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.

 

Belmont Home Sales Smash Records! December 2013 Market Report

Welcome to our Belmont home sales year-end report. In Part I we close out December’s sales, and in Part II we recap the year and the look deep into our crystal ball for what may be in store for the housing market in 2014.

PART I

Let’s start with December sales:

December was a strong month for Belmont home sales, as winter home sales go. We contrast these sales to the same time last year to avoid any seasonal anomalies.

Belmont December 2013

SALES

Belmont had 18 home sales in December—one less than last year and five more than 2011.

MONTHS of INVENTORY

At the current rate of sales, compared to the existing inventory and new listings, the time it would take to sell all of the homes in Belmont dropped to an astonishing low of .28 months—that’s a little over a week of inventory. To help put that number in perspective, San Mateo County is running at 2.2 months and the country as a whole is at around five months.

Which part of the equation changed since last year? The number of new listings year-over-year was unchanged and sales were relatively unchanged but the inventory level was already at only five homes for sale going into December this year as compared to 12 last year so the appearance in the rate in which inventory was depleted was exacerbated.

MEDIAN HOME PRICE

The median home price rose to $1,086,000—a 16% increase over last December and essentially unchanged from the prior month. What did change is that in 2012, for $939,000 one could get a 2,150 square foot home while this year, at the new median home price of $1,086,000, one could purchase a home only 1,625 square feet in size. So for 15% more, buyers in 2013 bought homes that were 32% smaller than in 2012.

DOM (Days on the market)

In 2012 it took 54 days to sell the homes that closed in December while this year that number dropped to only 19.

Hot Pepper 25PERCENT OF ASKING

And now we get to the Sizzle Factor—what percent homes are selling of the asking price. It’s a great measurement of just how hot the Belmont housing market really is.

In December of 2012 Belmont homes were selling for 98.83% of the seller’s asking price. This December Sellers grossed 107.6% of their asking price. At a median home price of $1,086,000 that delta is huge! It represents sellers netting on average $95,000 more for their home in 2013.

PRICE REDUCTIONS

In 2012 42% of the listings that sold had price reductions of on average $158,000, while in 2013 only one lone seller had to lower their initial asking price by $30,000.

In 2012 58% of the homes sold for an average of $44,000 under the seller’s asking price and 37% sold for on average $37,000 more.

In 2013 83% of the sellers received on average $99,000 over their initial asking price while only two sellers settled for on average $12,500 less.

In Part II we’ll take a look at Peninsula home values on a more macro level and discuss what may be in store for 2014.

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.

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.

What is a Relative Bid in Real Estate?

Relative Bid Offers–Safe or Insane?

Among other tactics used in multiple offer situations, is the use of relative bids, also referred to with somewhat of a negative connotation as “Sharp Bids”. This tactic is sometimes Frequently Unasked Questionsemployed in purchase agreements for real estate when competing buyers are vying for a property.

Here’s how a relative bid might work. A buyer wishing to avail themselves of this tactic should prepare their offer with an initial stated offer price, and a caveat that their offer shall be “X” amount higher than the highest verifiable offer up to the buyer’s desired price cap—the highest the buyer would be willing to go in a worst case scenario. That’s the correct way to prepare a relative bid—a baseline, the overbid, and a cap.

What are some of the advantages and disadvantages of relative bids?

The main disadvantage is that most real estate agents do not know how to handle relative bids and/or write them for their clients. In fact, one of the largest reals estate companies in the Bay Area disallows their agents from employing or even entertaining this type of bid for fear they might muck it up and end up in a lawsuit.

To us, that’s throwing the baby out with the bathwater.

One specious argument against relative bid offers is that your relative bid may place you at an offer price above an inferior offer, perhaps rife with contingencies. A logical and practical rebuttal to this is that sellers use inferior offers all of the time to counter lower price offers with superior terms to match higher price offers which they have no intention of accepting.

The advantage for a buyer is they are no longer bidding blindly against themselves. Say for example a home is listed for $900,000 and there are 17 competing offers, as there were for a home we recently listed in Redwood City. Buyers have no real idea how high to bid to secure the property and in many cases bid far higher than the next closest bidder—effectively bidding against themselves.

A relative bid allows them to offer a specific amount higher than the highest offer and have control over how much they over bid in a multiple offer situation—but only if it’s done properly.

Is it legal? Absolutely. In fact another large company (with whom we have previously worked) in the South Bay actually recommends to their agents that they make the option of a relative bid known to their buyers to avert a claim of a lapse in the agent’s fiduciary duty—by not explaining all potential bidding options to one’s client.

