Local Market in Need of a Relaxitive
|Market conditions in Santa Clara County are creating a high level of frustration, particularly for buyers.
These conditions will resolve themselves, in time. But, it is going to take time for the market to settle down.
Lack of inventory is the most important dynamic at the moment. There are several reasons why inventory is low and will continue to be so for the next two to three years.
First, investors are snapping up entry-level homes and turning them into rentals.
Second, underwater homeowners are unable to sell. According to DataQuick, a real estate tracking firm, about 28% of all homeowners in the county are underwater, with most of them concentrated in the entry-level market. It’s going to take years before they are able to sell.
Third, the large increase in the IPO nouveau-riche over the past few years has fueled demand in the $1MM+ segment of the market.
Fourth, new-home building in the county is moribund.
It’s a perfect storm for home buyers.
The one bright note is the surge in prices since the beginning of the year. We calculate the median price for single-family homes is up 28% since January.
If prices continue rising at this pace, we could see the market loosening up by next spring because many underwater homeowners will be able to breathe again.
July MARKET STATISTICS
Sales of single-family, re-sale homes were up 19.4% year-over-year.
Home inventory was off 32.8% from last July. That’s eighteen months in a row inventory has been lower than the year before.
The median price for homes rose 16.9% year-over-year. This pushed the sales price to list price ratio to 102.1%. The median price has been higher than the year before for the past six months.
The average price for homes was up 17.3% year-over-year. The average price has been higher than the year before for the past nine months in a row.
Pending home sales, another good indicator of market movement, were up 0.6% year-over-year.
for homes bounced up 2.7 points to +4.3.
has been on the up-swing the past seven months. It gained 2 points to go into positive territory for the first time since last June: +0.2.
momentum by using a 12-month moving average to eliminate seasonality. By comparing this year’s 12-month moving average to last year’s, we get a percentage showing market momentum.
The median price for condos gained 19.6% year-over-year. Inventory problems affected sales which were down 3.9% from last July.
Condo inventory was down 77% from last July.
This is an extraordinarily tough market for buyers. It’s important to be calm and realistic. If you don’t know what to do or where to begin, give me a call and let’s discuss your situation and your options.