Forget Everything You Thought You Knew About Home Values

It seems there’s even more pent-up demand for housing than there was after the 1989 housing crash. The lower than usual interest rates is undoubtedly a contributing cause for the frenzied activity but what else is creating the stratospheric rise in housing activity?

It’s becoming a common event for a home to have 10-20 offers submitted by enthusiastic buyers. One first time buyer home in San Mateo recently sold with 86 offers! We’ve been in bidding wars ourselves where the winning bid paid over $300,000 more than asking price for a modest San Carlos home.
It’s probably not a leap for you to then believe that the median size home in San Mateo County climbed 29% since last March?
How’d we come up with that 29%? We adjusted it to account for the size of homes selling during the two periods. Had we not done so the raw figures showed a 34% increase.
In March of 2012 the median home in San Mateo country sold for just $689,000 and this March the median home price was $925,000. So did a lot of larger homes sell this year? For sure the upper market is starting to get traction again but the median size home selling in 2013 was only 5% larger. So we roughly estimate that if one can get a 5% large home in 2013 but have to pay 34% more, than prices probably went up by a factor of around 29%.
Looking at the housing picture for San Mateo County for March of 2013 as compare to March of 2012, we see that there were 20% fewer home sales this year as compared to last.
Why the fewer home sales if the market is so hot? Because, simply put, there are fewer homes for buyers to choose from. In 2013 there were 20 percent fewer sales but 29 % fewer new listings-which explains the low inventory.
For buyers wanting to get into a home, it may be now or never as home prices appear to have skyrocketed almost 30% in San Mateo County just in the last year. If interest rates rise, that double whammy may just put home ownership out of the reach for many.

 

 

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 Prices & Sales for March 2013 – Can it Get Any Hotter?

Once again Belmont home sales were strong. Now that we are comparing a bull year in 2013  to 2012, another bull year, the increases seem a bit watered down since in both years thus far home sales have been strong.

Belmont Home Prices March 2013

SALES

At 22 home sales in Belmont this March, we tied last year’s impressive increase of 29% over 2011 with 22 sales once again.

DAYS ON MARKET

The time it took to sell a home in Belmont went from 38 days last March to only 29 this year—just one more affirmation of the incredibly hot market.

PERCENT RECEIVED

Sellers enjoyed another boost in the percent of their asking price they received. In March of 2011 sellers received 99.5% of asking which jumped to 101.6% in 2012 before being eclipsed by this year’s impressive 108.3%. Sellers that are worried about what they pay their agent should think less about negotiating a ½ % discount in commission and more about hiring the best agent with the best results. My parents called that “Penny wise and pound foolish”.

PRICE REDUCTIONS

Two sellers had to lower their initial asking price to entice a buyer as compared to last year when three sellers lowered their asking price. Once again, compared to 2011 when almost 1/3rd of seller reduced their asking price, this is another high water mark.

MEDIAN PRICE

The median home price in Belmont last March was $899,000 and for the second month in a row it has eclipsed the $1 million dollar mark coming in at $1,044,000 for March—though the median size home also went up from 1,763 square feet in 2012 to 1,830 in 2013. So while the size of homes selling this year are 3.8% larger, they are selling for 16% more—suggesting an overall increase of around 12% year over year. Sounds about right for what we are seeing.

MONTHS OF INVENTORY

This statistic is used represent the “Month’s of Inventory” in a given period. Essentially the time it would take to sell the entire existing inventory of homes at the current rate of monthly sales. In Belmont, that number has been dwindling each month until it reached .6 (less 18 days of inventory). That number alone might not have much meaning unless you understand that the housing inventory as whole in the US stands at 18 months—not 18 days.

Is it because there are more sales, or a declining inventory due to fewer new listings—or both?

With buyers and agents complaining about the lack of inventory, and with the lack of inventory playing a large role in the multiple offers we’re seeing, we decided we’d add a new graph to our statistics page that tracks the number of new listings and sales each month in select cities.

 

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.

DRE License Numbers 01124318 & 01174047

Drew & Christine Morgan, REALTORS | Notary Public