A quick update on where we are in the Santa Clara County / Silicon Valley housing market. This information comes from the September statistics for homes currently for sale, pending sales, and homes that are sold. Lots of great little tid bits in this one graph.
The blue area is the number of days it would take to sell all the homes for sale at the current rate of sales. The green line shows the number of homes in escrow. Normally, this line tracks closely with the red line, which shows actual sales. As you can see, the two lines have diverged over the past year. This is due to many homes being put into escrow as short-sales, contingent upon the banks’ approval. This is being done even before the banks know about the short sale. Subsequently, many of these escrows do not close. On average 30% of short sales return to the market over and over.
Also, if you look at February 2009, you will see the peak of the buyer’s market. At that time, we had nearly one years worth of inventory to sell. Thanks to the tax incentives, FHA loans, low interest rates, and a lot of hungry real estate agents this inventory is pretty much gone. Now we have about 100 days of inventory. With the average home being on the market nearly 50 days, it takes us about two months to clear inventory. However, inventory is climbing like it typically does as we approach the holiday season. The question is whether or not the last of the fence sitting buyers will see the opportunity for deals in this last quarter of 2010.
List to sales price ratio is right at 100% for most areas. Which means that on average, what the average home is listed for is about what it is selling for. However, higher end markets like Los Altos Hills (L/P ratio at 96.7%) and Saratoga (L/P ratio at 96.8%) are feeling the pain of limited jumbo loan buyers. The higher end market still has room to fall. The only high end market that is keeping market value up is Palo Alto. Thank you Stanford, tech, and the green government programs for keeping this home market solid.
Total sales volume is down on average 25% over last year when prices were on average 12% lower. Some call it a recovery, most believe that until California’s budget crisis is managed and joblessness decreases, we are in for a “bumping along the bottom” ride. Some months will be up and some months will be down. Now, we have to bet on how the banks will deal with the problems created by sloppy paper work on thousands of foreclosures. I, for one, do not want to see another bubble created in 2011 simply because hundreds of thousands of foreclosures have not yet been released to the market. If you would like to talk about real estate in any particular neighborhood, contact me. It is one of my favorite subjects.