For a seller the advantage is that they may get a higher price than they would have should they choose to invoke the relative bid offer, since typically relative bid caps are the buyers “best and highest” price they would possibly entertain—their worst case scenario if you will.

As a seller and a buyer, wouldn’t you want to know that you have all the tools available to you when buying or selling a home? At RE/MAX, we are not only allowed to accept and write relative bid offers, we have used them to our advantage in several strategic and crucial situations—much to the satisfaction of our prevailing clients.

 

Disclaimer:

Drew & Christine Morgan are REALTORS/NOTARY PUBLIC in Belmont, CA. with more than 20 years of experience 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.

 

 

 

 

Housing Market Shows Signs of A Cool Fall

Have you heard rumblings that our local housing market which has been racing away like a runaway train is beginning to run out of steam, or are you in the camp that there’s still no light at the end of the appreciation tunnel?

Clearly some Belmont sellers are being lulled into believing that our housing market is just as strong as during the spring. We personally encountered two sellers last week who defied all logic and refused to sell their homes unless they received considerably over their asking price. Neither seller has since sold their home.

If a seller markets their home and receives ten offers, it’s pretty safe to say that at least the day they sold their home, they got as much as they probably could. Of course there are variables such as how well their agent handles the negotiations, but absent the variables, the highest price pretty much sets the high water mark for the home’s value on that day.

Assuming that the high bidder is the winner (they aren’t always), if an identical home were to pop on the market a week later should that seller receive more or less than his lucky neighbor down the street? Since the highest bidder now owns a home, the second seller is left with the next highest offer buyers. The question becomes will one of those buyers be kicking themselves enough to pay even more than the last home they just lost?

It appears some Belmont sellers believe that the market owes them as much or more than the last sale. Unfortunately, it doesn’t work that way. The buyer’s determine the value not, the sellers or their agents.

The fall has brought with it a chill in the air which has cooled the superheated housing market seen earlier this year. Most of our evidence is empirical, but ironically the numbers don’t necessarily bear that out. So why do we feel the market has cooled? We are part of a Mastermind group of top producing REALTORS who gather monthly to discuss market trends and best practices. At our most recent meeting on October 17th there was a consensus from our think tank colleagues who are scattered all up and down the Peninsula that indeed the number of bidders is waning. Being in the trenches gives us a unique perspective about  multiple offer situations. Of course this begs the question, is it a seasonal adjustment or is the wind of appreciation beginning to change?

Belmont Home Sales October 2013

SALES

Home sales in Belmont for the month of September 2013 were brisk with 18 sales—just one fewer than last year at this time.

NEW LISTINGS

Last year there were 25 new listing in September as opposed to the 36 new listings which harkens back to the traditionally higher spring listing levels.

INVENTORY

Overall, inventory of homes for sale were still lower than in 2012 with only 33 homes on the market, but with the influx of new listings in September, the Months of inventory increased to 1.83 up from .73 just a month earlier—still lower than the 1.95 a year ago.

MEDIAN HOME PRICE

The median home price increased year-over-year once again from $938,000 in 2012 to $1,210,000 in 2013—a 29% increase, with the size homes selling during the two periods also increasing 22% and inflating the delta.

Days on Market [DOM]

The average time it took to sell the homes which sold in September was 13 days this year, as compared to 28 last year. This is not to be confused with the average DOM for all of the homes which are not selling—that number stands at 34.

PERCENT RECEIVED

Belmont sellers received on average 105.75% of their asking price—besting the 101.98 a year ago but far shy of the 109.5 which seller’s received just last month.

This year, 78% of the homes sold for over the seller’s asking price—up from 58% a year ago, while only 11% received under their asking price, as opposed to last year when 32 percent received less.

Has the market cooled? Certainly. Is it a seasonal adjustment or a foretelling of a market to come? Visit our blog page next week when we will look at the seasonal price and sales trends in more depth.

Disclaimer:
Drew & Christine Morgan are REALTORS/NOTARY PUBLIC in Belmont, CA. with more than 20 years of experience 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.

Multiple Offers and How to Win the Housing Bidding War

Multiple Offers and How to Win the War

With increasing bidding wars in real estate, bidding on a home in the Bay Area can be a challenge at best with exceedingly frustrating closer to the norm. It’s reminiscent of the ugly Cabbage Patch Doll fights that broke out in department stores in the early 1980’s where there were more parents head hunting Cabbage Patch Dolls for Christmas than the stores could produce—one of the more shallow behavioral moments in our nation’s history.

