San Mateo County Market Update - September 2012

Newly released are the Market Dynamics statistics for Santa Mateo County through September 2012. These statistics are for Single Family and Condo/Townhomes in San Mateo County only.Some highlights:

  1. Median Price- The Median Price held steady at $655,000 and has now held over $600,00 for six months in a row.  The two year average Median stands right at $600,000 and the two year trend is up +8%.
  2. Supply & Demand (Units)- What we are measuring in each of these categories is the two year average moving trend; The two year trend line for the following categories, For Sale (supply/inventory), Under Contract (pending sales) and Sold (closed escrows), are as follows - For Sale/inventory remained historically low during the first half of 2012 and has really continued into the second half, contributing to a two year downward trend of -57%.  The number of under contract properties (pending sales) trended up higher +39% and the sold/closed escrows now up +35%.
  3. Month’s Supply of Inventory (MSI) & Days on Market- The overall Months Supply of Inventory (months of inventory available based on the total existing supply divided by the rate of sales) two trend down -81% standing at 1.6MSI (the low point of 2012), Days on market running in the 30+ day range for the past 5 months.
  4. Sales Absorption- Measuring the two year average trend line in the following categories shows under contract properties +326% and number of closed/sold escrows remained at elevated trend levels +314%.  The Percent Under Contract remains another telling statistic of the Valley’s current market condition (at a five+ year high)….35% of the active properties/listings were under contract at the end of September (highest mark of 2012), above August @ 33% (as a further comparison; September 2011/15.3% and September 2010/11%).  This percent under contract figure is another key marker to pay attention to as the two year average is over 20%.  As we have discussed, this is the highest percentage of active listings we have seen under contract in well over 5-6+ years.

The Bay Area and national real estate markets turned the statistical and psychological corner in 2012.  Although we experienced signs of this trend in 2011 in our market areas, it was not until this year that the news began reporting that the market had bottomed out, inventory levels had been consumed or constrained and that competition for real estate was becoming fierce once again in increasingly more areas of the US.  Many naysayers have spooked the markets with stories of all the shadow foreclosure inventory that was going to flood the market in any given month over the past 2-3 years (this probably held a number of buyers back for fear of additional value declines).  Meanwhile, what no one had previously discussed was the pent up demand that has been created through the decline in typical housing formation rates that stalled over the past 4-5 years for a variety of reasons.  It is now obvious that the overabundance of buyers is more than enough to absorb any increase in inventory.  In fact, in most markets (the Bay Area included), any increased inventory would be welcomed to meet the rapidly growing appetite for real estate.

What do we have to look forward to in 2013?

"The housing market momentum, which began earlier this year will continue into 2013," said CAR Vice President and Chief Economist Leslie Appleton-Young. "Pent up demand from first-time buyers will compete with investors and all-cash offers on lower-priced properties, while multiple offers and aggressive bidding will continue to be the norm in mid- to upper-price range homes," she predicted.  Appleton-Young also said, "The actions of underwater homeowners will play an important role in housing inventory next year, with rising home prices inducing some to stay put and others to list and move forward."

If you simply take into account the supply and demand statistics, 2013 is setting up to be one of the most competitive and dynamic Bay Area markets we have experienced since well before the great recession.   Reflecting back on how competitive 2012 began right out of the gate in all of our market areas offers one indicator of what to expect more of in early 2013.  Arguably this will be even more intensified by the following factors:

  1. Buyers are becoming more confident that we have reached bottom and are entering the market at a more rapid pace, this includes pent-up demand from the previous year’s buyers who held back.
  2. The threat of interest rate increases in the next year to two will motivate buyers to act while rates are at historical lows.
  3. The Month’s Supply of Inventory in all three counties that we study are significant lower than they were at this same time last year- this means that we are going into January of 2013 with even more constrained supply than early 2012.
  4. Any distractions from the US Election will be behind us.

Overall Bay Area sales volume is up approximately 15-20% this year to date as compared to the same period last year in our market areas (most other larger brokerages up between 15-25% this year over last).  I am very proud and pleased to mention that Sereno Group remains up over 75% in closed sales volume this year to date over 2011.   We continue to produce at a rate of nearly 2 to 3 times per agent as compared to other sizable brokerages in our market.  The quality and caliber of our people remains one of our most unique and cherished advantages.

We look forward to closing out 2012 on a very positive note and soaring into 2013 with significant momentum.