February 2016 newsletter

See what’s happening in local real estate now, with plenty of charts for the analytical types and plain explanations for everyone else, covering recent real estate trends from Burlingame to the South Bay.  Find out what’s hot and not. Offering hand-crafted and carefully charted statistics you won’t find anywhere else, now expanded to show recent trends for these ten local sub-markets (see end of newsletter for definitions of sub-markets and methodology):

  • mid-Peninsula top-end single-family residences (SFR)
  • mid-Peninsula midrange SFR
  • San Mateo and Burlingame upper midrange SFR
  • South Bay upper midrange SFR
  • San Mateo and Burlingame midrange SFR
  • mid-Peninsula townhomes
  • mid-Peninsula condos
  • South Bay midrange SFR
  • South Bay condos and townhouses
  • mid-Peninsula affordable SFR

And including seven leading indicators for the Silicon Valley housing market.

First, this month’s summary:  The early results are in, and it looks like Silicon Valley real estate is still in demand, with one noteworthy exception.  The offers I’ve been involved in this year have all been multiple–usually around ten–a function as much of drastically limited inventory as enthusiastic demand.  I don’t think we’ll have the bouncing-off-the-walls spring we had last year, but anyone looking for a significant slowdown has been disappointed.  The noteworthy exception is the top end, which isn’t coming back from the mid-2015 slump that hit most of Silicon Valley real estate.  In fact, it’s tanking.  The top end is driven by stock market wealth, and it’s been a rocky road for the Nasdaq lately, but that’s kept interest rates low for buyers of midrange and affordable homes.  A pullback by foreign investors–our top-end prices aren’t the relative bargains they were two years ago–and even election year jitters may also be affecting the luxury home market.  But the past eighteen years have shown that the Valley’s affordable, midrange and top-end markets are remarkably insular, each with different drivers, each marching to its own drummer.  Which suggests that the contagion at the top doesn’t have to spread to the rest of Silicon Valley real estate.                     

Next,  a look at the month-over-month trend in sales prices per square ft. 

news0216pricefoot

Next, for historical context, a comparison of sales price per square foot  between January 2011, 2015 and 2016:

news0216pricecompare

Next, seven leading  indicators for the Silicon Valley housing market.

indicator one-year trend short-term trend effect on real estate
San Mateo County unemployment     down      flat   good
Santa Clara County unemployment     down     down   good
Silicon Valley VC Index   Q4 2015     down      up   good
30-year fixed mortgage rate    down     down depends on price range and area
NASDAQ Composite    down     down    bad
Bloomberg Silicon Valley index     down     down    bad
Silicon Valley 150 stock index     down     down    bad

And finally, a more in-depth look at what’s hot and not in  local real estate, using the month-over-month trend in real estate’s two most  reliable indicators:

  • absorption: sales divided by inventory; shown on the charts below on the left X axis, a high or rising absorption rate favors sellers, while a low or declining rate favors buyers, and
  • days on market (DOM): the average number of days before homes go into contract; shown on the right X axis, a high or rising days on market favors buyers, a low or declining DOM, sellers.

mid-Peninsula top-end  single-family residences (SFR):

news0216topend

hot or not?

13-month trend 1-month trend
freezing   cooling   mixed

mid-Peninsula midrange SFR:

news0216midpenmidrange

hot or not?

13-month trend 1-month trend
                          hot         cooling        mixed

San Mateo and Burlingame upper midrange SFR:

news0216SMBGuppermid

hot or not?

13-month trend 1-month trend
                         warm          mixed       cooling

South Bay upper midrange SFR:

news0216uppermidSB

hot or not?

13-month trend 1-month trend
                         warm         cooling        mixed

San Mateo and Burlingame midrange SFR:

news0216midSMBG

hot or not?

13-month trend 1-month trend
                         cold           mixed       cooling

mid-Peninsula townhomes:

news0216midpentownhomes

hot or not?

13-month trend 1-month trend
                         warm         cooling         mixed

mid-Peninsula condos:

news0216midpencondos

hot or not?

13-month trend 1-month trend
                         hot         mixed        mixed

South Bay midrange SFR:

news0216midSB

hot or not?

13-month trend 1-month trend
                         warm         cooling       cooling

South Bay condos and townhomes:

news0216SBCID

hot or not?

13-month trend 1-month trend
                           hot          mixed        cooling

mid-Peninsula affordable SFR:

news0216affordablemidpen

hot or not?

13-month trend 1-month trend
                           hot          mixed       cooling

Local sub-markets: Mid-Peninsula top-end SFR:  Homes 2001 sq.ft. or more in top-end Menlo Park, Palo Alto, Woodside and Portola Valley; Los Altos; Los Altos Hills; and Atherton. Mid-Peninsula midrange  SFR:  Homes 2000 sq.ft. or less in entry-level neighborhoods of Palo Alto and Menlo Park; all of Mountain View; and Redwood City and San Carlos west of El Camino. San Mateo and Burlingame upper  midrange SFR:  Homes in the Aragon, Baywood and San Mateo Park neighborhoods of San Mateo, plus Burlingame west of El Camino. South Bay upper midrange SFR:   Homes in Cupertino, plus the neighborhoods of Sunnyvale, Saratoga, San Jose and Santa Clara with Cupertino schools. San Mateo and Burlingame midrange SFR:  Homes in San Mateo neighborhoods west of El Camino (except Aragon, Baywood and San Mateo Park) and Burlingame neighborhoods east of El Camino. Mid-Peninsula townhouses:  Two-plus level CID (Common Interest Development) 2000 sq.ft. or less in Los Altos, Menlo Park, Mountain View, Palo Alto, Redwood City, Redwood  Shores and Sunnyvale. Mid-Peninsula  condos:  Single-level CID (Common Interest Development) 2000 sq.ft. or less in the same cities. South Bay midrange SFR:  Homes in Campbell and adjacent San Jose neighborhoods (MLS Area 15) and the Cambrian area of San Jose (Area 14). South Bay condos and townhomes:  Homes in Campbell and adjacent San Jose, Cambrian and Santa Clara. Mid-Peninsula affordable  SFR (Single-Family Residences):  Homes at least twenty years old in East  Palo Alto east and west of 101; Menlo Park east of 101 (Belle Haven); Redwood  City, San Carlos and Belmont east of El Camino; and San Mateo neighborhoods east of 101, plus MLS area 416 Bowie Estate west of 101 but east of El Camino. South Bay affordable SFR:   (Discontinued due to changes in the MLS.)  Homes in Central (downtown) San Jose (MLS Area 9) except Rose Garden and Naglee Park. Methodology:  For sales price per square foot, a rolling three-month average to minimize statistically irrelevant differences from month to month yet capture the overall trend; then adjusted to the average size of the last 1000 homes sold to minimize distortions in sales price due to variations in average property size sold for each period.   For days on market, a rolling three-month average.  For absorption, the one month average.  Thinking of buying or selling? Please contact me at jfyten@cbnorcal.com.  This is not a solicitation if your home is listed with another broker.  My Bureau of Real Estate license number is 01044243. copyright © John Fyten 2016

2 thoughts on “February 2016 newsletter

  1. interesting mid-peninsula midrange SFR surpassed mid-peninsula top-end SFR. has this happened before? With a small sample (one month’s worth of data), i guess we shouldn’t make a big about it.

    • Yes, let’s see if it’s a fluke or a trend, although I suspect the latter. I’m guessing that if this ever happened before it would have been when the dot-com market deflated in 2001. The top end took a much bigger hit than the midrange, and took years to recover. The midrange recovered in early 2002.

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