Active Listings for Los Altos homes is at all-time low

A very common comment is that there isn’t any “inventory”. Meaning, there are not very many listings on the market. They are right.
The chart below shows the number of Active Listings at month-end over the past ten years. This Newsletter is in regards to Los Altos, however the story is common across Silicon Valley. Back in 2006-07 the inventory would build up to a peak in the 80’s. In 2014 we were lucky to get to 20. That is ~75% reduction in the number of Active Listings on any given weekend. But does that mean the homes are not out there?
 

The next question is what is the source of this dramatic decline: supply or demand?

This next chart shows both. The blue bars are the number of New Listings (supply) per year going back to 1998. The red line is the average days on market (demand) for the same time period. As to supply, the number of New Listings pre-crisis was 500-600, in 2013-14 it was barely over 300. That is ~45% decline in the supply of New Listings. It is interesting to note the on-going decline in New Listings over the past five years.

The Average Days on Market (DOM) is at an all-time low of 17 days. This is nearly a 50% from pre-crisis levels of around 30-40 days. For the past three years, the homes are only on the market for one week: list on Tuesday, Open House on Saturday and Sunday, offer due Tuesday, sold on Wednesday. The drop in the DOM is certainly partly due to the drop in the supply of New Listings. It is also due to an increase in the number of Buyers, including off-shore Buyers.
The net effect of supply and demand on home prices is as to be expected: up. Los Altos has seen a strong rise in prices during 2012-13 with 2014 showing some leveling-off of prices, which is true for several cities. Maybe we are reaching a price plateau or maybe we will see another Q1 price jump as in the past. We will know soon enough.
The outlook for 2015 is a continuation of a very strong Seller’s market and a very competitive market for Buyers. Companies continue to hire new people from outside Silicon Valley. Construction is everywhere. It has all the signs of a thriving local economy.
The above charts and more are available for every city from Menlo Park to Los Gatos to Willow Glen. You are weclome to check them out at www.SiliconValleyMLS.info
Let me know whenever you have a question.
Bryan

650.793.0355

Cupertino has seen a dramatic decline in the supply of New Listings

A very common comment is that there isn’t any “inventory”. Meaning, there are not very many listings on the market. They are right. The chart below shows the number of Active Listings at month-end over the past ten years. This newsletter is in regards to Cupertino, however the story is the same across Silicon Valley. Note that back in 2006-07 the inventory would build up to a peak of around 100. In 2013 we barely got to 40 and in 2014 it was around 20. That is 60% to 80% reduction in the number of Active Listings on any given weekend. But does that mean the homes are not out there?

Inventory Cupertino

The next question is what is the source of this dramatic decline: supply or demand or both?

This next chart shows both. The blue bars are the number of New Listings (supply) per year going back to 1998. The red line is the average days on market (demand) for the same time period. As to supply, the number of New Listings pre-crisis was close to 800. The supply dropped ~30% during the financial crisis. Interestingly, the supply has been on a four-year decline since the recovery started. We are close to 300 New Listings per year which is ~60% lower than pre-crisis levels.

Suppy Cupertino

Since the recovery started, the Average Days on Market (DOM) has declined in-step with the decline in supply. Most homes are only on the market for one week: list on Tuesday, Open House on Saturday and Sunday, offer due Tuesday, sold on Wednesday. The drop in the DOM is certainly partly due to the drop in the supply of New Listings, however it is also due to an increase in the number of Buyers.

The net effect of supply and demand on home prices is as to be expected: up. There has been a strong rise in prices during 2012-13 with 2014 showing a leveling-off of prices, which is true for several cities. Maybe we are reaching a price plateau or maybe not. We will know soon enough. For now, most expect the trend to continue. Companies continue to hire new people from outside Silicon Valley. Construction is everywhere. It has all the signs of a thriving local economy.

Cupertino

As for Buyers – the supply of New Listings is lower, but not so low that there are not plenty of good homes out there. They just are not out there for very long. You need to watch every week and be ready to move quickly when you see one that is a fit. And you need to have your financing in order so that you can offer shorter loan contingency period or better yet no contingencies at all. Some lenders will give a full loan approval prior to submitting an offer – in this market it is a near necessity.

