About 1 year ago, crazy-man Jim
Cramer of CNBC’s Mad Money predicted that the housing market would bottom on
June 30th, 2009. I’m
not saying that I agree with everything he says, but I do find his honest and
open delivery style quite refreshing.
At the time, it was a tough call and pretty hard to see where he came up
with the idea given all that was happening in the financial and housing
Here we are one year later, and
on June 16th he announced on his show that the housing market had
hit bottom 2 weeks earlier than he thought — based on the housing start
numbers showing an increase, and based on 3 months of improved sales figures in
the number of homes being sold across the country.
In the charts you see below it
might be hard to see that we are bottoming, but that’s what it looks and feels
like to me. Most every one of the
entry-level priced homes ($400k-$500k) have multiple offers on them within days
of hitting the market. It’s like
Buyers have an appetite that cannot be satisfied.
As for the higher-priced homes,
they are still correcting. Palo
Alto between $1M and $1.5M is stabilizing, however Saratoga is down 25% and
recently 2 short-sales have been listed at $1M and $1.2M (the first of more to
follow no doubt), Los Gatos is down 40%-50%, but Los Altos is only off about
15%. I think the biggest gaps are
with Sunnyvale and Cupertino as compared to Palo Alto or Saratoga. I’m hearing a lot of questions like
“Why would I buy in Sunnyvale or Cupertino at $1.2M when I can get Palo Alto
for $1.2M now?”
Each chart here shows the
percent CHANGE over the prior year in both the Average Sales Price and the
Median Sales Price for single homes only, not condos — enjoy!
Almaden Valley has some very attractive deals coming onto the
market but they are being snapped up equally as quickly. Still, there is a healthy inventory of
homes around $1.2M that offer great square footage values with excellent
schools, something you would not have seen a year ago.
Blossom Valley has been negative for the entire 12 preceding
months — but look at that bounce off the bottom, further evidence that the
market is stabilizing in the most affordable areas.
Willow Glen is still seeing some deals on homes around $600k
but several low-end foreclosures are skewing the price averages down further
than normal. Most of WG will be
priced above $750k.
Downtown San Jose looks a lot like Blossom Valley because the
affordability factor is very similar.
Investment and first-time buyers are still getting great deals here with
properties that may even cash-flow for the first time in a long time!
Campbell is perhaps the most interesting chart of all the
areas we cover. As I’ve written in
prior posts, Campbell homes that come on the market around $500k+/- are sold
quickly. There is very little
price depreciation over last year and I believe Buyers will keep Campbell where
it is without much if any price erosion.
Los Gatos will continue to slide down as long as financing
is hard to find for higher loan amounts.
We may begin to see short-sales and foreclosures putting additional
pressure on prices in the coming months.
Saratoga prices seem to be holding better than I expected
although it now has 160 Active homes for sale. I still believe that Sellers will need to reduce their
prices to get moved given this kind of competition for Buyers looking in this
Santa Clara continues to show a 25% discount in prices
compared to last year. New
foreclosures come and go very quickly as Buyers recognize the values they are
Sunnyvale prices are still correcting, but the bottom may be
near. I’m seeing more distressed
sellers coming to market with higher-priced homes (around $1M). Now that it seems Palo Alto prices have
stabilized we should see some stabilization in Sunnyvale as well.
Cupertino has quickly stabilized, much to my surprise. We may see another short dip but I have
to say it looks like the biggest discounts were already taken earlier this year
so that window may be closed.
Los Altos prices are under huge pressure and it looks like
they are still searching for a bottom given this chart below (same comment as
last time, yes). Look at this
chart — lower highs and lower lows.
Any “chartistician” will tell you that it looks like we are still
heading lower in Los Altos.
Mountain View prices are slowly deflating. In a way similar to Sunnyvale, I am
seeing a few distressed sales coming to market that will definitely have an
impact as those properties attract bargain hunters.
Palo Alto prices have again shown that they are stable, yet
lower than prices of a year ago.
It may take a few more quarters before we see price gains but the window
for buying in Palo Alto is now from what I can see.
We are Realtors. We are in the market every day
representing Buyers and Sellers throughout the areas above. Everyone has a reason why they are
making the move (buying or selling) at this very moment.
We bring you this information to
help you make an intelligent decision about your next move. Timing the market is impossible and
unwise because you may ultimately not be able to meet goal. Your motivation for buying or selling
should outweigh your concerns of market timing. The market is always here, people are buying and selling
every day, people are getting financing every day — the real question is ‘when
are you ready to make a move?’