Single family homes in the more affordable price ranges seem to be flying off the market in the San Jose district of Almaden Valley. For the last twelve weeks or so, the absorption rate or months of inventory in the 95120 zip code has been hovering around 2 – 3 months. That’s fast! (6 months is a balanced market, less a sellers market, and more a buyers market.)
This comprehensive post will include data from three subscription based sources. First a summary of the October 2009 sold data (care of my RE Report ). Then, with the aid of Clarus Market Metrics (a subscription through my MLS and real estate board), we’ll take a two year view of the Almaden real estate market, its months of inventory and supply & demand ratios. Then we’ll incorporate data from Altos Research, another subscription service I utilize, to look at the data for listed homes today, broken down by price quartile (since what may be happening in Almaden overall may not be the experience in a subset of this market).
|Trends At a Glance||Oct 2009||Previous Month||Year-over Year|
|Median Price||$990,000||$860,000 (+15.1%)||$976,500 (+1.4%)|
|Average Price||$1,052,370||$914,410 (+15.1%)||$1,045,160 (+0.7%)|
|No. of Sales||28||39 (-28.2%)||16 (+75.0%)|
|Pending Properties||39||38 (+2.6%)||13 (+200.0%)|
|Active||61||61 (0.0%)||122 (-50.0%)|
|Sale vs. List Price||97.5%||98.0% (-0.5%)||95.6% (+2.0%)|
|Days on Market||48||54 (-11.4%)||65 (-27.0%)|
Fewer homes are coming on the market now, so the old inventory is getting absorbed. Prices often are getting pushed up in multiple offers if the home sells quickly (in 3 – 4 weeks).
Here’s a view of the months of inventory in the Almaden Valley area of San Jose over the last 2 years:
Next let’s have a look at the overall “supply and demand” for this upscale part of Silicon Valley over the last two years. Sales are rising while inventory is shrinking – and for buyers, that’s exactly how it feels: there’s less to choose from and prices are inching upwards. If you were waiting for the “bottom of the market”, it may be behind – just depends on your price point.
This is extremely interesting as an overview of the 95120 zip code. But as we know, things can be vastly different between entry level homes and the most expensive luxury estates. Let’s change gears, then, and make use of Altos Research’s charts and graphs (to which I subscribe and have the right to post). NB Altos uses list prices. The data above, from our MLS, is using sold prices.
A great thing about Altos is that they separate out the data by price quartile. I’ll now demonstrate why this matters so much.
First, here’s the median list price for all of Almaden Valley (all price quartiles combined) for the last year:
Now let’s see the data broken down by quartile:
Now perhaps it doesn’t look so bad, unless you are in the most expensive homes. The upper middle quartile appears to be about where it was a year ago – so really not bad.The lower three quartiles all got a bump up in pricing in summer, but the highest priced homes continued to drop. Let’s look closer at the prices of the luxury homes for sale in Almaden.
These most expensive homes in the 95120 zip code appear to be listed at about 20% less than they were a year ago.
Next is the list price for the upper middle quartile:
This upper middle quartile has held its value amazingly well, with only about a 1% change in pricing. I wish I knew why.
Next the lower middle quartile:
This quartile looks to be about 9% “off” from a year ago.
And finally, the bottom quartile of houses for sale in Almaden – the most affordable or “entry level” homes for sale:
These least expensive Almaden Valley homes for sale have come down by about 8% from a year ago. That’s quite a big difference from the most expensive homes!
Overall, most of the homes in Almaden have had a fairly consistent drop in pricing over the last year. The upper middle tier did not seem to have such a consistent drop as the rest – not sure why that is.
What about inventory in San Jose’s Almaden Valley area of 95120?
Here’s the chart for all quartiles combined of the active inventory of Almaden Valley homes for sale:
Inventory is crucially important because of the law of supply and demand. Buyers today are finding less inventory and this is precisely what is causing the surge in sales and the low “months of inventory”. (I did not show this by quartile because it simply shows four lines following the exact curve pattern.)
Now average days on market for Almaden Valley overall:
Next average days on market by quartile:
This is an interesting tangle of information reflecting the average days on market among Almaden Valley homes for sale, separated by quartile. Inventory is rising, but there was a “dip” in spring to summer, depending on the price point.
Finally, let’s circle back to the absorption rate or “months of inventory”. It’s quite low for Almaden overall – just abeout 3 months of inventory right now. But it may be quite different from one price range to the next.
The top quartile (black line) is lagging the most. This seems to make sense as those homes appear to have taken the biggest hit with pricing. In all quartiles, though, the absorption rate is up. If you go to the top of this post to view last month’s closed data, you’ll see that sales are up 200% over a year ago. That is an enormous improvement!
So what can Silicon Valley home buyers and sellers take away from this post on the Almaden Valley real estate market? It appears to be a mixed message:
prices are down (from 1% to 20% from a year ago)
days on the market are up from a year ago
inventory is down from a year ago
sales are up
I believe that what we are seeing here is the turning of the tide. With fewer homes to choose from and buyers actively picking up bargains, there’s simply more demand than supply – and it’s pushing prices up.