The above charts and more are available for every city from Menlo Park to Los Gatos to Willow Glen. You are weclome to check them out at www.SiliconValleyMLS.info

Let me know whenever you have a question.

Bryan

bsweeley@apr.com

650.793.0355

Active Listings for Palo Alto homes is at all-time low

A very common comment is that there isn’t any “inventory”. Meaning, there are not very many listings on the market. They are right.

The chart below shows the number of Active Listings at month-end over the past ten years. This Newsletter is in regards to Palo Alto, however the story is the same across Silicon Valley. Back in 2006-07 the inventory would build up to a peak in the 150-200’s. In 2013-14, we didn’t even get to 50. That is ~75% reduction in the number of Active Listings on any given weekend. But does that mean the homes are not out there?

Inventory

The next question is what is the source of this dramatic decline: supply or demand?

This next chart shows both. The blue bars are the number of New Listings (supply) per year going back to 1998. The red line is the average days on market (demand) for the same time period. As to supply, the number of New Listings pre-crisis was around 700, in 2013-14 it was barely over 400. That is a little over 43% decline in the supply of New Listings. It is interesting to note the on-going decline in New Listings over the past five years.

Supply Demand

The Average Days on Market (DOM) is at an all-time low of 17 days. This is nearly a 50% from pre-crisis levels of around 30 days. For the past three years, the homes are only on the market for one week: list on Tuesday, Open House on Saturday and Sunday, offer due Tuesday, sold on Wednesday. The drop in the DOM is certainly partly due to the drop in the supply of New Listings. It is also due to an increase in the number of Buyers, including off-shore Buyers.

The net effect of supply and demand on home prices is as to be expected: up. Palo Alto has seen a strong rise in prices during 2012-13 with 2014 showing a leveling-off of prices, which is true for several cities. Maybe we are reaching a price plateau or maybe we will see another Q1 price jump as in the past. We will know soon enough.

Palo Alto

The outlook for 2015 is a continuation of a very strong Seller’s market and a very competitive market for Buyers. Companies continue to hire new people from outside Silicon Valley. Construction is everywhere. It has all the signs of a thriving local economy.

The above charts and more are available for every city from Menlo Park to Los Gatos to Willow Glen. You are weclome to check them out at www.SiliconValleyMLS.info

Let me know whenever you have a question.

Bryan

bsweeley@apr.com

650.793.0355

Active Listings for Sunnyvale homes at an all-time low

A very common comment is that there isn’t any “inventory”. Meaning, there are not very many listings on the market. They are right.

The chart below shows the number of Sunnyvale Active Listings at month-end over the past ten years. Back in 2006-07 the inventory would build up to a peak in the 150’s. In 2013-14, we were lucky to get to 50. That is 1/3 the number of Active Listings on any given weekend. But does that mean the homes are not out there?

Active Listings

The next question is what is the source of this dramatic decline: supply or demand?

This next chart shows both. The blue bars are the number of New Listings (supply) per year going back to 1998. The red line is the average days on market (demand) for the same time period. As to supply, the number of New Listings in 2005-06 was nearly 1200, in 2013-14 it was slightly above 600. That is ~50% decline in the supply of New Listings over the past ten years. The good news is that there is some indication that the decline in New Listings is leveling off.

New Listings

The Average Days on Market (DOM) is at an all-time low of 17 days, which is about 30% lower than 2004-07 average. For the past two years, the desirable homes are only on the market for one week: list on Tuesday, Open House on Saturday and Sunday, offer due Tuesday, sold on Wednesday. The drop in the DOM is certainly partly due to the drop in the supply of New Listings. It is also due to an increase in the number of Buyers.

The net effect of supply and demand on home prices is as to be expected: up. The rise in prices started in mid-2012 and ran through mid-2014. Prices in the second-half of 2014 leveled-off, which is true for several cities. Maybe we are reaching a price plateau or maybe we will see another Q1 price jump as in the past. We will know soon enough.

Sunnyvale

For now, most expect the trend to continue. Companies continue to hire new people from outside Silicon Valley. Construction is everywhere. It has all the signs of a thriving local economy. The above charts and more are available for every city from Menlo Park to Los Gatos to Willow Glen. You are weclome to check them out at www.SiliconValleyMLS.info

Let me know whenever you have a question.

