June 05, 2007
The data is now in for May’s pending and closed sales. In a nutshell, prices in Los Gatos appear to be holding generally – over the last few months – but days on market are lengthening, the number of sales is declining and the list price to sales price ratio is falling. If this trend continues, it is very possible that prices in Los Gatos will decline. In much of the county, earlier stats for April (indicating sales from March) indicated that March may have been the “peak of the market” for the season.
If you would like data on other cities and areas in Santa Clara County, please click here. Under “Santa Clara County”, click on Monthly Trends. Page 2 of that report has a spreadsheet with data on the entire county.
Let’s take a look at the Los Gatos numbers.
First, see the % of list price to sales price. Here is the ratio since the beginning of the year (single family homes only):
May is down significantly. Any month could be an “off” month so we wouldn’t consider this too much if it were in isolation from other important factors that demonstrate what the market is doing. So, let’s next let’s view the “days on market” (DOM) and “continuous days on market” or CDOM (the difference being that DOM could be the listing period only under a current broker, if the seller changed agents recently). The first number will be the DOM, the second the CDOM:
January 54 101
February 39 48
March 42 65
April 41 60
May 49 78
Homes sold the fastest in January (representing closed sales in February), kept a steady pace for about 3 months and now are stretching out longer.
Inventory is also key, both in terms of current inventory and new listings. The number of new listings dropped a bit from last month, but current inventory is rising steadily. Below please find first the new listings and then the current available homes for sale, or current inventory:
Month: New Total
January 54 100
February 45 103
March 62 118
April 73 136
May 69 153
This trend toward growing inventory is normal for this time of year, we see this nearly every year as more sellers decide to sell. Ultimately, as sellers come on the market faster than buyers do, it causes pricing to level out (and sometimes to drop). But the fact that it’s normal doesn’t mean it’s better for sellers – it isn’t.
Interestingly, prices do not appear to be dropping – yet. But with the drop in list price to sales price ratio, it would seem that sellers are thinking their homes will sell for more than they did in the past, and are pricing accordingly, but taking lower offers.
The average and median price do not always indicate that a particular home has gained or lost value, but it does tell you where the market is going, generally. In Los Gatos we have a very, very broad range of real estate values, from the low end of about $800,000 for a small house on the edge of town on a small lot to $10 or $20 million dollar estates. A “typical” Los Gatos home is worth somewhere between $1 million and $1.8 million, depending on the exact neighborhood, school district, etc. When we see a blip of higher values for the average and median sales prices, we know that there’s more activity in the high end market. When the higher values are sustained in both the median and average prices, though, we know that home values are rising. That said, here are the numbers, first the average, then the median prices, followed by the number of sales.
January $1,670,150 $1,550,000 (27 closed sales)
February $1,570,482 $1,535,000 (29 closed sales)
March $1,518,416 $1,454,000 (30 closed sales)
April $1,815,043 $1,555,000 (45 closed sales) (March activity)
May $1,659,639 $1,500,000 (33 closed sales)
For May, the numbers are right about where they were in January, amazingly. But they bounce around a lot. Between the higher number of closed sales in April and the higher pricing, it appears here that March was a great month for selling (remember that April’s closeds usually represent pending sales from March). Are we at the beginning of a trend here, or was this month a blip, and next month it’ll bounce back up again within the range above?
To get a bit of a glimpse into the future, we check out the pending sales – they will be next month’s closed sales. Viewing the last three months of data, below please find the sales under contract (number of homes that went “sale pending” during that month) followed by the total sales volume of the month:
March 37 sales 102,125,928 volume
April 26 sales 85,122,849 volume
May 16 sales 28,868,790 volume
These numbers are sobering – fewer homes are selling, days on market are lengthening, list price to sales price is dropping.
What about the average and median home prices (asking price)? They are dropping too:
March $1,856,835 average list price $1,749,900 median list price
April $1,811,124 average list price $1,599,950 median list price
May $1,603,821 average list price $1,242,450 median list price
It is possible that this reflects more “where the market is active” than actual home values. In other words, it could mean that the high end of the market sees fewer homes now. Or it could mean that the higher priced homes (over $3 million) are stalling out a bit. But combined with the other data, mentioned above, it does appear that the market in Los Gatos is softening further.
We enjoyed a bit of a seller’s market in the lower price ranges for a bit early this year. Is that over? Possibly not. Buyers often want the most updated and remodeled homes in the best schools – this is not really a luxury, but many consider it a necessity. They feel they must have the best schools and they do not have time to buy a fixer, not even a cosmetic one.
In short, I do not think it’s doom and gloom for Los Gatos homesellers. However, it is important to understand the changing market and strategize accordingly. It is not at all uncommon for the market to begin softening by late spring and early summer, so part of this is likely a seasonal change that is to be expected.
And buyers, the softening market is
a great breather for you! But know that if you are going after a “shiny penny” type home where all improvements have been made,
the area is great and the home is priced aggressively, you may have competition and still face multiple offers – especially in the lower priced homes.
Each price point and neighborhood has its own story, trends, and statistics. For more information on what is happening in your area, please contact me.
Realtor, ABR, CRS, ePro, SRES
Intero Real Estate Services, Los Gatos