For January, as compared to previous Januarys, we had very low closings and would have set a new low level except for January 2008 (before the financial crisis!). Closings in one month are more times than not, sales the previous month so these were in large measure indicative of December’s slower activity. As we look at inventory, the amount of single family residences available to purchase in Santa Clara County, this did in fact set a record low for a January at just 715. All the while, the Silicon Valley real estate market continues in its slower pace as it usually does this time of the year, we see evidence of buyer demand sufficient enough to firm and otherwise increase prices. Keeping in mind that smaller homes sell during the holiday season (less family-related activity), as 54% of the closings have a sale price greater than list price with an additional 12% of sellers obtaining full list price. In San Mateo County, the number is 61% of the single family residence closings that had a sale price greater than list price. These indicate that there is ample buyer demand to push up prices in the near future as activity increases into the early-Spring season. As mentioned in the past, a sale price that is greater than list price infers that there were multiple offers — otherwise why would a buyer offer more!
Historically, the Silicon Valley real estate market shifts more toward a seller’s market after Super Bowl Sunday — the last “holiday” of the season. This certainly appears to have taken place. Matter of fact with the above ratios, it may not have ever ebbed too much from last year’s high level of activity!
Prices, as measured by the median price or the middle transaction, have been choppy to flat with a few exceptions. Santa Clara County median price for a single family residence stood at $739,000 in January, a slight decrease from the month before but more importantly up 11.8% from the same month a year ago. This is a scant $1,000 lower than the January record median price reached in January 2007! Remember to compare year over year as it eliminates the seasonality factor we experience each year and the annual shift to smaller homes that sell during the holidays with their resultant lower prices. Newspaper and internet accounts of price movements tell you that you should look at the month-to-month variations which is patently false (perhaps they sell more papers with the scary headlines!) and don’t bring up the fact that smaller homes sell during this time of year. In San Mateo County, the median sales price reached $1,010,000, also up nicely from the same month a year ago.
Silicon Valley real estate trends continue to be positive and we should see higher prices in the future. Mortgage rates have trended higher and are now in the low to mid-4% range, employment in the valley is higher for well-paying jobs in high-tech, biotech, etc which increases the demand for housing especially when the major employers encourage employees to live closer to the campus otherwise they pick you up in a wi-fi bus so you start working as soon as you get on board! The stock market gains also are a contributing factor as gains help with higher down payments and even cash transactions. Last year cash transactions accounted for about one third of all transactions!
Hot market areas in Santa Clara County are the Los Altos-Palo Alto area as well as the Cupertino-Sunnyvale area. Each one has a median days on market of just 9! This means that half of all the closings were sold in an incredible 9 days. The coolest market area in Santa Clara County was the East, Central and South San Jose area with a reading of 30.
For San Mateo County, the hottest market area is the Bay Cities area comprising Belmont, Burlingame, Milbrae, San Carlos and San Mateo followed closely by Redwood City and Foster City with median days on market of 12. The coolest market area remains the San Mateo Coast of Half Moon Bay, El Granada, Moss Beach and Montara with a reading of 66.
I track the different market areas to understand the latest dynamics in the market because county-wide averages don’t help sellers or buyers. This also helps me to advise clients on the most appropriate strategy to employ to sell at the highest possible price the market will bear or for a buyer to obtain the most house for their money while still being able to purchase a home without overpaying. That said, of the last nine buyers I have helped in multiple-offer situations, my buyers have prevailed in seven of them!
For questions, comments on the Silicon Valley real estate market or update in your neighborhood or your target area you are considering, please contact me and I’ll personally respond to assist you with the current market dynamics. Thanks for reading!