Here are some highlights to pay particular attention to as you review the data/graphs through September 2012:
1. Median Price- After increasing for four months in a row, the “sold” Median price declined to slightly under $500k in September ($498,425). The Median price is showing more signs of price stability as this figure has held right around $500k for three months in a row (first time in over 2+ years). Dramatic improvements over September of last year ($425k) and even with September of 2010 ($499k). The two year average Median continues to inch up and is now at $437,000.
2. Supply & Demand (Units)- What we are measuring in each of these categories is the two year average moving trend; The two year trend line for the following categories, For Sale (supply/inventory), Under Contract (pending sales) and Sold (closed escrows), are as follows – For Sale/inventory has remained historically low in early 2012 contributing to a an increasing two year downward trend slightly more from August -37% . The number of under contract properties (pending sales) up +85%, and the sold/closed escrows up +61% . Pending sales seasonally adjusting downward from August (at 217 September month end) but still trending above the same month for the prior two years (182 in Sept/2011 and 137 in Sept/2010).
3. Month’s Supply of Inventory (MSI) & Days on Market- After declining to a 5+ year low of 2.7 months in August, the overall Months Supply of Inventory (months of inventory available based on the total existing supply divided by the rate of sales) increased to 3.1 months supply at the end of September (one year ago SCZ County stood at 7.2MSI and September of two years ago we had a completely different dynamic with 11.2 month’s supply). Two year MSI trending down 74%.
4. Sales Absorption- Measuring the two year average trend line in the following categories shows under contract properties climbing up +241% in September and the number of closed/sold escrows trending up even further from last month to +196% (last month’s trend stood at +163%). The Percent Under Contract remains a very telling statistic of the current market condition (at a five+ year high)….22% of the active properties/listings were under contract at the end of September, (as a further illustration of improving market demand/conditions: September 2011/11% and September 2010/7.6%). This percent under contract figure is another key marker to pay attention to as the two year average is now at 14%. The past 8 months have resulted in the highest percentage of active listings we have seen under contract in well over 5 years.
The Bay Area and national real estate markets turned the statistical and psychological corner in 2012. Although we experienced signs of this trend in 2011 in our market areas, it was not until this year that the news began reporting that the market had bottomed out, inventory levels had been consumed or constrained and that competition for real estate was becoming fierce once again in increasingly more areas of the US. Many naysayers have spooked the markets with stories of all the shadow foreclosure inventory that was going to flood the market in any given month over the past 2-3 years (this probably held a number of buyers back for fear of additional value declines). Meanwhile, what no one had previously discussed was the pent up demand that has been created through the decline in typical housing formation rates that stalled over the past 4-5 years for a variety of reasons. It is now obvious that the overabundance of buyers is more than enough to absorb any increase in inventory. In fact, in most markets (the Bay Area included), any increased inventory would be welcomed to meet the rapidly growing appetite for real estate.