Bryan

bsweeley@apr.com
650.793.0355

Active Listings for Mountain View homes at an all-time low

A very common comment is that there isn’t any “inventory”. Meaning, there are not very many listings on the market. They are right.

The chart below shows the number of Sunnyvale Active Listings at month-end over the past ten years. Back in 2006-07 the inventory would build up to a peak in the 150’s. In 2013-14, we were lucky to get to 50. That is 1/3 the number of Active Listings on any given weekend. But does that mean the homes are not out there?

Inventory mt view

The next question is what is the source of this dramatic decline: supply or demand?

This next chart shows both. The blue bars are the number of New Listings (supply) per year going back to 1998. The red line is the average days on market (demand) for the same time period. As to supply, the number of New Listings in 2004-05 was nearly 500, in 2013-14 it was close to 250. That is ~50% decline in the supply of New Listings over the past ten years. Note the downward trend over the past seven years.

supply mt view

The Average Days on Market (DOM) is at low-point of 20days, which is slightly lower than 2006-08 average. For the past three years, the desirable homes are only on the market for one week: list on Tuesday, Open House on Saturday and Sunday, offer due Tuesday, sold on Wednesday. The drop in the DOM is certainly partly due to the drop in the supply of New Listings. It is also due to an increase in the number of Buyers.

The net effect of supply and demand on home prices is as to be expected: up. The rise in prices started in spring 2012 and are still rising. Looks like the Google-effect is alive and well in Mountain View.

Mt. View

For 2015, most expect the trend to continue. Companies continue to hire new people from outside Silicon Valley. Construction is everywhere. It has all the signs of a thriving local economy. The above charts and more are available for every city from Menlo Park to Los Gatos to Willow Glen. You are weclome to check them out at www.SiliconValleyMLS.info

Let me know whenever you have a question.

Bryan

bsweeley@apr.com
650.793.0355

Santa Clara homes: Inventory of Active Listings at an all-time low

A very common comment is that there isn’t any “inventory”. Meaning, there are not very many listings on the market. They are right.

The chart below shows the number of Santa Clara Active Listings at month-end over the past ten years. Back in 2006-07 the inventory would build up to 150-200 and over 250 in 2008. In 2013-14, we were lucky to get to 50. That is a good 60%+ reduction in the number of Active Listings on any given weekend. But does that mean the homes are not out there?

inventory santa clara

The next question is what is the source of this dramatic decline: supply or demand?

This next chart shows both. The blue bars are the number of New Listings (supply) per year going back to 1998. The red line is the average days on market (demand) for the same time period. As to supply, the number of New Listings in pre-crisis was close to 1000, in 2013-14 it was 600 per year. That is ~40% decline in the supply of New Listings over the past ten years. The good news is that it appears the decline in supply is leveling-off.

supple santa clara

The Average Days on Market (DOM) is certainly at low-point of 20 days, which is about 30%+ lower than 2004-07 average. For the past two years, the desirable homes are only on the market for one week: list on Tuesday, Open House on Saturday and Sunday, offer due Tuesday, sold on Wednesday. The drop in the DOM is certainly partly due to the drop in the supply of New Listings. It is also due to an increase in the number of Buyers.

The net effect of supply and demand on home prices is as to be expected: up. The rise in prices started in spring-2012. In both 2013 and 2014 there was an initial jump in prices and then leveled off for the year. Maybe we are reaching a price plateau or maybe we will see another Q1 price jump as in the past. We will know soon enough.

Santa Clara

For now, most expect the trend to continue. Companies continue to hire new people from outside Silicon Valley. Construction is everywhere. It has all the signs of a thriving local economy. The above charts and more are available for every city from Menlo Park to Los Gatos to Willow Glen. You are weclome to check them out at www.SiliconValleyMLS.info

Let me know whenever you have a question.

Bryan

bsweeley@apr.com
650.793.0355

San Jose-Cambrian homes: Inventory of Active Listings at an all-time low

A very common comment is that there isn’t any “inventory”. Meaning, there are not very many listings on the market. They are right.

