We have seen a very interesting year in the entire bay area for both the residential real estate market and with the mortgage market in general. With interest rates diving then rising and available inventory taking a severe downward trend, we have just experienced one the most unique markets in history. The attached video discusses a few of the most interesting developments during the year and provides a basis for a discussion of what will happen in 2010.
December 2009
The following San Francisco Chronicle article quotes a Case- Schiller report where home prices in the San Francisco Bay Area actually had a modest gain in sales price during the month of November. These types of articles and statistics can lead to much debate and I am curious as to what your feeling is regarding the real estate markets in Danville, Alamo, and San Ramon.
Over the past year we have seen active inventory and the inventory absorption rate decline at a very fast rate. Why is the Town of Alamo not experiencing the same market as Danville or San Ramon
The inventory absorption rate for single family detached homes in Alamo is currently at a respectable 2.4 months, however when comparing with the Town of Danville andCity of San Ramon we see a drastically different situation. Currently in Danville the inventory absorption rate is at 1.2 months, or half of the rate for Alamo. The City of San Ramon is experiencing an absorption rate of .33 months or just over 1 week. What we are seeing is that buyers are really looking at the price per square foot as a sign of value. Within Danville we typically see a price per square foot that is a little less than that of Alamo. In San Ramon the price per square foot is considerably less. This coupled with the fact that all 3 towns are located in the same award winning San Ramon Valley School district actually pushes the buyer to San Ramon or Danville over Alamo. Also, many of the homes in Alamo are older than those in San Ramon and in many cases Danville as well. We are finding many of the buyers not wanting a older home because they are concerned with future maintenance and upgrade costs. However, I dont want to say that people will not buy in Alamo. In fact we had 13 closed sales in December already. There are those buyers who actually like the charm of an older home and appreciate the larger lot sizes. I expect this current situation to continue for some time.
Current Alamo Real Estate Statistics:
Currently there are 75 active listings for single family detached homes in Alamo. The average list price for these homes is $2,235,205 with the highest priced listing at $38,000,000 and the lowest at $675,000. The average price per square foot is at $437 and the average days on market at 155. There are 31 pending sales in Alamo with an average list price of $1,092,990. The highest priced pending sale was listed at $2,345,000 and the lowest at $625,000. The average price per square foot is at $334 and the average days on market at 75 days. During the month of December there have been 13 closed sales with an average sales price of $1,421,805. The highest priced sale was at $2,250,000 and the lowest at $950,000. The average price per square foot for these sold homes is at $382 and the average days on market of 171.
I have been posting blogs over the last year which have shown a downward trend in active inventory for San Ramon Real Estate which has made it more difficult to find a great buy.
As of December 29, 2009 the inventory absorption rate for San Ramon single family detached homes is now down to .33 months, or just over 1 week! You may say “So What” but it is important for those looking to buy a San Ramon home. Where we were seeing tough negotiating and falling prices last year, we are now seeing multiple offers and rising prices. In fact the average difference between asking price and sales price for the 35 closed sales in December is practically zero. And at the homes priced under $800K we are seeing more of them sell for over list price than not. Additionally we are seeing more buyers see the signs of a turning market and are now entering the “Active Buyer” stage in their home search. So the bottom line is that there are fewer homes with more buyers than just one year ago. To increase the sense of urgency with buyers we are expecting interest rates to rise significantly over the next few months, I speak about this in depth on a past blog regarding interest rates. So, you may be expecting to see a flood of foreclosures coming that will relieve the upward pressure on pricing, but, there is no signs from the banks that this is coming anytime soon and in fact the current thinking is that we will see foreclosures hitting the market in 2010 but they will be listed sparingly in order to keep prices from falling.
Current San Ramon Real Estate Statistics:
There are only 55 active single family homes on the market in San Ramon. The average list price for these homes is at $945,914 with the highest listed at $4,990,000 and the lowest priced listed at $465,000. The average price per square foot for these homes is $443 and the average days on market is 94 days. There are 151 pending sales in San Ramon with an average list price of $780,227. The highest priced pending is at $1,798,000 and the lowest at $315,000. The average price per square foot is at $293 and the average days on market at 36 days. During the month of December we have had 35 closed sales with an average sales price of $731,205. The highest priced sale sold for $1,086,050 and the lowest was at $465,900. The average price per square foot for these sold homes is at $305 and the average days on market at 38 days.
In spite of the holidays we are seeing the activity level for sales and pending’s of Danville real estate continue to increase.
The inventory absorption rate is continuing decline and is now at 1.2 months which is down from my last Danville blog just 1 week ago. An interesting statistic is with the average days on market. You would expect the average days on market to be less than 40 days but as a result of many of the pending sales being “Short Sales” the average days on market for Pendings are at 61 days and the average days on market for “Sold” homes is at 70 days. We are still seeing many listings not selling and as a result the average days on market for the 97 active listings is 120 days. A few reasons for this condition are that the homes priced between $950,000 and $1,300,000 seem to be sitting, see my past Danville Real Estate blog about this situation, and if you compare the average price per square foot of the sold against the active you will see a large gap.
