Market Trends Report

The Silicon Valley Real Estate Market Trends Report: June 2021

In this issue

Santa Clara County (SCC): Home Sales Prices Set New Highs, Again, in May

Sales prices for single-family, re-sale homes set new highs for the fourth month in a row. The median sales was $1,660,000 last month, a gain of 20.9% compared to last year. That’s the nineteenth month in a row the median sales price has been higher than the year before.

The average sales price for single-family, re-sale homes rose to $2,026,750. It was up 21.5% year-over-year.

The sales price to list price ratio went from 109.9% to 110.1%. Multiple offers continue to be the norm.

Sales of single-family, re-sale homes were up 130.3% year-over-year in May. There were 1,101 homes sold in Santa Clara County last month. The monthly average since 2000 is 987.

This was the ninth month in a row that home sales were higher than the year before.

Pending sales were up 48.7% year-over-year.

Inventory of single-family, re-sale homes was down 32.2% compared to last year. That is the twenty-first month in a row inventory has been lower than the year before. As of June 5th, there were 658 homes for sale in Santa Clara County. The average since January 2000 is 2,703.

Days of Inventory, or how long it would take to sell all homes listed for sale at the current rate of sales, rose three days to 18 days compared to April. The average since 2003 is 89.

It took only thirteen days to sell a home last month. That is the time from when a home is listed for sale to when it goes into contract.

The median sales price for condos was up 11.2% from last May. The average sales price gained 11.4% year-over-year.

Condo sales were up 214.7% year-over-year. There were 612 condos sold in May.

The sales price to list price ratio stayed at 104.6%.

Condo inventory fell 18.2% compared to last May.

As of June 5th, there were 368 condos for sale in Santa Clara County. The average since January 2000 is 757.

Days of inventory rose four days to twenty-three.

It took an average of twenty days to sell a condo last month.

For readers wondering, “Should I buy a house now or wait,” the above statistics may help you to decide.

If you are planning on selling your property, call me for a free comparative market analysis.

May 2021 Sales Statistics (SCC)

* Total inventory is active listings plus pending     listings. Active listings do not include pending.

More information is available in our on-line report at https://avi.rereport.com/market_reports

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Want straight answers to your real estate questions?
Call 650-305-1111 or send me a note to schedule a complementary & confidential one-on-one meeting.

VISIT https://avi.rereport.com/ for a free on-line market analysis of your property.
You can also perform your own personal search of properties for sale.

Housing: Not So Fast (SCC & SMC)

May 28, 2021 — The increasingly unfavorable conditions facing Bay Area housing markets are starting to have the expected effects: sales of new and existing houses are slowing down. Softening sales aren’t a result of a lack of demand, at least for the most part, but rather a lack of supply, and most especially, a lack of supply that is desirable and affordable to wide swaths of the homebuying audience.

We learned last week that sales of existing homes throttled back for a third consecutive month, falling another 2.7% in April. Actually, sales have been flat to falling now for about six months after hitting a recovery high of 6.73 million units at an annualized rate of sale last October; April’s 5.85 million rate was about 13% below that mark. The culprit(s) for tempering sales? Some would blame firmer mortgage interest rates, but they are only running perhaps a third of a percentage point above all-time bottoms, so that’s not really the issue. However, home prices rising by double-digits compared to a year ago — and at nearly a 20% year-over-year clip in April — is enough to put some buyers on the sidelines.

Perhaps the greatest issue is that there aren’t many homes even to look at on the market, let alone purchase, as “for sale” inventories of existing homes remain razor thin (if improved somewhat from the tightest levels of the winter). Just 2.4 months of homes for sale at the present sales pace were available in April and potential buyers face bidding wars, cash competition and need to make near-instant decisions whether to buy or not just to have a chance to buy. In addition, there’s little time to even consider options, since listings are coming off the market in an average of slightly more than two weeks’ time.

After some weeks or months of trying and having no success, some potential homebuyers simply become discouraged and step back from the market, hoping for more favorable conditions to emerge.

In some markets, new construction can help pick up the slack for a lack of existing homes to buy, but not everywhere. Locations where new homes can be built more than one at a time are often a greater distance from city centers, amenities and job markets. Work-from-home opportunities have attenuated the last issue to a degree, but only to a degree, and with pandemic restrictions fading and more companies talking about a return to the office, the waters are a little muddy when it comes to potential future commuting. This changing climate may give some buyers who might consider a brand-new home pause.

