coldwell Banker - November MARKET FLASH
Statistical data from CAR and DataQuick

EVERYTHING HAS ITS UPS AND DOWNS

Intro: Economic zaniness continues unabated as everyone from the Fed to your local savings bank tries to make the situation look coherent – but they can’t. 2005 will probably be a record year for residential real estate in Northern California, but signs of leveling abound in the market; you can bet that 2006 may bring a substantial new direction. But which direction is one of the hottest topics in town.

Statistics:

Statewide: The median resale price of a single-family detached home in California for September was $543,980, down 4.4% for the month (August-to-September roll-off as usual) but an increase of 17% over September 2004; sales were up almost 4% over a year earlier. Unsold resale inventory in September was sufficient for 3.3 months (CAR says up from “3 months [revised],” we say down from 3.7 months a year earlier). Median number of days till sale was 32, up from 29 (30 unadjusted) a year earlier.

Top Ten List: The ten California communities with the highest median home prices, and over 30 sales, in September were: Palos Verdes Estates, $1,600,000; Manhattan Beach, $1,578,000; Burlingame, $1,419,000; Los Altos, $1,410,500; Newport Beach, $1,399,000; Coronado, $1,350,000; Saratoga, $1,314,000; Calabasas, $1,218,000; Carmel, $1,200,000; Hermosa Beach, $1,200,000. Almost the same four out of ten as last month, with Carmel replacing Mill Valley. Made the price but not the sales: Belvedere Tiburon at $1,500,000 (23 sales), Alamo at $1,350,000 (22 sales). Made the sales but not the price: Palo Alto with 30 at $1,112,500, Orinda with 36 at $1,042,500, Danville with 94 at $1,000,000.

[From the writer: The Top Ten-Plus List is an attempt to provide median prices for communities in a way that Northern California Sales Associates will find most useful. From now on, while always including and building on CAR’s Top Ten List, we will also include Northern California communities with ten or more sales for the month and median prices of $1 million or over. This information is generally available from additional CAR statistics and from DQNews.

Our own cutoff of ten sales per month will, unfortunately, have occasional arbitrary effects of its own. Sales Associates in and for upscale communities naturally realize that towns and cities like Atherton, Diablo, Greenbrae, Larkspur, Monte Sereno, Pebble Beach, Portola Valley, Ross, Stinson Beach, and Woodside usually have fewer than ten sales for the month, even though their monthly medians would often include them in – or even head – the Top Ten-Plus List.]

Bay Area: September median price, at $709,980, is almost 11% higher than the September 2004 figure, although down about 3% for the month. The Santa Clara County median price of $733,000 has lost 3.6% for the month, but gained a healthy 16% for the year. Santa Cruz County looks about like Santa Clara for prices – $750,000 median, lost 4.2% for the month, but gained 16% for the year. Monterey County has the largest year-over-year median price increase – 18.3%.

Sacramento/Capitol Region: Median is up about 15% for the year.

Interest Rates: As of the end of October, rates had been rising for six consecutive weeks, and 30-year fixed is now 6.17%; in other words, it has risen to the level of fifteen months ago. Fifteen-year fixed is at 5.72%; 5/1 ARM is at 5.77%.

It's hard to identify these rate increases as a trend. Still, less say where that trend is going, because so many developments are acting on the market. At the moment it's reacting not only to things we already knew about, like increasing fuel prices, but newer ones, like Hurricanes Katrina, Rita, and Wilma, wide approval of Ben Bernanke as the President's pick for chair of the Federal Reserve... how can you assess overall impact when the contending forces include so many catastrophes and intangibles?

Inventory: At the high end, lavish. Entry level and midrange, where the strength of the market is concentrated, have very uneven inventory, and in sought-after neighborhoods it’s actually tight. The relation between supply and locality has rarely been more complex.

News Media: Going through a progression that we frankly have some sympathy for. First it was “The housing bubble is almost on top of us and it’s going to be like the high-tech bubble four years ago.” Then it was “Nobody really knows what a housing bubble looks like,” followed by “but it probably deflates very slowly.” Newspapers are in the business of making predictions, which isn’t as much fun when you can dig up facts to support almost any prediction.

Overall Assessment: As we write, consumer enthusiasm is driving this market – but affordability, uncertainty, lending fluctuations, and the job market could very much affect how fast it gets driven. What is still true, at least around here, is that for every willing seller there’s probably a willing buyer. Bring the two together and you’ll be well rewarded.