Reports

  • RE Stats through 12/10

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  • Commentary from Sereno Group CEO

    Attached, please find the most updated Market Dynamics statistics for Santa Clara County through December 2010. These statistics are for Single Family and Condo/Townhomes in Santa Clara County. Here are some highlights to pay particular attention to as you review the data/graphs through December of 2010: 1. Median Price- The Median Price increased slightly from $506,000 in November to close out 2010 at $507,000 which is slightly higher than the mark of $500,000 at the end of 2009 . All bay area counties including San Mateo, Santa Clara and Santa Cruz Counties are experiencing increasing sales activity as we closed out 2010 and this momentum of new/pending (open sales) has carried over into 2011. We had projected a year end Median of $520,000. 2. Supply&Demand (Units)- We continue to see a significant distinction in pendings and solds, however, some balance in the inventory category as we make the two year month over month comparisons (December 2008 versus 2010) in the following categories; For Sale (supply/inventory), Under Contract (pending sales) and Sold (closed escrows). To illustrate when we compare 2008 with the same month in 2010 we see the following- For Sale properties/supply remains down 21.2% . The number of under contract properties (pending sales) remains- UP +8.4% and the sold/closed escrows also is up an impressive 15.3%. The overall pattern and direction of this market for the past 12-18 months has declining overall supply/inventory (which has only recently started to increase in this comparison), increasing new sales and closed escrows. I would also point out that year over year under contract properties are up significantly; in December of 2009 there were 938 new sales, this past December of 2010, 1,316. 3. Month’s Supply of Inventory & Days on Market- The overall Months Supply of Inventory (months of inventory available based on the total existing supply divided by the rate of sales) is @ a two year low at 2.7 months supply at month/year end, down from last month’s figure of 3.4 (also lower than Dec 09/4.5months supply). This is down from a 2+ year peak of 14.2 months in January of 08. Days on market has averaged between 45 and 60 days for the past 7-8 months and has increased over the past three months to 70, 75 and now stands around 80+ days on market average (this should be noted in setting realistic marketing expectations). 4. Sales Absorption- The Absorption metrics are quite compelling with the comparison of December 2008 vs December 2010 with under contract properties up 33.4% and closed/sold escrows up 38.2%. 22% of the active properties/listings were under contract at the end of December 2010 (a two year high!), which is up from 20% in November of 2010 (up from 18.1% in October of 2010 and much stronger than a mark of 15.8% in December of 2009.). As we have indicated in the last several reports, we are experiencing an increase in pending sales activity that has carried us strongly into 2011. This momentum and level of new sales activity has not been seen in four years (since 2007) this early in a new year. December of 2009 was a tremendous closing month (the highest volume closing month of the year in 2009), however, this was driven mainly by expiring government incentives and stimulus programs (not due to any specific or measurable improvements in the economy). The closed volume in December of 2009 also did not carry over into the first quarter of 2010 and therefore the 2010 market did not pick up steam until the end of Q1/early Q2 with the bulk of sales/closing activity peaking out in June, then coming to a stall late last Summer. The main distinction this year is that pending sales activity/momentum has been steadily picking up steam over the past few months and as we closed out 2010 (although it did not result in the level of closed volume recorded last December) the carryover demand is more than encouraging. This is being driven by an economy that continues to accelerate, record profitability for many companies (specifically the technology sector which has a tremendous impact on Silicon Valley), the climbing stock market as well as extended tax cuts that run through 2011 and 2012. Furthermore, this increased confidence is now being met with historically low interest rates, realistic prices/valuations in many segments of the market and a very low supply of inventory as illustrated in our statistics above. RIS Media- Recovery on Move: December 2010 Existing Home Sales Jump 12.3%- http://rismedia.com/2011-01-20/recovery-on-move-december-2010-existing-home-sales-jump-12-3-percent/ At Sereno Group, we continue to benefit from being at the pulse and center of global innovation, technology and real estate sales activity. As an indicator of overall improvement in the San Francisco Bay Area real estate market, Sereno Group closed $800 million in sales in 2010 which was up from a mark of $600 million in 2009. We are projecting company-wide sales of $1 billion for 2011. Other market improvements can be observed by glancing at the epicenter of the commercial real estate market in Silicon Valley, Palo Alto, which has less than 3% vacancy as demand for commercial space has increased in such desirable areas. The two statistics that need to be given most attention in the Bay Area early in 2011 are the month’s supply of inventory (which are at or nearly at two+ year lows) and the percent of active listings under contract which are at a peak or close to the year-end peak as compared to any time over the past several years. In a supply and demand market the formula is simple; when you combine these statistics with increasing demand, the result will be a robust market and the beginnings of price appreciation. I am forecasting a 15%-20% increase in overall sales volume for 2011 over 2010. I anticipate that prices will remain mostly flat/stable/slightly rising with a 1-3% plus or minus variation depending on specific market areas, the rate of continued momentum in the economic recovery and several outliers in our valley such as potential liquidity created through IPO’s or other methods within several non-public companies with significant valuations. Overall, we are already experiencing a much improved market in 2011 and which appear to be supported by significant and measurable improvements in our local and national economy. I am certain that 2011 will be our best year yet! Sincerely, Chris

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