ResalesSilicon Valley Market Still Sliding
Silicon Valley home buyers and sellers shouldn"t be taken by the recent uptick in prices in September.
Most market indicators reveal a price slide that"s likely to continue. The statistical forecast calls for particularly chilly home prices through the winter and the New Year isn"t likely to immediately bring higher prices as it has in recent years.
The good news for buyers and sour notes for sellers come because Silicon Valley"s technology-based economy is on the rocks as it"s been for more than a year.
The unemployment rate was 7.7 in September with rates ranging from 4 percent in the affluent city of Palo Alto to 9 percent in San Jose, the county seat. Jobless rates in the county"s southern, more suburban and rural areas were higher, ranging from 9.5 percent to 12.6 percent, according to California"s Employment Development Department.
The business downturn is also reflected in Silicon Valley"s commercial real estate vacancy rates, which are at 20 percent or more and hotel occupancy rate -- largely corporate travel related -- which has fallen to 50 percent, according to recent reports.
"We"ll be in a deep chill by Christmas. There might be some slight improvement in prices because people expect there to be, but I"d be shocked if it"s anywhere near the $100,000 increase we had last year -- which then evaporated. Over all, the trend will be down. The $50 million question is if prices will be higher (later) next year," said Richard Calhoun, broker-owner of Creekside Realty in San Jose, CA.
Based on closed sales, the median price of single-family homes jumped $9,000 in September from August"s $540,000 median price. Silicon Valley (Santa Clara County, CA) home prices had been slipping since May, according to Calhoun"s the Bay Area Market Newsletter. Condo prices continued a three-month slide to a median $340,000 in September from $360,000 in both June and July.
Calhoun uses data from R.E. InfoLink, the regional multiple listing service, to tabulate statistical market conditions.
He says the single-family home uptick for September likely reflects a larger-than-normal group of high-end home sales in September. The previous three-month price slip for both single- family homes and condos is more indicative of the market"s direction, because homes continue to take longer to sell, inventories are rising and a chunk of listings reveal price reductions, Calhoun says.
In May Silicon Valley single-family homes took a median of 33 days to sell, but by September that had risen to 51 days. During the period, there was no monthly dip in the length of time it took homes to sell. With each passing month the median number of days increased the amount of time to sell. Likewise condos took a median 26 days to sell in May, 39 by September.
The inventory of all homes has also increased every month since May from 3,290 to 4,909 in September as closed sales plunged from 1,418 in May to 879 in September.
Calhoun also says approximately 30 to 50 percent of changes to listings reflect price reductions or "relists" homes that have been on the market unsold for 60 days or more and are relisted -- likely with a lower price -- to give the impression it"s a fresh listing.
In one 22 hour period Calhoun found of all listing changes 40 percent were price reductions or relists, 60 percent were true new listings.
"Next month (the median price) is going to go back down again. I believe the balance of this year will be nothing but down," said Calhoun who says it"s too early to forecast much beyond the year"s end.
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