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How is the Real Estate Market?

By Steve Mun

Real Estate Agent with Keller Williams Silicon Valley Cal BRE# 01358433

November 04, 2007 05:30 PM

As a Realtor, this is perhaps the question most frequently asked of me. Someone asked me this at a friend's BBQ over this weekend. I had to tell him: "it depends on the specific market, but properties are not moving as quickly as they did the same time last year but prices are not falling as people would expect" was my response. To illustrate this point (and perhaps to give him some supporting data now), here are two areas (Campbell and Cupertino) and how they have been doing recently.

Campbell

If we look at $/square feet, we see that in Campbell, it remained pretty consistent (Sept 07 @ $481; Sept 06 @ $480 and Sept 05 @ $479). So price has not really had much of an impact, even with all of this brouhaha about the sub-prime market.

However, things are a bit different in the inventory arena. The rate at which the market can absorb the unsold inventory (absorption rate) is on the rise. (4.7 months worth in Sept. 07 vs. 3.7 months worth in Sept. 06 vs. 1.3 months worth in Sept. 05).

Cupertino

Things are a bit different in Cupertino. With the news everyday about the negative impact of the mortgage market, we would expect prices to drop or if lucky, stay flat like Campbell above. But in reality, the prices actually shot up dramatically here. Prices went to $642/sq.ft. in Sept 07 vs. $544 in Sept 06 vs. $566 in Sept 05. The prices have remained fairly consistent over the past 12 months!

I think we can all agree that we are fairly deep into the effects of the sub-prime market's impact on the economy within the past 6 months; yet if you look at the unsold inventory at the same time in Cupertino, the impact seems minimal. Sept 07 had 2.1 months of unsold inventory vs. Sept 06 with the same 2.1 months vs. Sept 05 with 1.5months worth. Relatively speaking: nearly imperceptible impact; while the rest of the country went wild.

So my friend, if you are reading this: I told you, it depends on the market but houses tend to be remaining on the market longer but prices are not falling (it's increasing in some areas).