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A common buyer question right now is whether or not the real estate market in Silicon Valley is overheated, if we are experiencing “another bubble”.  If you visit open houses in places like Sunnyvale, Cupertino, and in many parts of the Peninsula, you may see droves of buyers and be convinced that the market is, in fact, overheated.

Silicon Valley encompasses a large area, primarily Santa Clara County and some of San Mateo County, but a few sections of neighboring counties as well. Generalizing about huge regions is tricky.  Overall, though, it is a deep seller’s market throughout Silicon Valley.  But there is a great deal of variation from one city or town to the next, as well as between ages of homes, quality of schools and neighborhoods, and price point.   Today we will focus primarily on a couple of statistics: the ratio of sales price to list price for houses in San Mateo and Santa Clara Counties, and ratio of new listings to sold and closed ones of houses in these counties.

First, though, a look at the two counties combined to show the broadest common real estate trends for Silicon Valley in relation to the sales price to list price ratio and “days to sell”.

 

Santa Clara County and San Mateo County sale price to list price ratio and average days to sell

Santa Clara County and San Mateo County sale price to list price ratio and average days to sell

 

The chart above gives a snapshot of the Silicon Valley market, which appears to have had a peak in about October – November 2012. likely reflecting sales 45-60 days earlier, when the days to sell hit a yearlong low.  Since that time, though, things appear to have calmed down.

New listings of houses for sale versus sold homes in San Mateo and Santa Clara Counties

A few days ago, before getting the stats for closed sales in January 2013, I wrote about the trends for new listings of houses in relation to the closed sales in Santa Clara County in late fall 2012.  What we were seeing was that homes in escrow were closing or finalizing the sales faster than new inventory was coming on the market.  The closings in January, though,reflecting sales which began in December, a trend reversal, back to a more normal ratio, in both Santa Clara County and San Mateo County.  December is often the softest month of the year, with few listings relative to the rest of the year and sales at lower price points.  Looks like this December followed that pattern to a point.  Have a look at the charts for both counties and notice the trend reversal, below.

 

New Listings vs Sold SCC Feb 2013 (Small)

Santa Clara County New Listings vs Sold Houses last 12 months

And next, San Mateo County:

 

Santa Mateo County New Listings vs Sold Houses last 12 months

Santa Mateo County New Listings vs Sold Houses last 12 months

 

The reversal of this trend may imply a moderating of the market in terms of the supply-demand imbalance.  We will have to watch this and see what happens in February, typically a “tell tale” month of what’s to happen.  Next, the ratio of sale prices to list prices in these counties and certain areas within them.

Sale price to list price ratio of houses closed in San Mateo County and Santa Clara County

Next we’ll look at the real estate trends and statistics for the sale price to list price ratio in these counties for homes sold & closed. Many cities and towns will be reflective of their counties, but interestingly, not all.

Santa Clara County – notice that the overall thrust is upward, but recently has come down (that can be typical of the softer selling conditions in late fall and December).  But it remains well over 100%, meaning that the sellers have the upper hand.  Will it continue to decline?   In most Januaries (this chart does not show it), the spring tends to bring rising prices, but not in every year.

 

Sale price to list price ratio Santa Clara County houses sold

Sale price to list price ratio Santa Clara County houses sold

 

Now let’s see how San Mateo County stacks up to its neighbor on the southern side:

 

Sale price to list price ratio San Mateo County houses sold

Sale price to list price ratio San Mateo County houses sold

 

Fairly similar patterns overall with a recent softening – but also an uptick.  This will be worth watching. If we see what happened in 2012, it would seem to indicate that the market was overheated – at least by this one measurement and the steep change in this ratio.

What about cities and towns within these counties?  Do all of them follow the same general pattern?  Most do – but some do not.  Here I am inserting a gallery with 9 cities and towns (not in this order): Palo Alto, Menlo Park, Redwood City, Sunnyvale, Mountain View, Cupertino, Saratoga, Los Gatos, San Jose.  If you click on the images you can see that one enlarged.  In many of them, the recent push has been up or down, with a small change in the near past – in those cases the caption reflects the major trend, but do notice the nuances.

 

 

In many cases, there was a huge surge in this statistic in 2012, but we’re seeing some pullback now.  Given how steeply some areas appear to have appreciated, seeing a small correction in this one statistic does not appear unwarranted, and if it moves back toward 100%, a little more balance in the market.  Is it overheated, or a bubble?  If so, it’s been going on for about a year.

Note: these charts and data were crunched by me using MLSListings.com, our local MLS, of which I am a member.