Typically our reports on the real estate market have a much more positive outlook than those from the mainstream media – as well they should! The pace of sales compared to inventory has picked up dramatically this year to the relief of many, but this spring the temporary situation is that in lower-priced neighborhoods, investors have been making multiple all-cash offers to snap up inexpensive foreclosures for what they hope will be a lucrative return. Meanwhile, would-be first-time homebuyers with pre-approvals for FHA or conventional loans are making offers on these same houses, hoping to purchase a nice place to live, but ultimately finding that theirs was one of as many as 30 or more offers with little chance of being the winning bidder. Wait a minute, aren’t we supposed to be in a slow real estate market? Why are these properties moving so fast?
Yes, it’s confusing, but we’re here to remind everyone that this is a temporary situation! It’s an ever-shifting economy, and thus it’ll be an ever-shifting real estate market. But the intense competition that buyers of bank-owned property are facing can be attributed to a couple of factors: 1) the drastic increase in affordability since 2008 and 2) foreclosure moratoriums which have delayed, but not prevented, bank-owned inventory from coming on the market.
That there were only 3.4 months of inventory in Santa Clara County at the end of May is a sign of pent-up demand, and that’s the good news. Meanwhile, expensive markets such as Los Gatos and Saratoga continue to be slow. The market was not going to and still is not going to recover overnight, but we know that regardless of any moratoriums or other government intervention, it eventually will.
Vital Signs:
Santa Clara County, Detached Houses and Condominiums/Townhomes, as of May 2009
Total Active Listings: 4379
Average (Mean) On-Market Asking Price: $970,000
Average (Mean) Final Sales Price: $582,000
Average Sales Price-List Price Ratio (includes only homes that actually sell): 97%
Average Market Time (not including re-lists): 63 days
Sales, year-to-date: 5,042
Expired listings, May: 625
1-year appreciation: -33.2%
Months of Supply, May: 3.4
Average 30-year fixed interest rate (week ending 6/4/2009, not including points or fees): 4.79%
What’s Hot and What’s Not in Silicon Valley, May 2009:
Numbers represent “months of inventory.” The lower the number, the more likely prices there will be rising (sellers’ market). The higher the number, the more likely prices there will be falling (buyers’ market).
Sellers’ Markets: Milpitas (2.0); San Jose-Alum Rock (2.1); San Jose-Blossom Valley (2.2); San Jose-South (2.4); San Jose-Cambrian (2.4); Newark* (2.4); San Jose-Santa Teresa (2.5); Mountain View (2.5); San Jose-Berryessa (2.8); Fremont* (2.9)
Balanced Markets: Cupertino (3.1); Santa Clara (3.2); San Jose-Central (3.7); San Jose-Evergreen (3.7); Morgan Hill/San Martin/Gilroy (3.8); Campbell (3.8); Palo Alto (4.0); Sunnyvale (4.4); Los Altos (4.7); San Jose-Willow Glen (5.2); San Jose-Almaden Valley (5.3)
Buyers’ Markets: Los Gatos Mountains (7.7); Saratoga (8.4); Los Gatos/Monte Sereno (9.8); Los Altos Hills (11.5)
* denotes Alameda County
Santa Clara County Average: 3.4 months of supply
Charts and Graphs:
