As previously mentioned, real estate operates in very local markets. For this reason I have broken the data looked at yesterday at the county level into MLS areas so see specifically where the market has heated up. Particular areas are moving much faster than others. The highlighted rows all have over 80% pending to inventory ratios and therefore buyers are gobbling up these homes: Santa Teresa, Evergreen, Alum Rock, Berryessa, Milpitas, South San Jose, Blossom Valley, and Cambrian. If you are familiar with these areas, you would probably also note that these are the lower-end prices of the SCC market. These areas also were the hardest hit in 2008 so prices are very attractive right now. I believe these markets have caught fire since investors can cash flow with as little as 25-30% down payment and therefore this new group of buyers in jumping in. Data is gathered for Single Family Homes, in the listed MLS area, as of April 14th, 2009. City/Area | Inventory | Pending | Ratio Pending:Inventory | Almaden Valley (13) | 125 | 32 | 25.6% | Alum Rock (4) | 412 | 389 | 94.4% | Berryessa (5) | 146 | 134 | 91.8% | Blossom Valley (12) | 164 | 164 | 100.0% | Cambrian (14) | 127 | 104 | 81.9% | Campbell (15) | 156 | 64 | 41.0% | Central San Jose (9) | 215 | 139 | 64.7% | Cupertino (18) | 167 | 55 | 32.9% | Evergreen (3) | 252 | 213 | 84.5% | Los Gatos/Monte Sereno (16) | 215 | 42 | 19.5% | Milpitas (6) | 78 | 91 | 116.7% | Morgan Hill / Gilroy / San Martin (1) | 439 | 312 | 71.1% | Santa Clara (8) | 159 | 110 | 69.2% | Santa Teresa (2) | 71 | 65 | 91.5% | Saratoga (17) | 161 | 22 | 13.7% | South San Jose (11) | 236 | 246 | 104.2% | Sunnyvale (19) | 155 | 71 | 45.8% | Willow Glen (10) | 209 | 91 | 43.5% |
This data is also interesting to compare to March's data reviewed a few days ago. A quick assessment shows that the slower areas of Saratoga, Los Gatos and Almaden have seen some additional sales in these past 2 weeks. Particularly Almaden is showing positive signs as the pendings have doubled since the end of March! This may be the breakthrough that Almaden needs to catch up to other areas of the SCC market. My prediction is that the areas with less than 25% pending:active, Los Gatos and Saratoga, can expect a further price adjustment or at least an average list price decrease in the majority of homes to align the prices with the sales that have been recently happening. What I see looking at homes in these areas is that many, many new listing are coming on the market way out of line of the recent comps as mentioned in my post on "What is Going on with this Real Estate Market". The higher-end market experienced an almost overnight price drop of 20-25% and sellers have not come to grips with this. Many homes in these higher-priced areas are over-priced, particularly Saratoga, Los Gatos and Almaden. This is a simple economic matter of supply and demand, so I will be sure to keep a watch and see when these areas actually break free and starting decreasing their inventory. Buyers out there, are you feeling the same or do you have some observations to add? |
