San Jose housing inventory is critically low, and this is pushing real estate prices higher and higher. Home buyers are finding that not only do they get outbid on pricing in this market, they are also out maneuvered on terms as others dare to write purchase contracts with no contingencies of any kind or bring 100% cash to the closing table.
Today we’re going to consider the realty market trends for houses (inventory, pricing and market momentum) in the city of San Jose courtesy of Altos Research, to which I have a subscription, and using some other tools as well. This is helpful information for area home buyers or sellers to better understand the negotiating lay of the land. (For newcomers: San Jose represents a little more than half of Santa Clara County and is often reflective of how the rest of the county is doing.)
Let’s start with inventory. How many houses are for sale today in San Jose? Just turned to MLSListings.com and searched – as of right now, there are a measly 366 single family homes for sale in San Jose which are not under contract.
Now let’s look at the trends over the last three years – I marked each year’s peak with the green diamond to highlight the pattern.
In 2012 we saw a huge shift in the San Jose real estate market. Normally inventory would rise beginning in about February and peak sometime in summer, but last year it peaked in early spring and has been falling ever since. How low can it go? Right now, it should be on an uptick – but we are not seeing it yet. Hopefully it’s coming soon, the market is overheated and is in dire need of more listings – that is, home sellers willing to sell!
How does the tiny inventory level of 366 compare to other Februarys? The following stats for prior years are according to my RE Report.. It’s pretty clear – we haven’t seen anything this low in recent history! In fact, it appears that in terms of February’s regular inventory, this month it was twice as bad as the lowest month ever – 2005, when there were 681 homes for sale in SJ.
2/2009 3228 – deep buyer’s market
2/2008 3429 – deep buyer’s market
2/2005 681– hot seller’s market
2/2004 890 – seller’s market
None of these prior years comes even close to how low our inventory is today. It would be no big deal if buyers were yawning, but with super low interest rates, they are jumping to buy now that prices are notching up. Let’s next turn our attention to pricing and home values.
Next, over three years:
Low inventory, rising prices – bad for buyers, good for sellers. Here’s what the last year looks like in graph form for the residential real estate market in San Jose, CA.
Going back three years, it looks like this:
Pretty steep switch in market conditions since early 2012 – we have seen about 10% appreciation in house values in SJ.
By the way, depending on how you figure the statistics, the months of inventory in San Jose is very low – about one month right now. It’s a very high, swift absorption rate. It is a great time to sell a San Jose home. Hard time to buy one!
If you are thinking of buying – it will require nerves of steel right now. It can be done but it’s not fun, you will be competing most of the time against many offers and paying a lot for whatever you buy.
If you are thinking of selling – this is as good as it gets. It may never be better than it is now. CALL ME for a confidential consulation about getting the most from your home sale. You do not want to miss this market!