But the new construction market is now starting to suffer from surging prices, too. Rising costs for lumber and other materials is inflating the cost of a new home, and supplies of labor and fixtures and more remain an issue due to the effects of the pandemic 9and perhaps those stemming from attempts to ameliorate the effects of the pandemic, too). As recently as March, the median cost of a brand-new house ($334,200) was nearly the same as that for an existing home ($326,300), and prices for new stock were in a comparatively flat pattern relative to existing home prices.

That’s no longer the case, with new home prices shooting up by 11.4% on a month-to-month basis ($372,400) and about 20% higher than they were last April. Pandemic effects play a role to a degree in the size of the annual jump, but just a little. So with prices leaping for new homes almost as fast as existing, it’s reasonable to expect sales to temper, and they did, falling 5.9% to an 863,000 annual rate of sale. Unlike the existing market, homes available to buy aren’t much of an issue, as there reasonable levels of inventory available — about 4.4 months at the present sales pace — with the 316,000 units available the highest number in a year’s time.

Where existing home sales reflect demand anywhere from a month or two prior to the month in which they are reported (e.g. April’s sales reflect demand in February and March), sales of new homes are recorded in the month when the contract is signed, so demand for new homes cooled in April. The National Association of Realtors has a similar as-contracted tally for existing homes called the Pending Home Sales Index; April’s 4.4% decline in the PHSI to a level last seen a year ago in May suggests that sales of existing homes will likely be sluggish in May and June. Often, once the “spring homebuying season” passes, home sales tend to tail off a bit for the summer, but more likely this year is that they’ll only flatten out a bit more from where we are at the moment. Even if they should, there’s really nothing especially concerning about home sales in the 5.5 million or so range, even if this number is considerably lower than it could be in more favorable inventory and price conditions.

So even as the rest of the economy comes up to full (or fuller) recovery speed, the housing market may not be able to produce much by way of gains, but 2021 will turn out to be a very solid year even if it can only hold present levels. While there’s no immediate indication that the Fed will be making any moves anytime soon, the more time moves forward, the closer to the day we get when they will start making changes. As we approach this shift (whenever it may be) this at least for a time will produce higher interest rates, and that may temper sales a bit more.

So housing markets are settling after a strong set of gains. Odds favor that sales will pick up again once inventory levels improve (existing) or lumber and materials inflation subside (new construction) and home price increases throttle back again. It would be better if these things happened sooner than later, because later at some point will come with higher mortgage interest rates, although they won’t be high enough (perhaps a 4% level or higher) to do any kind of real damage to demand for an extended period yet.

For further details and a city-by-city breakdown statistics, go to https://avi.rereport.com/market_reports.

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For a focused review of current and historical market trends go to https://avi.rereport.com/market_reports and click “change’’ see below

 

Real Estate Related Articles

WSJ
5-7-20211

From Dutch Tulips to Internet Stocks, How to Spot a Financial Bubble

By Jon Hilsenrath

WSJ
5-5- 2021

Google Adopts Hybrid Workweek, With 20% of Its Employees to Work Remotely

By Tripp Mickle

Mercury News
4-1-20211

The Explosive Surge of Mortgages for “Second Homes”: Housing Bubble Math

By Wolf Richter

WSJ
3-30- 2021

The Most Splendid Housing Bubbles in America: “House-Price Inflation” in all its Glory. March Update

By Wolf Richter


California homeowners interested in building accessory dwelling units
on their property just caught a break, potentially shaving off thousands of dollars in fees and permits.
In a move proponents say will help ease the Bay Area’s housing crisis, Gov. Jerry Brown on Tuesday signed Senate Bill 1069, making the so-called “granny units” easier and less expensive to build throughout the state.

For more read California eases restrictions on ‘granny units’
and www.hcd.ca.gov/policy-research/AccessoryDwellingUnits.shtml

Helpful resource for home owners

Many new home owners or owners who consider remodeling or rebuilding their homes should take advantage of their county Tax Assessor web site. These web site and their respective city building departments web site typically have vest information regarding the process for applying for permits, the impact on their taxes and many other resources that home owners should be aware are available for them.
For the San Mateo County Tax Assessor office visit https://www.smcare.org/default.asp
For Santa Clara County Tax Assessor visit https://www.sccassessor.org/index.php

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The Silicon Valley 150 Index Corner

The Silicon Valley’s Real estate market is a derivative of the local economy–it prospers and withers depending on how well the local innovation-based sector performs. The San Jose Mercury News tracks the performances of the largest 150 publicly traded companies headquartered in Silicon Valley through an index called the SV150, which may be found at www.mercurynews.com. Stocks are valued based on several criteria, but one of the more important criteria is a company’s future earnings. Therefore, I see the SV150 as a leading indicator for Silicon Valley’s real estate market.

