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Silicon Valley, Peninsula house prices, sales rise in February

(Mercury News)

The median price of houses sold in Santa Clara County rose 21 percent last month compared to the same time last year, as more high-end homes changed hands.

Sales in the county increased 4 percent last month compared with February 2009, with 804 houses sold, according to a report Thursday from MDA DataQuick.

The median price of the previously owned, single-family houses that changed hands in the county last month was $510,500, up from $421,000 in February 2009. Resale condominiums posted a median price of $315,000, up 16 percent from $271,500 in February 2009.

"It's feeling like we are off to a healthy spring market — certainly not blockbuster, but healthy,'' said Rick Turley, president of realty brokerage Coldwell Banker's Bay Area office. "We need more listings."

The trend was the same in San Mateo County, where the median price of houses increased 13 percent year over year, and sales climbed 5 percent. The median house price in that county was $600,000, up from $531,000 last year. The median condo price was $330,000, down 13 percent from February 2009.

February's significant increases in median price do not mean that every home has enjoyed double-digit appreciation over the past year. In fact, the values of some homes are still falling. But median prices have increased compared with last year in part because of a change in which types of homes are selling, DataQuick said.

For example, in February 2009, homes costing $500,000 or more made up 24 percent of all Bay Area home sales, including new and resale houses and condos. But last month, sales in that price range made up 32 percent of sales. In Santa Clara County, 44 percent of sales cost $500,000 or more last month, up from 36 percent a year earlier.

Turley said that after the financial market meltdown of fall 2008, high-end home sales dried up during the first two quarters of 2009. Compared to those days, homes sales in higher price ranges are much more robust now, pushing up median prices. And with relatively few homes on the market in Silicon Valley and on the Peninsula, prices in some neighborhoods have stabilized.

Only about 3,300 houses and condos were for sale in Santa Clara County at the end of last week, compared with nearly 6,000 a year ago.

Campbell resident Michael Reed would probably agree that more listings would help prospective homebuyers like him. Reed has been looking for a home priced at about $500,000 on the west side of Silicon Valley for about six months, submitting "easily a dozen" offers, with no deal inked yet.

"The big word is 'frustrating,' " he said. "We've tried to do foreclosures, we've tried to do short sales, we've even tried to purchase on the courthouse steps. We've gone every single direction, but nothing's really working out."

Reed said along with help from his parents, he is prepared to pay cash for his first home and then get a mortgage on it later — but even with cash, he's been outbid every time.

He admits part of the problem is that he's being picky, preferring a home in Campbell or Cambrian that's in decent condition — homes, in other words, that are popular with lots of other buyers.

Kathi Hammill, an agent with Alain Pinel Realtors in Los Gatos, also notes that buyers in the $1 million-and-up price range are more numerous this year than last, but "are still being choosy." Properties that need refurbishing or have less-than-savory locations may still sit on the market. "If there's anything a little wrong with it, buyers are not willing to put offers on those types of houses. They are waiting."

For the nine-county region, home sales of all types — including new and resale houses and condos — were down slightly in February compared with a year earlier, falling 0.9 percent, with sales dropping significantly in Contra Costa, Napa and Solano counties, according to DataQuick's report. But median prices were up in most counties from last year.

"I would take that as an encouraging sign," said economist Matthew Anderson of Foresight Analytics in Oakland.

The median house price for the Bay Area as a whole was $370,000 last month, up 25 percent from $296,500 in February 2009.

The median price marks the halfway spot, meaning half the homes sold for less than the median figure, and half for more. DataQuick gathered its information from public records of sales that closed in February, meaning many of the transactions began in January or earlier. Anderson said he would not be surprised to see median prices and sales volume keep rising compared with 2009, but only if mortgage interest rates do not rise significantly. A big increase in rates would quell homebuying, he said.

Contact Sue McAllister at 408-920-5833.

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Market Dynamics through Febuary 2010

On the above PDF file, please find the most updated Market Dynamics statistics for Santa Clara County through February 2010.  These statistics are for Single Family and Condo/Townhomes in Santa Clara County.

Here are some highlights to pay particular attention to as you review the data/graphs through the first two months of 2010:

1.  Median Price- February's Median Price regained its upward trajectory from 2009, after a slight dip in January ($475,000),  to $499,000  which is significantly higher ($78,000) than February one year ago.  The Median reached its low point in March of 2009 @ $415,000 and has proceeded to climb and then hovered above and around $500,000 and reached a high of $530,000 in November of 2009.  As we predicted over the last few months of 2009, we are already seeing a higher rate of upper end sales in Santa Clara County (several between 3-5 million).  As these sales begin to close escrow, the median price in SCC will continue its climb well above $500,0000 during the course of 2010. 

