Sue McAllister from the San Jose Mercury writes about the July data indicating a surge in median home prices.
Yet another media outlet continuing to share the good news that the San Jose Silicon Valley market is doing reasonably well.
New home sales increased from June to July nationwide, but that gain didn’t extend to California and the Bay Area where the expiration of a state tax credit for new home purchases is being attributed for a drop in sales.
A Commerce Department report released Wednesday showed that sales nationwide surged 9.6 percent in July, rising for the fourth-straight month and beating expectations as the housing market marches steadily back from its historic downturn.
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Months Supply of Inventory
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July’s Market data shows a huge drought in available San Jose inventory complicated by the less than two months inventory we are currently experiencing. While there continues to be rumors of an influx of foreclosed homes my feeling is that investors holding the inventory will release it at a measured pace to maximize net profit.
Supply vs Demand
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Another chart showing the shrinking inventory compared to the up swing in sales activity.
Pending Home Sales
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A year ago the amount of inventory was evident but since then the introduction of FHA loans and low interest rates have obviously fueled pending sales activity. Furthermore the low affordable home prices are contributing to the frenzy and cash investors taking advantage of cash flow positive opportunities.
Median Sales Price
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Affordable homes prices between $250,000 and $350,000 are generating twice as many sales thus impacting the median sales price. This is not an indication that home prices are sliding, it shows the huge pool of affordable homes have been moving over the last 90 days.
New Listing Activity
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while we continue to see foreclosure activity and short sales driving the San Jose market more and more sellers are opting to wait out the volatility of the economy before considering trading up to another home. Remember that any seller may have to take consider taking a haircut in price ultimately preventing some sellers from entering the market.
Summary
Affordability continues to be the name of the game. The sweet spot for our market are properties under $500,000. Buyers considering purchasing a home should prepare themselves for a sellers market. Average months of inventory under six months are considered sellers markets. We are currently under two months of inventory.
Chart shows sales climbing slowly while inventory declines
Associated Press article discusses signs of a possible comeback in home sales. Santa Clara County sales over the last 90 days have been HOT to say the least.
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