Investors Corner

S&P CORELOGIC CASE-SHILLER INDEX REPORTS 12.0% ANNUAL HOME PRICE GAINS CLIMBED TO 13.2% IN MARCH

NEW YORK, MAY 25, 2021: S&P Dow Jones Indices (S&P DJI) today released the latest results for the S&P CoreLogic Case-Shiller Indices, the leading measure of U.S. home prices. Data released today for March 2021 show that home prices continue to increase across the U.S. More than 27 years of history are available for the data series, and can be accessed in full by going to click here

U.S. Housing Markets Moving Into Rent Territory for First Time in Over 8 Years: Report

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San Mateo County (SMC): Sale Prices Set New Highs in May

Sale prices of both single-family, re-sale homes and condos set new highs last month.

The median sales price for single-family, re-sale homes rose 25.5% compared to last year. That’s the twelfth month in a row the median sales price has been higher than the year before.

The average sales price for single-family, re-sale homes was up 16.1% year-over-year. That’s the eighteenth month in a row the average sales price has been higher than the year before.

The sales price to list price ratio fell to 109.3% from 109.7%.

Sales of single-family, re-sale homes in San Mateo County were up for the eleventh month in a row, year-over-year, in May. They jumped 92.5% year-over-year. There were 435 homes sold in San Mateo County last month. The average since 2000 is 398.

Inventory of single-family, re-sale homes was down 37.7% compared to last year. As of June 5th, there were 292 homes for sale in San Mateo County. The average since January 2000 is 1,287.

Days of Inventory, or the amount of time it would take to sell all homes for sale divided by how many homes have sold, dropped to twenty from twenty-one days.

It took nineteen days, on average, to sell a home last month. That is the time from when a home is listed to when it goes into contract.

The median sales price for re-sale condos rose 18.1% year-over-year.

Year-over-year, the average sales price rose 14.2%.

Condo sales were up 138.9% year-over-year. There were 129 condos sold last month. The average since January 2003 is 122.

Inventory was down 7.9% year-over-year.

As of June 5th, there were 129 condos for sale in San Mateo County. The average since January 2003 is 350.

Days of inventory rose to thirty from twenty-eight.

It took an average of nineteen days to sell a condo last month.

For readers wondering, “Should I buy a house now or wait,” the above statistics may help you to decide.

If you are planning on selling your property, call me for a free comparative market analysis.

May 2021 Sales Statistics

* Total inventory is active listings plus pending listings. Active listings do not include pending.

You can get more information at: https://avi.rereport.com/market_reports

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Call or email me if you have any questions.

For further details and a city-by-city breakdown statistics, go to

https://avi.rereport.com/market_reports.

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Looking to Downsize?

Keep Your Property Tax Base

Under Proposition 60, California homeowners 55 and older get a one-time chance to sell their primary residence and transfer its property-tax assessment to a new one, but the market value of the new home generally must be equal to or less than the market value of the old home.

Prop. 60 was designed to help longtime California homeowners who want to downsize but don’t want to give up the low property-tax assessment they enjoy in their existing home.

Under Proposition 13, homes are reassessed for property-tax purposes when there is a change in ownership or new construction. In between ownership changes, the assessed value can go up by an inflation rate not to exceed 2% a year. (Homeowners can get temporary reductions when property values go down.)

Prop. 60 lets homeowners 55 or older transfer their base-year value from an existing primary residence to a new primary residence, but there are restrictions.

The new home must be in the same county as the old one or, as Proposition 90 added, in one of eleven counties that accept transfers of base-year value from other counties. The eleven counties are: Alameda, El Dorado, Los Angeles, Orange, Riverside, San Bernardino, San Diego, San Mateo, Santa Clara, Tuolumne and Ventura.

Also, the new home must be purchased or built within two years – before or after – the sale of the original property.

If the new house is purchased before the old house is sold, the market value of the new house on its purchase date cannot exceed 100% of the old home’s market value on the date it is sold.

Silicon Valley Real Estate Market Trends Report

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