Archive for the 'Quarterly Updates' Category
SF Peninsula & Silicon Valley: How Q1-‘14 compared to: Q1-‘13, Q1-‘09, and 15yr Averages
BUYERS NERVOUSNESS INCREASES WHILE HOMES APPRECIATE RAPIDLY
Lack of homes for sale remained the greatest factor in the local housing maket in the first quarter of 2014. Warnings of an imminent “market top” and a “housing bubble” echoed throughout the various news services and media. Yet, it did little to dampen the numbers of offers on homes. Nor did it stop buyers from offering to pay greatly over the asking prices for the few homes available each week. How long will this housing market boom continue? That is now the question everyone is asking!
On average, among the cities in the charts below, during the first quarter of ’14 new listings were down by 34% from their 15 year averages. As a result, sales were down by 17%. It took half as long for a home to sell in Q1 ’14, compared to the 15 year average. Until buyers begin to balk at the asking prices – which has yet to happen with any frequency – or when a financial shock of some magnitude causes a drop in consumer confidence, we anticipate that the current “seller’s market” will continue unimpeded.
Median sales prices were up, on average, by 45% since 2009! Buyers paid 5% over asking price, on average, in 2014 compared to 5% under the asking price in 2009. The price of homes per square foot was up by 42%, on average, compared to 2009. Location, location, location: Homes that are the most volatile (that rise and fall the most in value in each cycle) are those with “unremediable issues” – negative location issues or poorly designed floor plans. There is very little discount for homes with negative attributes in today’s hot market, but they drop greatly in value in a slower market. Folks in homes with location “issues” are wise to sell now, before the market turns. Conversely, buyers must now select very carefully!
WANT MORE SPECIFIC INFORMATION?
The towns included above have diverse neighborhoods and prices. When we look at averages we get clues to the overall market, but not the details. If you would like an in-depth analysis of market trends in your particular town or neighborhood, simply call Jeff at 650/823-8057 or Steve at 650/450-0160, or email us: [email protected], or visit our website: JeffAndSteve.com. We’ll be happy to help!
In the towns listed below the housing market was hot again in the 3rd quarter of 2013. Overall, sales were up, the percentage of list price received by sellers was up, price per square foot was up, and median sales prices were up. The number of new listings and the average number of days it took to sell were both down – two more indicators of a hot market. An extremely low supply of homes for sale continued to fuel bidding wars for rationally-priced, well-located homes during the 3rd quarter.
HAVE WE REACHED A TIPPING POINT?
As we write this, Congress has yet to settle its differences regarding the budget and debt ceiling – they’ve only put it off until January and February of 2014. Meanwhile, consumer confidence is rapidly eroding! Whether or not these difficulties will bring about the end to the current real estate bull market remains to be seen. If inventory starts to steadily grow, we’ll have the answer.
THE BOTTOM LINE: Buyers, select very carefully! Sellers, don’t miss this low-inventory market!
THIRD QUARTER MARKET ACTIVITY
This Year, Last Year & 5 Years Ago
In the second quarter of 2013 listing of homes for sale were down in all the areas below except for Los Altos where the listings were up slightly from Q2 last year. Median sales prices were up to new highs in all areas except Los Altos Hills. One has to look back to 1999/2000 to see similar percentages of list prices received by sellers and homes selling so quickly (Days on Market).
In the charts below, you’ll find 15 years of data for market activity and median sales price for the Second Quarter for Palo Alto, Los Altos, Los Altos Hills, Menlo Park and Mountain View. You can’t find this level of historical data all in one place anywhere else, so if you have any questions or wish to get more info about your community, don’t hesitate to contact us.
All the usual signs of a market top are present: front page newspaper headlines of a “Hot Real Estate Market”, cocktail party conversations about recent home sales, and high-priced homes selling quickly.
GETTING READY FOR A CHANGING MARKET
Sellers: When the market changes, consumer confidence will drop; sales will slow; the number of homes on the market will rise; prices will stabilize and then fall. For those thinking of selling their home during the next 1-2 years, we recommend getting in touch with us now. We can advise you on how to prepare your home so it is ready to sell when the market begins to change.
Buyers: The key to success in a hot market is to select carefully. When the market is this hot, there is very little discount for irremediable issues (location issues, bad floor plans, etc). However, when the market cools those properties can decline in value by as much as 40%!
In the charts below, you’ll find 15 years of data for median sales price for the 1st Quarter sales for Palo Alto, Los Altos, Los Altos Hills, Menlo Park and Mountain View. You can’t find this level of historical data all in one place anywhere else, so if you have any questions or wish to get more info about your community, don’t hesitate to contact us.
The 49ers’ Colin Kaepernick is not the only hot commodity in town!
Homes on the San Francisco Peninsula continue to be on fire. Check out the charts below showing Q4 trends for the last 15 years in Palo Alto, Los Altos, Menlo Park, Los Altos Hills and Mountain View.
The first chart displays median price and percentage of list price received. As you can see, all areas showed improved median sales prices in Q4 2012 (except for Menlo Park which was merely a result of the lack of homes to sell in the upper price ranges). The second chart compares market activity – inventory of homes for sale, total sales and average days on the market. Inventories are at all-time lows in most areas and demand for those homes is fierce! We expect this pattern to continue for the foreseeable future. It will take a major financial shock of some sort to cool the current market.
If you have any questions or would like to discuss your specific neighborhood and real estate needs, don’t hesitate to shoot us an email or call. We invite you to share this post with anyone who owns real estate or is looking to buy in Palo Alto, Los Altos and surrounding communities.