2.  Supply&Demand (Units)- We continue to see a dramatic distinction as we compare early 2008 with 2010 in the following categories; For Sale (supply/inventory), Under Contract (pending sales) and Sold (closed escrows).  To illustrate when we compare Feb 08 with the same month in 2010 we see the following- For Sale properties/supply is down -40%.  The number of under contract properties (pending sales) is now up an amazing 92% and the sold/closed escrows are up 41%.  The pattern and direction of this market for the past 7-8 months continues to be the same story; declining overall supply/inventory, increasing new sales and closed escrows.  Normal seasonality is beginning to come into play as buyer demand continues to amplify moving well into the 2, 3 and 4+ million price ranges at a significant rate as compared to the same time last year.  Despite the overall increase in sales activity in all price ranges, the overall rate of closings continues to be somewhat sluggish mainly based on a high percentage of short sales and the ongoing challenges of financing given the new disclosures and stringent guidelines.  We are anticipating some strong closing months in late Q2 and during Q3 given the large pipeline of pending sales as they are worked through with lenders approving select short sales and financing coming through for purchases.  This closing activity in the coming months will have a significant, positive affect on these monthly data points, further pointing to a balancing market and a imminent real estate recovery in Silicon Valley.

3.  Months Supply of Inventory & Days on Market- The overall Months Supply of Inventory (months of inventory available based on the total existing supply divided by the rate of sales) dwindled down to a 2 year low range of under 2 months! This is down from a 2 year peak of 14.2 months in January of 08.  The Months of Supply of Inventory declined each and every month in 2009 from 7.7 months in January to 2.6 months by year end.  Days on market has remained under 60 days for the past 7-8 months, which on average is down about 10 days from the same period one year ago.  This reduction in the Days on Market is another indication of the improving residential real estate market. 

4.  Basic Absorption- The decline in the residual inventory levels continues(the remaining inventory each month excluding pending sales, closed sales and new listings).  This segment is down -62% when comparing Feb 2008 and Feb 2010.  More  of the less desirable or unrealistically priced properties are either now selling (in the case of unrealistically priced- prices are being adjusted) or coming off the market.  The other metrics are quite compelling with the comparison of Feb 2008 vs Feb 2010 we see Under Contract Properties/pendings increasing and up 92% and New listing inventory coming on the market remaining  down 17%.

5.  Percent Under Contract- This is typically one of the most telling statistics of all because this is @ the line of scrimmage, where the market is today.  Essentially when looking @ this stat, we are factoring of all the available inventory what percentage is under contract or a pending sale.  Typically in any area we have seen where @ least 1 for every 4 available listings is under contract, we have a stable or appreciating market.  Whenever we have seen this factor less than 1 out of 10 or less than 10%, we have sign prices more in a correction mode.  We can look back historically and show where this occurred in pockets throughout SCC @ different times and how this was impacting values to the down or upside.  At this point in time, SCC is @ a 2 year high with nearly 29.8% of all the available listings/supply under contract/in escrow. This percentage is slightly up from last month's fully adjusted figure of over 24.2%, and is a 222% increase when compared to February 2008 when this figure for SCC was at a lowly 9.2%!.

In conclusion, the market stability and strength in the overall bay area residential real estate market is confirmed by these data points.  From our sales activity over the past 30 days and increasing even in the past week, we are certain to see improving data and statistics in the news as these new sales begin to close escrow.  We are fortunate to be right at the pulse of activity and trends and this should be an advantage to our clients and/or those that have an interest in following up to date market trends.  In addition to the positive current rate of sales, one of the most encouraging signs is the increasing high-end sales activity, which was sluggish during much of 2009.  It will be very interesting to see the upward movement in the median price as these sales begin to close escrow over the next 30, 60 and 90 days.  The biggest challenges of the day are high percentage of short sales (difficulties in getting lenders to communicate and close these transactions), the increased paperwork introduced into the loan process this year and the ongoing stringent lender guidelines.  The market, despite its increasing buyer demand, is one of the toughest we have seen.  Salespeople are working harder than ever to represent their buyers and sellers in the market and navigate them through the various hurdles that seem to be commonplace in every transaction.  The buyers are in the market and ready to buy there is no question about it and this is a good starting point to build from.  We are projecting a strong spring and summer market in most price ranges and possibly the most balanced and active market we have seen in over 2-3 years.

Sincerely,

Chris Trapani

President & CEO

Sereno Group

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 By Carol Rodoni

Presented by Bamboo Consulting Inc. Vol. 15 March 2010

Current Real Estate Update

Improper electrical wiring usually done by homeowners or unqualified contractors. Think inadequate overload protection, wires tied together without being housed in a box, etc. All of these issues can cause major problems and are fire hazards. As a seller, get this kind of work done with a proper permit and by a licensed contractor. It will save you time and money in the end. And, most electrical issues are safety issues. So, be smart and get it done right.

Roof deterioration -- A roof that is old and damaged leads to leaks. If left unrepaired, a totally new roof is often the only fix and can cost on average almost $20,000. So, check the shingles and tiles on an ongoing yearly basis, clean gutters yearly, and trim back trees that could cause damage.

Improper surface draining or grading – Water is a powerful force and can flow into a house because of poor drainage or grading. Basements and crawl spaces are the most vulnerable. So, assess how your home sheds water, watch for signs of water damage, and find the source.

Plumbing problems – The biggest money drainer is dripping faucets. Leaking water can cause damage that can often be fixed by a part that costs under a dollar. In addition, shoddy plumbing work is cheap, but expensive in the long run – think mismatched piping materials, improperly installed water heaters, or rocking toilets. So, make sure your toilets are securely bolted, check faucets and valves periodically for leaks, and do the repairs when the problems are small.

General condition

– Often cracks, peeling, or dirty painted surfaces, broken appliances, and decayed caulking are found by inspectors, which can lead to costly repairs. Check these things on a regular basis and fix the issues early.

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