We recently sold a home in Belmont which we listed at $900,000. We received four offers the first week. The seller chose to accept the highest non-contingent offer—not the highest offer. There was a higher offer at $1,003,000 which they did not entertain due to an inspection contingency. Last year when another agent had this home listed for sale, the sellers had two buyers rescind their deals and the sellers wanted to avoid that frustration again. They decided they were willing to accept $27,000 less for their home for the peace of mind of knowing they had a sure deal.

We think they made the right decision. Because it’s not just peace of mind they were getting, they were also getting $76,000 over their asking price—more-or-less a sure thing. Had they opted to roll the dice and the higher offer rescinded, to resurrect the $976,000 offer a second time around would be difficult. In all likelihood they would be relegated to an offer down around their initial $900,000 list price. Gambling on $27,000 when they stood to lose $76,000 just didn’t make send to them—or us either.

Last September, with multiple offers well established as the norm, we wrote an article for our blog site discussing the pitfalls of contingencies in an offer. In the last year nothing has changed except we have more empirical evidence that contingent offers often lose in a multiple offer situation, and sellers get less for their home if they have to re-market the property.

Now if your parents won’t help you with the down payment unless you promise to include a contingency, there are alternatives but they relegate you to homes where nobody else is bidding—which also means they are overpriced. Better to explain to Mom and Dad that the market has changed since they bought their last home.

So here’s the lesson about contingencies—think about it—in the above scenario, the high bidder had to make their offer $27,000 more and as it turns out it cost them the home as the seller didn’t take their offer. So how much does a contingency in an offer cost? Would the seller have accepted a contingent offer $50,000 or more above the next highest offer?

NOTE: We’re aware that many agents admonish their clients to not forgo contingencies and the genesis of their fear is to insulate them from any possible repercussions after the sale. The California Association of REALTORS recently held a seminar with the top CAR attorneys discussing exactly how to write non-contingent offers since the standard of practice in our area has evolved to embraced such practices.

Disclaimer:
Drew & Christine Morgan are REALTORS/NOTARY PUBLIC in Belmont, CA. with more than 20 years of experience 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.

Are Belmont Home Values Near The TOP–August 2013

Are home values near the top? Thus far this year the media focus has been to highlight the hot local housing market. Now it seems they are looking for any signs of it faltering to present a new angle. And in deed you may have already heard the recent reports from Case-Shiller and others indicating that the market is showings signs of cooling off.

When will it begin to cool? Has it already?

Remember—real estate is local yet media reports often are not. What you might be hearing in the news may not apply to the neighborhood where you live.

With the biggest housing crash since the great depression* still front and center in our memories, it’s no wonder that potential purchasers might be wary of how fast the market has rebounded.

We recently released an article discussing those very points—“What’s in store in Q4”. In it, we delve into why we believe if recent changes in market forces continue, the once rapid rise in home values will begin to wane.

AUGUST 2013—For now, the numbers are in for Belmont for August 2013 (Septembers will be out soon), and there’s no sign of a let up in our fervent housing activity—at least according to the numbers for August.

Belmont Home Values Aug 2013

[click on the graphic for a larger picture]

MEDIAN HOME PRICE

Most notably is the pace of the median home price in Belmont. It stands at $1,105,000 which is a 20% increase over last year during the same time. We’re the first to look at the size of homes selling in the two periods to see if perhaps larger or smaller homes sold and skewed the median home price. But what we found was that in August of this year the homes that comprised the sales mix were 16% smaller and yet cost 20% more. Also interesting to note was that the median home price in Belmont has been over the million dollar mark for the last four consecutive months—in fact had the median home price not dipped just below that threshold in April of this year, it would have been over the million dollar mark every month so far this year. Contrast that to the historical median price trend in Belmont which has never had consecutive months over the million dollar mark.

Summary—Belmont homes values have hit a new high.

SALES

August of 2013 saw a 55% increase in home sales and paradoxically a 70% decrease in new listings.

MONTHS OF INVENTORY†

That brings us to the inventory which was down 131% from August of 2012 resulting in a record low “Months of Inventory” factor of .73, down from 2.6 months in 2012.

DOM [Days on Market]

The average time it took to sell a home which closed in August was 17 days, down from 31 in 2012.

