Home Sellers and Bay Area Market Trends

      The Real Estate market in the Bay Area is rebounding. We are currently seeing positive trends in a variety of different metrics which suggest an upswing from the recession. We have observed marked improvement on weekly transactions, price per square foot, transaction volume, and the sell-to-ask ratio in Santa Clara and San Mateo counties. The following figures illustrate these trends.

This graph depicts seasonal ups and downs for the past three years. The green line represents this year’s trend. It is not the line’s movement itself that matters, but it is the fact that the green line is above the previous years’ lines.

As you can see from the chart above there has been an increase in transactions per week in 2012 versus 2010 and 2011. An increase in weekly transactions indicates growing buyer demand, and may mean a quicker sale for a higher price.

From January of 2010 through the second week of August there were 9,485 closed transactions in Santa Clara and San Mateo Counties. There were 9,364 for the same period in 2011, virtually no change from the previous year. This year there were 10,126 in the same period, more than 8% increase. If this trend continues we can expect roughly 16,350 transactions closed in both counties by the end of this year, 1,230 total transactions more than last year.

This figure represents annual percent change in the volume of weekly transactions. The blue line depicts change from 2010 to 2011; the green line depicts change from 2011 to this 2012.

Observe the period of time from April through June. April to June 2011 showed significant drop-off in the number of weekly transactions. Conversely, April to June 2012 saw a noticeable climb in transaction volume.  In most markets April through June is the most telling period every year; this influx signals an improving real estate market.

This diagram depicts the price per square foot of homes sold in San Mateo and Santa Clara County from 2010, 2011 and 2012. This metric is relevant because prices for small vs. large homes are easier to compare when they are simplified.

For example a 2000 ft² home priced at 1M will have the same price per square foot as a smaller 1000 ft² home priced at 500k. Both homes are $500 per square foot.

As you can see in this figure, prices per square foot have noticeably risen in 2012. When prices are rising buyers rush to buy quickly. By listing your home for sale at market price now you are likely to get multiple offers quickly and sell above asking.

Ease of getting a home loan under new programs and Silicon Valley’s improving economy together lead to increased demand. These outside factors coincided with seasonal real estate demand peak causing a stronger-than-usual upward pressure on prices of homes for sale.

This chart depicts the Sell/Ask ratio for homes sold in Santa Clara County and San Mateo County from 2010 to 2012. When sellers put homes on the market they set certain expectation by posting their asking price. When the home finally sells it will sell either below, at, or above the original asking price. When a home sells exactly at asking price we say that the Sell/Ask ratio is 100% - because the sell price is 100% of the original asking price. If a home sells below asking price then the Sell/Ask ratio is less than 100% and vice versa.

Take this example: a property listed for 1M is sold for 1.1M. 1.1 million is 110% of 1 million, and therefore we say that the Sell / Ask ratio in this example is 110%.

As seen in the figure Sell/Ask ratios have been below 100% throughout 2011. They finally broke through the 100% line in April 2012. Currently homes in Santa Clara and San Mateo County are selling on average above asking price, as they did before the recession.

 

 

If you are interested in selling your home we invite you to contact us to discuss the potential market pricing and timing of your listing.