The chart below shows the number of Active Listings at month-end over the past ten years in the San Jose Cambrian area . Back in 2006-10 the inventory would consistently build up to 200-250. In 2013-14, we were lucky to get to 50. That is a good 75%+ reduction in the number of Active Listings on any given weekend. But does that mean the homes are not out there?

Inventory cambrian

The next question is what is the source of this dramatic decline: supply or demand?

This next chart shows both. The blue bars are the number of New Listings (supply) per year going back to 2004. The red line is the average days on market (demand) for the same time period. The supply of New Listings certainly dropped from 1000-1200 pre-crisis to around 800 in 2009-14, a 25% reduction. The good news is that the current supply of New Listings is fairly stable.

supply cambrian

The Average Days on Market (DOM) is certainly at low-point of 20 days, which dramatically lower than during the financial crisis and probably about 30-40% lower than in the pre-crisis period. For the past two years, the desirable homes are only on the market for one week: list on Tuesday, Open House on Saturday and Sunday, offer due Tuesday, sold on Wednesday. The drop in the DOM is certainly partly due to the drop in the supply of New Listings. It is also due to an increase in the number of Buyers.

The net effect of supply and demand on home prices is as to be expected: up. The rise in prices started in early-2012. In both 2013 and 2014 there was an initial jump in prices and then leveled off for the year. Maybe we are reaching a price plateau or maybe we will see another Q1 price jump as in the past. We will know soon enough.

Cambrian

For now, most expect the trend to continue. Companies continue to hire new people from outside Silicon Valley. Construction is everywhere. It has all the signs of a thriving local economy. The above charts and more are available for every city from Menlo Park to Los Gatos to Willow Glen. You are weclome to check them out at www.SiliconValleyMLS.info

Let me know whenever you have a question.

Bryan

bsweeley@apr.com
650.793.0355

 

Ok. Here is a recap of 2014 that provides the story of what is going on with the Cambrian San Jose real estate market and a lead-in to 2015. Charts and more charts are available at www.SiliconValleyMLS.info/cambrian-homes

First, home values had their second year of spectacular rise in 2014. Values are now well above (~28%) higher than the pre-financial crisis peak.

annual

Here is how the above annual median sales price translates into the distribution of home price points. The sweet spot is between $600k and $1.0M for a single family residence (nothing under $500k). About 2/3 are 3-bedroom homes, most of the rest are 4-bedroom.

Price Distribution

So what is going on? Supply and Demand. First, note that the supply of New Listings (the blue bars) has actually been pretty consistent over the past six years, however a good 20% below the pre-crisis levels. The “demand” has increased represented by the Avg DOM (Days On Market, the red line) which has fallen like a rock over the past three years. New listings are now selling, on average, within 20 days, which is about 1/2 of the time as in the pre-crisis period.

DOM

Now let’s look at the distribution of how long homes are on the market and how much they are selling over/under list price. First point, over a super majority (72%) sold within 14 days of being posted on the MLS. Secondly, a near super majority (65%) sold for over list price. This the summary chart representing a ~20% decline in the supply of New Listings combined with a significant increase in Buyer demand.

price

Did I just hear you say that this is depressing? Not really, just a market reality that you need to prepare for.  The number of Closed Sales is ~5% below the 17-year average, so there are homes out there and Buyers are buying home. In this market, the “winning” buyers tend to be submitting no contingency offers, even if there is a loan. And you shouldn’t be surprised if you need to offer ~10% over the list price to make the short-list.

What do I expect in 2015? A continuation of the past two years. The monthly median sales price chart below provides some insight into the trend. A dramatic and steady increase in 2012 as the market recovery started to catch-up. Then in both 2013 and 2014 there was a jump in the price levels early in the year, which then held steady for the rest of the year. The two most likely scenarios are either 1) prices jump again in 2015, or 2) they hold steady at 2014 levels.

monthly price

The way the new year is starting, I’m thinking that 2015 will be a repeat of 2014 with an increase in price levels in March and then stay there for the rest of the year. The sky-is-falling scenario is if interest rates jump-up dramatically, thereby dramatically reducing the number of qualified buyers, 2) the high-tech companies (Google, Facebook, Apple…) put a freeze on hiring, or 3) there is a major disaster (earthquake, terrorist…).

