February 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 charts say home prices are declining in the more expensive half of the Silicon Valley housing market.  That’s fine with me, but it’s not how it looks in my own little corner of real estate.  Absorption rates of 50 percent or more in most of the Valley’s sub-markets confirm my impression that most inventory sells, usually quickly.  So unless Valley sellers are suddenly a lot more motivated to leave town and leave money on the table, I see the price curves rising this spring.  That’s amazing, this far into the boom, but the usual signs of buyer interest–open house attendance, requests for disclosures, multiple offers–remain high.  Also amazing:  California’s Employment Development Department says that last December saw Santa Clara County’s 80th consecutive monthly gain in professional and business services jobs (it was San Mateo County’s 79th month) with professional, scientific and technical services accounting for more than three-fifths of the increase.  That’s nearly seven years of highly-paid job creation.  VCs have “continuing concerns over political uncertainty”, but remain reasonably optimistic, and stock market investors apparently see nothing but good times ahead.  Rising job creation and stock market wealth:  I’ve seen two Valley real estate downturns, and this doesn’t feel like one.            

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

Next, for historical context, a comparison of sales price per square foot  between January 2012, 2016 and 2017:

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      down  meh
Santa Clara County unemployment     down      down  meh
Silicon Valley VC Index   Q4 2016       up      down  Index still above average
30-year fixed mortgage rate       up      down depends on price range and area
NASDAQ Composite       up        up  good
Bloomberg Silicon Valley index       up        up  good
Silicon Valley 150 stock index       up        up  good

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):

hot or not?

13-month trend 1-month trend
cool warming mixed

mid-Peninsula midrange SFR:

hot or not?

13-month trend 1-month trend
                       red hot          mixed         mixed

San Mateo and Burlingame upper midrange SFR:

hot or not?

13-month trend 1-month trend
                          hot          mixed         mixed

South Bay upper midrange SFR:

hot or not?

13-month trend 1-month trend
                         warm          mixed         mixed

San Mateo and Burlingame midrange SFR:

hot or not?

13-month trend 1-month trend
                           hot        warming       warming

mid-Peninsula townhomes:

hot or not?

13-month trend 1-month trend
                       red hot       warming         mixed

mid-Peninsula condos:

hot or not?

13-month trend 1-month trend
                         warm         warming       warming

South Bay midrange SFR:

hot or not?

13-month trend 1-month trend
                           hot        cooling         mixed

South Bay condos and townhomes:

hot or not?

13-month trend 1-month trend
                           hot         cooling          mixed

mid-Peninsula affordable SFR:

hot or not?

13-month trend 1-month trend
                          hot       warming         mixed

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 2017

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