Current Danville Real Estate Statistics:
There are 97 active single family detached homes currently on the market in Danville. The average list price for these homes is $1,262,406 with the highest priced listing at $3,595,000 and the lowest priced at $520,000. The average price per square foot for these homes is at $432 and the average days on market at 120 days. There are 80 pending sales in Danville with and average list price of $921,033. The highest priced pending sale was listed at $2,395,000 and the lowest at $449,000. The average price per square foot is at $323 and the average days on market at 61 days. In the month of December there have been 27 closed sales. The average sales price is $890,615 with the highest priced sale at $2,050,000 and the lowest at $540,000. The average price per square foot for these sales is at $339 and the average days on market at 70 days.
Some recent policy changes with The Fed and lenders like Freddie Mac and Fannie Mae have already had a affect on interest rates. Money is getting tighter and rates are on the rise. If you are in the market for a home purchase and need a home loan or refinance this video is a must see. Warning: The Video is a little longer than normal but definitely worth the investment in time.
The real estate market in the East Bay Area has no resemblance what so ever to the market we saw last year at this same time.
As I posted in a previous article, the real estate market in both Alameda and Contra Costa Counties is completely different from just a year ago. As you will see in the attached graph, the inventory levels for active homes is less that 45% of where it was just one year ago. Additionally, we see the number of foreclosures and short sales drop at the same rate. Perhaps the biggest and most dramatic change is in the number of Pending sales. Pendings have increased to the point where the number of Pendings are greater than the number of active listings. This means that the inventory absorption rate is less than one month!! This is consistent with the more localized real estate activity in Danville, San Ramon, and Alamo.
I dont see this trend changing at least through Q1 of 2010. Things that will have an impact on the future of this market are interest rates, which we expect to rise after March 2010, the number of foreclosures and short sales being listed, and the access to mortgages.
The Danville Real Estate market is still cooking with low inventory and high sales. Then why are some homes sitting with no activity?
As of the 21 of December we already have 21 closed sales in Danville. This coupled with an inventory absorption rate of 1.35 months demonstrates that there is a Sellers Market in Danville. But a closer look at the statistics will point to a clear disconnect between the homes that are selling and those that are not. The average price per square foot for the 107 active listings in Danville is at $421 with an average days on market of 111 days. If you take a look at the 79 pending sales the average price per square foot is at $326. That is a significant difference in perceived value per square foot. With the 21 homes that have sold this month so fay we see an average price per square foot of $333. Again, while it is a sellers market in terms of inventory absorption rate, we are seeing the buyers clearly looking for value in price per square foot.
Current Danville Statistics:
The average list price for the 107 active listings is at $1,233,582 with the highest priced listing at $3,598,000 and the lowest at $520,000. The average price per square foot is $421 and the average days on market of 111. The average list price for the 79 pending sales is at $935,958 with the highest priced listing at $1,599,950 and the lowest at $449,000. The average price per square foot is at $326 with the average days on market of 58 days. The average sold price for the 1 sales this month is at $862,220. The highest priced sale sold for $1,820,000 and the lowest at $580,000. The average price per square foot was at $333 and the average days on market at 81 days.
In a recent New York Time Article titled “Interest Rates Are Low, but Banks Balk at Refinancing” The author describes what is currently happening with interest rates and what will happen starting in March 2010. For those looking to buy a home, this will have a significant effect. For those looking to sell or refinance, this may have an impact.
Much like the surrounding communities of San Ramon and Danville, we are watching the Alamo Real Estate market dance around a bit while having an overall downward trend in Active inventory.
On my last Alamo Real Estate post I stated that the inventory absorption rate had bumped up to 3 months while active inventory dropped. Well, the inventory absorption rate is back down to 2.5 months and inventory has dropped again. Currently there are 85 active single family detached homes on the market in Alamo. This is slightly less than that of Danville but more than the much larger city of San Ramon. The market has segmented into 3 distinct buying points which has slowed the sale of homes in Danville and Alamo at the mid price point levels ($900k-$1.3M). At the lower price points we are seeing homes sell at a brisk pace and in San Ramon they are experiencing bidding wars. The high price point levels have basically remained unchanged. My thoughts are that the people who can afford it would rather pay more for a home that is completely remodeled as opposed to a lower priced home that may need some work. In Alamo and Danville what we are seeing is the mid priced homes sitting mainly because buyers are okay with paying less money for a Major fixer in a nice neighborhood.
Current Alamo Statistics:
There are 85 active listings in Alamo for single family detached homes. The average price for these homes is $2,208,533 with the highest priced at $38,000,000 and the lowest priced at $599,000. The average price per square foot is $440 and the average days on market is 150 days. There are 33 pending sales in Alamo with an average list price of $1,188,778. The highest priced listing is at $2,595,000 and the lowest at $650,000. The average price per square foot is $345 and the average days on market is 93 days.