Summary – you need to do everything possible to make your offer as strong as possible prior to finding a home. If you wait, it will almost certainly be too late, because there are other buyers that didn’t wait.

Please email with any questions or requests for additional information.

Bryan
Bsweeley@apr.com

There has been a lot of talk over the past year or two about “off-market” listings. This is referring to homes for sale, but not listed on the MLS (multiple listing service), and therefore not listed on the various internet real estate sites. This has become a more popular topic as Buyers are finding it harder to compete against multiple offers and are hoping that they would have a better chance if fewer people knew about the listing.

Of course that is exactly what most Listing Agents will tell their Sellers. Only that they want as many offers as possible so the buyers will bid-up the price to the highest price the market will bear. Sellers should put their homes on the MLS and promote it as much as possible. However there are circumstances where an off-market listing is in the best interest of the Seller and an opportunity for Buyers “in-the-know”. (I personally bought and sold my own home this year, both off-market).

Our local MLS service has been tracking the percent of homes sold “off-market” in the five county area that it serves from San Mateo to Santa Cruz counties. Their analysis is that up to 20% of homes are sold off-market (11.8% in 2011, 14.5% in 2012, 20.7% in 2013, and 16.4% YTD 2014). Of course, this may or may not be what you see in the specific market you are interested in.

So what is the answer in Los Altos? The short answer is that around 95% of Los Altos homes are listed on the MLS, 2% are sold by Realtors off-market and posted on MLS after the sale, and 3% are never posted on the MLS.

Los Altos homes sold off-market

 

To give you more of a feel, here are the specific numbers as of Dec 15th for 2014:

–  Homes listed for sale on the MLS = 279

–  Homes sold by Realtors and posted on MLS after the sale = 6

–  Homes sold and not posted on MLS (assume by owner) = 10

The sell and purchase of my personal homes represented 2 of the 6 homes sold by Realtors and posted after the sale.

A couple of key conclusions for Buyers:

1. The MLS is a very strong reference base for assessing market values and finding comparable homes with 97% of home sales being reported on the MLS.

2. There are very few “off-market” homes for sale (16 out of nearly 300 per year). Certainly worth having your Realtor work their network to keep an ear out for off-market listings and to get a jump on upcoming listings, but not a silver-bullet.

3. There is a small hand-full (~10/year) that are sold directly by the owners. About 1/3 are new construction homes that most Realtors hear about. Maybe 1-2 post on the various For Sale by Owner (FSBO) internet sites. The rest; just happens.

For Sellers:

1. The base-line answer is that you should market your home on the MLS in order to attract as many prospective Buyers and offers as possible. This is usually the best path to maximizing the value you receive for your home.

2. There is a way to market your home off-MLS. Realtors, especially ones in the major brokerages in Los Altos, have a very extensive network of Realtors that they can reach. I sold my personal home off-market by marketing it to agents in my brokerage, Alain Pinel, which happens to be the #1 brokerage in our area. It worked well in our case and the Buyer’s agent was not from my brokerage!

Hope you find this helpful. Feel free to email me with any questions or requests for additional information.

Bryan
Bsweeley@apr.com
650.793.0355

Buyers ask me whether their offer has a chance against an all-cash offer. Here is some insight in the Los Altos market.

Realtors reported on MLS that 37% of the Closed Sales in 2014 were All-Cash and 63% were with conventional financing. Pretty impressive given Los Altos is one of the most expensive real estate markets in the nation.

Here is a little more detail. This charts shows the distribution of all-cash vs. loans by the length of the escrow period (days).

Cash vs Loan

Interesting to note how nearly one-half of buyers requiring loans are able to close escrow in 2-3 weeks, rather than the typical 30 days. This reflects many lenders, such as Wells Fargo, to complete a full loan approval prior to submitting offers. This eliminates nearly two weeks of diligence work by the underwriters.

Conclusion – 1. all-cash buyers don’t dominate the market, you can successfully compete with financing. 2. get full loan approval prior to submitting an offer. No cost and no obligation. Enables you to better compete and shows the Seller that you are doing everything possible to win their acceptance.

Hope this helps. Let me know if you have any questions or would like more info.

Bryan
Bsweeley@apr.com
650-793.0355