we removed the artificial borders and created one large new town called Bel-Carlos, for our analysis. Now it’s just one big happy city with various neighborhoods-like it really is. Because last we checked San Carlos and Belmont offered reciprocity to their neighboring cities for access to shopping, restaurants and parks—you name it. Would a person really choose to live in San Carlos and pay more just to enjoy the distinction that their city had a downtown? After all, they could live a few blocks north and get to the same restaurants and stores?

We think that the proximity to the downtown is more attractive than the mere fact that one exists. To illustrate this we see that the values near downtown in San Carlos (price per square foot) are greater than neighborhoods further away—in San Carlos and Belmont.

Bel Carlos Map

In this map we combined San Carlos and Belmont to create a borderless “Bel-Carlos” and then we used data since 2007 in each area to examine the price per square foot which homes sold for.  In almost each case San Carlos homes cost per square foot exceeded that of Belmont’s in the neighborhoods we examined.

Now in our new city, Bel-Carlos we have the same distinction. Some neighborhoods in Bel-Carlos are more expensive (per square foot) than others. Offering walking distance to Bel-Carlos’ fine dining fetches a higher price per square foot than neighborhoods further away.

Overall, the home values in San Carlos are higher and go up at a faster rate than those of her neighboring city of Belmont. Is it that San Carlos has a larger downtown with many fine restaurants, the warmer weather, shopping opportunities, community involvement or the city governance? It’s most likely all of the above. That said, there are many who choose Belmont for the beauty of the hills, proximity to major commute arteries, and the cooler mountain air.

Whichever city you choose you call home, we’re here to help.

Disclaimer:

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 or email at info@morganhomes.com.

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.

 

Belmont Home Values Set a New Record – November 2013 Sales

We hope that your holiday is filled with great times and fun with family or friends!

This is our last market update for the year as December’s won’t roll out until mid-January. That’s where we re-cap the entire year and take our best guess as to what’s  in store for our market in 2014.

We hope you’ve enjoyed this year’s market updates. Belmont has seen some amazing appreciation this year and November was certainly not a spoiler.

Click on the image for a larger view.
Click on the image for a larger view.

SALES

The seasonal slowdown has thus far not materialized. Belmont had 40% more sales this November than in 2012—25 compared to only 14 last year. That might seem staggering but as it turns out last November of 2012 was a bit of an anomaly in that very few homes sold when historic sales trends are reviewed.

MEDIAN PRICE

The big deal once again is the median price. Since virtually the same size homes sold last November in Belmont as did this year, the median price increase this year more-or-less accurately reflects the increase in Belmont home values. Last November the median home price stood at $901,500 while this year we hit $1,089,000—a 21% increase. But most important is that this is not a blip on the radar screen. Belmont homes values set a new record as except for April, Belmont has posted million dollar plus median home prices the entire year—a first in the history of Belmont.

Have the values surpassed those at the peak of our market? Undeniably—for Belmont.

DOM (Days on Market)

The time it took to sell a home was essentially unchanged at 23 days as compare to 27 days last year.

NEW LISTINGS

Interestingly enough we had 15 new listings hit the market in November this year. The warmer than usual weather might have had something to do with it but that represents a 50% increase over last year.

MONTHS OF INVENTORY

The time it would take to sell the existing home inventory at the current monthly rate of sales hit another low at 0.5 months. To help put the low inventory into perspective, nationally, that number still stands at around five months.

Hot Pepper 25PERCENT RECEIVED—THE SIZZLE FACTOR

Still holding at over 100% of asking, November did not disappoint as Belmont sellers enjoyed on average 107% of their asking price.  Some of you may have noticed that this number does not jive with the chart above. That’s because we calculate the percent received in our chart as a percentage the seller received of their ORIGINAL asking price, not the reduced price. The Multiple Listing Service tracks it as a percent of the price when the home sold, and that methodology accounts for the difference between our number of 103% of asking and the 107% reported. Either way, it’s a big number.

PRICE REDUCTIONS

There were more price reductions than normal this November. 20% of the sellers lowered their asking price while 16% received under what they were asking for their home. Still, 68% received more. But those numbers are just a tad bit less impressive than last November which could be rationalized because sellers are getting more aggressive in their initial pricing and thus are having to lower their expectations down the road in terms of a price improvement.

As always if you have any questions about our report you are welcome to reply to this post or email us at info@morganhomes.com or call at 650-508-1441.

And if you are considering a move in 2014, please take a moment to reach out to us. Well show you why year in and year out we have the best record for selling homes in Belmont.

Have a great Holiday and Happy New Year!

Disclaimer:

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.

Drew & Christine Morgan did not necessarily participate in these sales.

 

Belmont Home Sales – Are We Headed for a Cool Down or Not?

Like a marathon finish before the New Year, Belmont’s home sales hung in there for at least one more month as October’s home sale statistics showed little signs of distress.

It’s actually amazing for us to see just how strong the market is going into what is typically a seasonal slowdown period.

In order to make any sense of Belmont’s housing statistics, we look at year-over-year numbers rather than month-to-month changes which are often influenced by seasonal factors.

Belmont Home Sale Activity-October 2013

SALES

The sales for October were virtually unchanged from last year when 23 homes sold in 2012 and 24 in 2013.

How’s the Inventory?

That’s all the buzz with agents complaining daily about no housing inventory.

 

There are three factors to look at when thinking about the inventory level.

  • The number of new listings
  • The number of sales
  • And the overall inventory level

The number of new listings this October went from 14 in 2012 to 17, the number of sales were up this year by one, yet the overall inventory dropped from 32 to 24 this October.

In October of 2013 the number of available homes for sale was 32, while this year that number dropped to only 24. That brought down the “Months of Inventory” statistic which measure the time (in months) that it would take to sell all of the existing homes on the market at the current rate of sales. Nationwide, that number is still around five months of inventory.

Belmont dropped from 1.39 months last October to 1.04 this year.

With sales staying relatively static, and new listings increasing in 2013, why then does the months of inventory counterintuitively shrink rather than grow?

The answer lies in the number of leftover homes from the previous month which linger on the market. Last year the market was strong, but not as hot as this year, so some of the September homes for sale last year managed to spill over into October causing the overall inventory to increase.

MEDIAN PRICE

The median price this October recorded at $1,135,000 which may have been a seasonal drop from August 2013 when it stood at a record high of $1,239,000, but an increase year-over-year of 16.1% when last October the median price was only $977,500. In both periods the size homes which sold were relatively unchanged at 2,037 Sq. in 2012 to 2,060 Sq. in 2013.

PERCENT RECEIVED—THE SIZZLE FACTOR Hot Pepper 25

So how hot is the market? Just last month we were seeing some signs of a cool fall market but October’s number appear to have staved off the winter housing chill for at least one more month. Could it be the warmer than usual fall we are enjoying? Perhaps. In any case, this October 20 of the homes or 83% sold over the seller’s asking price, while one home sold at asking and only two sold for less.

Last October only 35% of the homes sold over the asking price, two sold at asking and 22% sold for less.

The percent sellers received of their asking price were 100.3 vs. 108.5 in 2013. Hotter than last year, and hotter than last month when the sellers received 106% of asking.

 

Disclaimer:

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.

Drew & Christine Morgan did not necessarily participate in these sales.