Santa Clara County Real Estate, April 2023

The Market Continues to Recover, But with Many Dynamics at Play

Buyer demand continued to rebound from the depths of the mid-winter slowdown: The number and percentage of listings going into contract, and overbidding percentages continued to climb, and days-on-market to drop as the spring selling season gained traction. Buyers generally shrugged off the local banking crisis, the main effect of which, so far, has been a significant drop in interest rates in the 4 weeks after SVB collapsed.

But though conditions have improved considerably, the market remains significantly weaker on a year-over-year basis, and across the Bay Area, median home sales prices have generally declined. However, it’s worth remembering that the market in Q1 2022 was severely overheated, and approaching the peak of a historic, 10-year boom. This will distort many year-over-year comparisons.
The number of new listings coming on market continues to be extremely low, as many potential sellers hold off from listing their homes due to the doubling of interest rates since early 2022: This constitutes a huge factor in market dynamics and is undoubtedly holding back sales activity.

Across the Bay Area, year-over-year sales declines in the highest price segments have outpaced drops for less expensive homes, and their demand-to-supply ratio – the number of sales compared to the number of listings for sale – is much weaker. Luxury home sales have been hit harder since the market correction began in mid-2022, though they too have been rebounding in 2023.

April, May & June sales volumes are commonly among the highest of the year, and this is especially true for luxury home sales.

Report created in good faith with data from sources deemed reliable, but may contain errors and subject to revision. All numbers approximate, and may change with late-reported activity.

Statistics are generalities, essentially summaries of widely disparate data generated by dozens, hundreds or thousands of unique, individual sales occurring within different time periods. They are best seen not as precise measurements, but as broad, comparative indicators, with reasonable margins of error. Anomalous fluctuations in statistics are not uncommon, especially in smaller, expensive market segments. Last period data should be considered estimates that may change with late-reported data. Different analytics programs sometimes define statistics – such as “active listings,” “days on market,” and “months supply of inventory” – differently: what is most meaningful are not specific calculations but the trends they illustrate. Most listing and sales data derives from the local or regional multi-listing service (MLS) of the area specified in the analysis, but not all listings or sales are reported to MLS and these won’t be reflected in the data. “Homes” signifies real-property, single-household housing units: houses, condos, co-ops, townhouses, duets and TICs (but not mobile homes), as applicable to each market. City/town names refer specifically to the named cities and towns, unless otherwise delineated. Multi-county metro areas will be specified as such. Data from sources deemed reliable, but may contain errors and subject to revision. All numbers to be considered approximate.

Many aspects of value cannot be adequately reflected in median and average statistics: curb appeal, age, condition, amenities, views, lot size, quality of outdoor space, “bonus” rooms, additional parking, quality of location within the neighborhood, and so on. How any of these statistics apply to any particular home is unknown without a specific comparative market analysis. Median Sales Price is that price at which half the properties sold for more and half for less. It may be affected by seasonality, “unusual” events, or changes in inventory and buying trends, as well as by changes in fair market value. The median sales price for an area will often conceal an enormous variety of sales prices in the underlying individual sales.
Dollar per Square Foot is based upon the home’s interior living space and does not include garages, unfinished attics and basements, rooms built without permit, patios, decks or yards (though all those can add value to a home). These figures are usually derived from appraisals or tax records, but are sometimes unreliable (especially for older homes) or unreported altogether. The calculation can only be made on those home sales that reported square footage.

Compass is a real estate broker licensed by the State of California, DRE 01527235. Equal Housing Opportunity. This report has been prepared solely for information purposes. The information herein is based on or derived from information generally available to the public and/or from sources believed to be reliable. No representation or warranty can be given with respect to the accuracy or completeness of the information. Compass disclaims any and all liability relating to this report, including without limitation any express or implied representations or warranties for statements contained in, and omissions from, the report. Nothing contained herein is intended to be or should be read as any regulatory, legal, tax, accounting or other advice and Compass does not provide such advice. All opinions are subject to change without notice. Compass makes no representation regarding the accuracy of any statements regarding any references to the laws, statutes or regulations of any state are those of the author(s). Past performance is no guarantee of future results.

Santa Clara County Real Estate, March 2023

2023 Market Indicators Turn Positive (But Interest Rates Climb Again)

After the acute decline in market activity occurring in the 2nd half of 2022, buyer demand rebounded dramatically and most market indicators turned positive in early 2023: Open house traffic, number of offers, and overbidding and absorption rates all saw improvement.*

It is too early for significant effects to show up in home prices: Indeed, through February, 3- month-rolling median house sales prices saw year-over-year declines across all Bay Area counties. (These percentage declines should be regarded cautiously until substantiated over the longer term.) Even with the striking improvement in demand over late 2022, most year-over-year indicators remain depressed, but these comparisons are with the severely overheated conditions prevailing at the peak of a 10-year housing market upcycle. The market was still just waking up in February. March through May is typically the most active listing and sales period of the year, and should soon provide much more data on supply, demand and price trends. Over the last 3 years, spring markets were deeply affected, in very different and often surprising ways, by the onset of the pandemic (2020), the pandemic boom (2021), and soaring interest rates (2022).

