The best time to buy a home was in 2012. Too late! That’s OK.
The best time to sell was in 2013. Too late! That’s OK.
There is always another day! Today for instance. Mortgage money is still in record-low territory and, even though sales are slowing a bit, prices are still edging upward. Not a bad situation for either buyers or sellers. Stabilization is a welcome omen. It beats suffering from a drought or from a flood. It’s a win-win.
The first Quarter of the year is gone. The early observations we can make after those short three months differ greatly depending on where you place the magnifying glass on the national map. The main reason for the spotty and erratic business activity in the US, so far, has been…the weather. It seems like every year we blame Winter for messing up business activity. This year though, it has been “unusually unusual”, as much of the country has been frozen in place.
The North-East, in particular, is only now about to start the year – as far as real estate is concerned! With the notable exception of snow-plowing, most businesses took a big hit. Totally different picture on the West Coast, especially in California. There, the snow is behaving in a more respectful way; it falls only where it is supposed to: on the ski slopes! The sun has been generous and the real estate activity has been relatively steady, from the start of January to the end of March.
The saving grace, though, has been a sizeable price appreciation. It kept the sales volume from dipping. The Silicon Valley is a pretty good example of the phenomenon. The analysis of the first Quarter of the year gives a conflicting image. The market is dancing the tango: one step backward (number of sales), and one step forward (price jump), one nearly offsetting the impact of the other….
Look at the stats for Santa Clara County: the closed sales (Single Family Homes + Condos) from 01/01 to 03/31 are down a significant 16.4% from Q1 2013. BUT the average sales price jumped 12.9%! Result? The total volume of sales, from one year to the next, is pretty close.
Same photo in San Mateo County, home to the priciest homes in the country. The unit sales dropped 15.7%, BUT the average sales price took off 19.6%, going from $968,468 to $1,158,460. When you run the totals, you end up with a slightly bigger volume of sales this year, in spite of a drastic loss of sales.
I am not going to surprise anyone by saying that the listings drought we have been suffering from for well over a year, and which is today more acute than ever, is largely responsible for the surrealistic market picture described above. The Silicon Valley inventory of active listings is pitiful. Don’t ask me why, I would get angry. In any case, the bidding wars, with multiple offers over the asking price, are still the name of the game for the strong-hearted buyers.
The only segment of the market where the supply matches –and perhaps exceeds- the demand is the high-end. More listings & more sales. Buyers actually have a choice. Values are up but modestly. The supply & demand mechanism is challenging sellers’ price expectations. The best properties, in prime locations, in top condition and construction, are moving fast. Others are not.
As we noted time & again, the cream of the cream of luxury real estate in the Silicon Valley is very much sought after by foreign nationals, mostly Asian buyers. Their impact is so significant that it can be said that they are the reason why the average sales price, pulled by the top end, has jumped so high and so quickly.
It is another way to say that, more than ever, in a market where listings are down and sales are scarce, real estate brokerages which are looking to keep on growing (or stay afloat) must focus on increasing their share of the high-end market. Those which successfully do it will grow. For those which don’t or can’t, 2014 is going to be a long year.