PERCENT RECEIVED OF ASKING

This August 80% of the sellers received on average $130,000 or 9% over their asking price as compared to 44% of sellers receiving $60,000 or on average 2% more than asking in 2012.

In short, the inevitable slowdown in the RATE of appreciation is news but it hasn’t appeared in the statistics yet. If you talk with a Belmont REALTOR® you’ll no doubt hear they think the market has cooled off a bit. We’ll look at September’s sales to see if that’s true, because July sales, (which resulted in August statistics), didn’t bear that out and neither did our first-hand experience.

Sellers of homes in Belmont should know that the majority of the rebound in equity has already occurred. The rate of appreciation will slow as the market forces we discuss on our blog begin to kick in. If we’re right and they do, the housing market will become much more sustainable—we have our fingers crossed.

*http://en.wikipedia.org/wiki/United_States_housing_bubble

†Months of inventory is the time as measured in months that it would take to sell all of the homes currently listed for sale, assuming no more new homes were listed.

Disclaimer:

Drew & Christine Morgan are REALTORS with RE/MAX and a NOTARY PUBLIC in Belmont, CA. with more than 20 years of experience 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.

What Does Q4 Have in Store for Our Local Housing Market?

Is it a bubble?Now that the media is hyping our local market once again with horror stories of multiple offers, and media proclaimed “Bidding Wars”, our attention turns to watching for signs of a change in the tempo of sales and/or over asking offers. Everyone knows the Peninsula housing market is red hot, and has been for more than a year now. The question now becomes, “When will it change?”

Some Pundits are already predicting a crash in what they perceive as an overheated housing bubble. Of course if they continue droning on about a market crash their theory eventually may come to fruition, but for now their bubble is more akin to a hot air balloon with scant facts to back it up.

The Case-Shiller report by Standard & Poor’s is a good macro-barometer of our Bay Area housing market and the nation as a whole. The Case-Shiller report, most recently released on September 24th 2013, showed an increase in the 20 largest housing markets across the country. In our area or “MSA” (Metropolitan Statistical Area), which includes the Napa, San Francisco, San Mateo Alameda and Contra Costa Counties, the index had risen 25% from July 2012 through July 2013 [Case-Shiller reports are delayed by three months so the September reports was actually for July].

Economists, like the National Association of REALTOR’S Lawrence Yun, have warned that prices have been rising “too fast” and at these double-digit rates of appreciation are “unsustainable”. We couldn’t agree more. The current rate is unsustainable in the long run, but we believe that many factors already in play will mitigate the danger of a bubble. But let’s take a small step back. Part of the reason that home prices have increased so dramatically is that in many areas they were below reasonable market values for so long that just returning to normal would be a huge increase. Many areas saw homes values plummet below the cost of construction. Home prices have not reached the May 2006 peak where the SF MSA stood at a whopping 218—24% higher than today. At the current rate of price increase home values would reach the peak seen in May of 2006 in one year from now.

We don’t believe that will happen—not even in the crazy Bay Area real estate market. Why?

What’s already in play to slow the engine of appreciation and avoid another economic train wreck?

  • More homes are being built as companies try to meet the new housing demands—this takes pressure off of the tight inventory
  • Interest rates will begin rising making homes less affordable—this will put pressure on price increases and most certainly limit over asking offers
  • More equity sellers are being created every day—more inventory will mean less upward pressure on prices
  • Investors are taking a break—as interest rates rise and unbelievable deals once had from the recession are gone, investors look for other opportunities outside of housing. Less competition for homes will help keep a lid on housing inflation.

According to the Case-Shiller study, “Since April 2013, all 20 cities are up month to month; however, the monthly rates of price gains have declined. More cities are experiencing slow gains each month than the previous month, suggesting that the rate of increase may have peaked.

Morgan Brennan who writes for Forbes Magazine on U.S. Housing markets, summed it up best in her article back in June titled “3 Reasons The ‘Bubble-Like’ Surge in Home Prices Won’t Last“. And since we agree with her sentiments, rather than re-invent the wheel we rather encourage you to read more about her theory.

 

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.

Belmont Home Values Rise Again in June But Fall Short of Surrounding Cities

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.

June of 2012 was about the time we were seeing strong signs of a housing rebound but it was still too early to declare with certainty that the rebound would last—that didn’t occur until November of 2012.

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.

Belmont Home Values Rise
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.

Belmont Home Values Break New Records – Home Sales Report for May 2013

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.

Belmont Home Values
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?

Belmont Home Values
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.