July 22nd, 2020 Market Update
Let’s talk about the state of the housing market, from July 22nd, 2020. You can also find the video version of this market update here.
First of all, I would like to share a few quotes from some of these economists and different websites.
As you see, Ali Wolf, a chief economist from Meyers Research, said that
“The housing recovery has been nothing short of remarkable… the expectation was that housing would be crushed. It was — for about two months — and then it came roaring back.”
Again, I want to remind everybody that this is not only talking about the Bay Area housing, actually, this is more on the national level. Javier Vivas, a director of economic research for realtor.com, said
“All-time low mortgage rates and easing job losses have boosted buyer confidence back to pre-pandemic levels.”
We’re going to take a look at it in a little bit with the numbers and statistics as well. Fannie Mae had mentioned that
“Recent home purchase measures have continued to show remarkable strength, leading us to revise upward our home sales forecast, particularly over the third quarter. Similarly, we bumped up our expectations for home price growth and purchase mortgage originations.”
We shared this chart last webinar, and I want to share it again. As you see that most of these different organizations or agencies have a really positive outlook of our housing prices, besides of the first one, Home Price Expectation Survey, for 2020 they expect it to come down slightly, but mostly they expect the housing prices are going to come up continue on 2021 and mostly 2022 as well.
The chart above shows what’s going on in the Bay Area. This consists of five counties in the Bay Area and again we saw that during the shelter-in-place, when it first started in 2020, the activities had come down quite drastically. Then right when May 4th when we are able to show all the homes, including occupied homes, you see the market had come up pretty quickly.
What’s interesting is that typically June, July, August are actually slower months, I know a lot of people always think — shouldn’t summer be a busy season? I tell them no, summer is always pretty slow, mainly because most people go out on vacation, schools are out. But this year we have a late spring start, so instead of slowing down, we’re actually still going up.
Now in this graph, you can see the close sales compared to last year. The number of closed sales in April is literally less than half of what April used to have. Then in May, we improved a little bit, but it’s still kind of short. However, in June it had gone above last year’s volume, so you can definitely see that people are not holding back, they are coming out to buy properties.
Here’s another one that I thought is actually really interesting. This is from Santa Clara County Association Realtors. As you see that the close sales for June compared to May, we had gone up 72.4% on single-family residents, but compared to a year ago, of course, we were still down a little bit. The same thing for condo sales, up 74.8%, but compared to one year ago, we are actually down 18.3%. That’s a huge difference between single-family and condo and townhouses. Now in terms of the pricing, I thought the most interesting fact is that the pricing compared to last year for single-family still went up about 2.3%, but condo and townhomes went down 11% and that’s a pretty significant drop for condo and townhomes. However, our days in the market are actually better than last year. Things are moving very fast and I’ll show you how fast they are.
I want to share with all of you just a few of the offers that we had submitted in the past two weeks, maybe up to a month at the most, some we got it, some we didn’t, but here’s an example. Los Altos single-family asking price 2.5 million, we know that accepted price is over 2.8 million dollars, and there were uh 10 offers, meaning 10 people competing for the same house. San Jose in the Berryessa area, single-family 1.2 million dollars, we know that the accepted price is over 1.3 million and there were 16 offers. And Sunnyvale, the asking price was 2.5 million for a single-family, it had 6 offers and then the offer price accepted is slightly below 2.7 million dollars. Cupertino with a 2.2 million dollar asking price and it went over to 2.4 million, it had 14 offers. Woodside, now bear in mind that these are all South Bay, and Woodside here is a little different. When I talk to our clients, we always say that make sure you understand that neighborhood, how people offer. Even though the market has been really hot everywhere else, this one in Woodside is asking for 2.9 million, and the accepted price is at 2.85 million, actually slightly below and there was only one offer. And Foster City 1.8 million, and in the end they accepted about right under 2 million dollars, and there were five offers. These are all single-families and this is what our team had picked out a few to show everybody the activities of the housing market.
Now let’s look at the condo and townhomes. For San Jose, the Santa Teresa area, south of San Jose, for a condo the asking price was 570,000 dollars and it went over to $585,000 with four offers, so it was still quite competitive. Santa Clara, there’s a co-op, the asking price was one million but ended up down to $905,000. It was on the market for over 50 days, and there was only one offer. Santa Clara, a townhouse asking for 1.33 million dollars, accepted was also under, 1.25 million, and there was only one offer and was on the market for over 40 days. Newark, townhouse asking at $845,000, accepted at $870,000 and there were four offers. Finally, Hayward townhouse, asking for $520,000, accepted at $510,000, and there was only one offer. We see a big difference between the single-family and the condo/townhouses. There’s a trend here, people want bigger space, people want yard space nowadays. You could tell that there is a lot more demand for single-family houses compared to condos and townhouses.
I thought this data was really interesting and always wanted to share something like this with everybody, so I finally put together these charts to show you all the actual activities. This is the underground, you know, from our personal experience, activity. Sometimes our clients would say — oh I heard that the market is gonna drop, or we can lowball, but you really have to see in terms of what type of property it is, and also where it is. Most of the time we see that when properties are on the market for a long time, it’s because they were way overpriced. So the rule of thumb, when you overprice your property, it’s definitely going to stay on the market for a while, and people are definitely gonna negotiate and try to come down on their offer price.
We hope this week’s market update is informative and useful to you. Visit our HG-TV page to watch the full recording of the 10th Bay Area Housing Q&A Webinar — Interest Rates, Guidelines, and Expectations.