How's the Silicon Valley market doing? A really good way of knowing is to take a look at the supply and how long it is lasting (as opposed to the days on market, which is a little skewed since some homes never sell, some sell fast, and it can't factor in the rate at which inventory is rising.)
The absorption rate tells us how long it would take for all the current inventory to sell off if nothing new came on the market. (Think of a bathtub. If no new water poured into the tub, how long would it take for the water currently there to drain out of the tub?) It is, I believe, the best indicator of the market that we have. So below please find the absorption rate of single family homes in Santa Clara County over the last few months:
(1) Single family homes months of inventory
January 2007 4.33 December 2.85 November 3.56 October 4.16 September 4.43 August 3.6 July 4.13 June 3.18 May 3.22 April 3.03 March 2.5
(2) Condos and townhomes months of inventory
January 2007 3.74 December 2.76 November 3.16 October 3.84 September 3.94 August 3.14 July 3.39 June 2.695 May 2.5 April 2.24 March 1.89
I looked at the absorption rate of January over the last 10 years and found that with single family homes, the average "months of inventory" was 2.97. Only one was higher than our current 4.33 and that was in 2003 when it hit 4.6 months. Of course, within 2 years that had completely reversed itself and in January of 2005 we had a very low rate of 1.84 months of inventory. In other words, this is a buying opportunity! If buyers wait too long, it will likely shift back into a Seller's Market.
The National Association of Realtors views a timeframe of under 6 months as still being a Seller's Market. Here, our market tends to move faster than the nation no matter what - but this is one indicator that if it IS a Buyer's Market, it's not a really strong one.
Another indicator is the percentage of list price received. Using this criteria, when it's at or over 100%, it's a Seller's Market, but under 100% it's a Buyer's Market.
% of List Price Received:
Jan 2007 98.34% Dec 2006 98.3% November 98.87% October 98.83% September 99% August 99.39% July 99.61% June 100.17% May 100.21% April 100.09% March 100.26% February 99.98% January 99.08%
So again, it is currently in the buyer's favor, but not by a lot!
;)
;)
