So you want to know how the real estate market is doing in your area because you are getting bombarded by the media: whether it is TV or print, telling you that the market is simply blowing up all around you. Is it true? How much do homes cost in your county and how much inventory is available? You want answers. Well, let’s look at some data to find those answers.
The perception is that the market is really hot everywhere. Is that perception a reality or are there significant differences in the market from county to county? To get an answer, let’s turn to the Sales Data from several counties and compare. We will look at the three surrounding Counties that border Silicon Valley: Santa Clara, San Mateo and Alameda. Most buyers looking for homes will consider cross shopping in different cities in these Counties as their potential homes.
To gauge the market, we will look at the following data points:
- Median Home Price - what the mid point sales price is in a particular county
- YTY % Change in Price - how much prices have fluctuated from the same month last year
- Median Time on Market - how long homes are on market before they receive offers
- Unsold Inventory Index - otherwise known as absorption rate - or how many months will it take before all of the current unsold inventory will be completely depleted (common wisdom is that 6 months of unsold inventory is considered to be a balanced market. Less than 6 months would be considered a seller’s market and more than 6 months would be considered a buyer’s market.)
The attached graphs give us an interesting range of prices in the three counties, with the median price ranging from $756,250 in Alameda county to $932,100 in Santa Clara County to a whopping $1,300,000 in San Mateo County! The Median price in California was $468,550.
How did prices do compared to last year? The more affordable Alameda County rose 14.5%, while Santa Clara rose 7.8% and San Mateo rose 11.1%. California overall was at 7.2%.
How much time did it take for these properties to get offers? One would expect the higher price homes to take longer to sell while the lower priced homes would sell quicker. In reality, almost the opposite was happening. Surprisingly, Alameda took 45.4 days to sell, while in Santa Clara 17.7 days and in the higher priced San Mateo, it took only 17.9 days to sell. For the State of California it took 39 days.
How much unsold inventory is in the market? This was pretty consistent. Alameda had 2.0 months of inventory, Santa Clara had 1.9 months of inventory and San Mateo had 1.6 months of inventory. California as a whole had 3.8 months of unsold inventory.
What does all of this data tell us? It tells us that in terms of price, properties in our three counties range from nearly double to triple the California Median price. We simply cannot ignore the impact of the Tech Sector’s robust growth and its hiring frenzy driving up competition among buyers trying to lock up low interest rates before it’s eventual rise.
But the greater tale here involves lack of inventory. There simply is not enough housing available for sale to meet the demand. The three Counties have less than half of the unsold inventory when compared to California, but look at the number of New Housing permits issued by each County. Alameda 123, Santa Clara 204 and San Mateo only 48. In a County as large as Santa Clara with a population of 1.9 Million issuing only 204 permits. The trend is pretty consistent, the volume of permits is not increasing. Until there are more permits issued to meet this demand or the demand decreases because the interest rate increases, this type of frenzied activity will likely continue.
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