Our “Rumors and Myths” articles provide factual information regarding real estate markets and practices.
I’ve seen a ton of agent advertisements and news media info lately about the current craziness in the Santa Clara County real estate market. Much of it is fair accurate information, but I know from speaking with several people that they’re more confused now than before they heard the latest “market update.”
I’ve toiled over all sorts of real estate statistics for years, and have concluded there is no making sense of a trend. That’s right, I said it. Sure, if you look at “the market” from a 10,000 foot level, certainly there are statistical trends that can be tracked at the city, county or regional level, or maybe the whole state. National figures are reported by Case-Shiller and others, but none of that drills down into the current happenings in YOUR neck of the woods.
Imagine we were talking about the transportation industry, and someone asked about the average or median sales price of a “vehicle.” The details indicate a bicycle, an SUV and a European sports car sold for $1,000, $49,000 and $100,000, respectively. Both the median and average come in pretty close to $50,000. However, these metrics are not particularly helpful in really understanding the transportation market unless the time is taken to dig a little deeper into the specifics.
Santa Clara County has an average of less than 1,000 single family home sales per month. Most real estate professionals track statistics by MLS area, and we have 50 such areas in the county. On average, that’s about 20 sales per MLS area per month. Is it safe to rely on basic statistics with such a small sample size? I’d suggest the need to dig a little deeper to understand WHY the numbers are what they are.
“Low inventory” is the most significant number being talked about these days. Inventory is the number of homes for sale where the Seller is still seeking offers (“Active” listings). How low is low for Santa Clara County? In the height of the last recession in 2008 the number peaked at nearly 7000. As consumer confidence and buyer activity increased, it had dropped to 2600 in 2012, and less than 1200 in 2016, fluctuating, of course, month-by-month. Today it sits at about 400. Yes, very low.
Whether you dig deep into “why” or not, something is very clear: High demand and low supply has continued to increase values dramatically. Need the specifics? Call us today.