January 2018 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:  If the December market is a preview of what Valley real estate will do the following spring–and it typically is–we’re in for a scorchin’ spring 2018.  Historically the slowest month of the year, last December hit absorption rates worthy of our spring peak selling season. The only good financial reason a seller had for keeping his or her home off the market in December 2017 was in anticipation of getting an even better price this spring.  Will it work out that way?  The new tax laws limiting California homeowners’ deductions create a major uncertainty, and markets don’t like uncertainty.  But we’ve known the general outline of the changes since late September, plenty of time for their effect on Valley real estate to be apparent.  My only question is how much sparse inventory, at a twenty-year if not all-time low, is masking any decline in real demand, as rising prices force out more and more buyers and make the options for those still in the market increasingly daunting.  Sure, open houses are still crowded, but going to open houses has long been a popular spectator sport.  Would normal levels of inventory cool the market?  For now, that question doesn’t seem particularly pertinent.        

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 December 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  Q3 2017     down      down  bad
30-year fixed mortgage rate     down        up depends on price range and area
NASDAQ Composite     up up and away!        up  good
Bloomberg Silicon Valley index       up        up  good
Silicon Valley 150 stock index       up        flat  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
                         cold          mixed       cooling

mid-Peninsula midrange SFR:

hot or not?

13-month trend 1-month trend
                beyond scorchin’        warming         mixed

San Mateo and Burlingame upper midrange SFR:

hot or not?

13-month trend 1-month trend
                           hot        warming       cooling

South Bay upper midrange SFR:

hot or not?

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

San Mateo and Burlingame midrange SFR:

hot or not?

13-month trend 1-month trend
                 mildly scorchin’        warming       cooling

mid-Peninsula townhomes:

hot or not?

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

mid-Peninsula condos:

hot or not?

13-month trend 1-month trend
                beyond scorchin’        warming         mixed

South Bay midrange SFR:


hot or not?

13-month trend 1-month trend
                         yikes!        warming         mixed

South Bay condos and townhomes:

hot or not?

13-month trend 1-month trend
                 beyond scorchin’        warming       warming

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 2018

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