As has been the case for the last 14 months, the biggest wildcard remains interest rates: After dropping considerably in January from a November peak, they climbed again in February, with big impacts on loan application rates. It has been very challenging to predict short-term interest rate changes. Another major factor is the substantial decrease in the number of new listings coming on market, a critical issue with wide ramifications if it continues.

*Sales in one month generally reflect deal-making in the previous month, and often pertain to listings that have already been on the market for months longer. Many real estate statistics are lagging indicators, and even dramatic shifts in demand may show up only very gradually in their readings.

Statistics are generalities, essentially summaries of widely disparate data generated by dozens, hundreds or thousands of unique, individual sales occurring within different time periods. They are best seen not as precise measurements, but as broad, comparative indicators, with reasonable margins of error. Anomalous fluctuations in statistics are not uncommon, especially in smaller, expensive market segments. Last period data should be considered estimates that may change with late-reported data. Different analytics programs sometimes define statistics – such as “active listings,” “days on market,” and “months supply of inventory” – differently: what is most meaningful are not specific calculations but the trends they illustrate. Most listing and sales data derives from the local or regional multi-listing service (MLS) of the area specified in the analysis, but not all listings or sales are reported to MLS and these won’t be reflected in the data. “Homes” signifies real-property, single-household housing units: houses, condos, co-ops, townhouses, duets and TICs (but not mobile homes), as applicable to each market. City/town names refer specifically to the named cities and towns, unless otherwise delineated. Multi-county metro areas will be specified as such. Data from sources deemed reliable, but may contain errors and subject to revision. All numbers to be considered approximate.

Many aspects of value cannot be adequately reflected in median and average statistics: curb appeal, age, condition, amenities, views, lot size, quality of outdoor space, “bonus” rooms, additional parking, quality of location within the neighborhood, and so on. How any of these statistics apply to any particular home is unknown without a specific comparative market analysis. Median Sales Price is that price at which half the properties sold for more and half for less. It may be affected by seasonality, “unusual” events, or changes in inventory and buying trends, as well as by changes in fair market value. The median sales price for an area will often conceal an enormous variety of sales prices in the underlying individual sales.

Dollar per Square Foot is based upon the home’s interior living space and does not include garages, unfinished attics and basements, rooms built without permit, patios, decks or yards (though all those can add value to a home). These figures are usually derived from appraisals or tax records, but are sometimes unreliable (especially for older homes) or unreported altogether. The calculation can only be made on those home sales that reported square footage.

Compass is a real estate broker licensed by the State of California, DRE 01527235. Equal Housing Opportunity. This report has been prepared solely for information purposes. The information herein is based on or derived from information generally available to the public and/or from sources believed to be reliable. No representation or warranty can be given with respect to the accuracy or completeness of the information. Compass disclaims any and all liability relating to this report, including without limitation any express or implied representations or warranties for statements contained in, and omissions from, the report. Nothing contained herein is intended to be or should be read as any regulatory, legal, tax, accounting or other advice and Compass does not provide such advice. All opinions are subject to change without notice. Compass makes no representation regarding the accuracy of any statements regarding any references to the laws, statutes or regulations of any state are those of the author(s). Past performance is no guarantee of future results.

Santa Clara County Real Estate, February 2023

Early 2023 Data Suggests Buyers Are Beginning to Jump Back In

December is typically the month that sees the year’s lowest level of deal-making activity – i.e. listings accepting offers (going into contract) – which leads to January usually posting the lowest monthly number of closed sales. (Sales typically close 3 to 6 weeks after going into contract.) In the 11-county, greater Bay Area, accepted-offer activity in December 2022 and closed sales volume in January 2023 generally hit their lowest monthly points in 15 years.

Typically, after the long holiday slowdown, the market just begins to wake up in mid-January before accelerating into spring. That being said, inflation has dropped substantially since June and interest rates since November, home prices are well down from last spring, stock markets are up 8% (S&P) to 15% (Nasdaq) YTD as of 2/3/23 (albeit with continuing volatility), and despite escalating layoffs in high tech, early indications in 2023 point to rebounding buyer demand. Open house traffic has jumped, more buyers are requesting listing disclosure packages, and there have been increasing reports of multiple offers and (often unexpected) overbidding of asking price. Based on this preliminary data (much of it still anecdotal*), it appears that buyer demand severely repressed by economic conditions in the 2nd half of 2022 has begun to bounce back.

A similar rebound began in mid-late summer 2022 for similar reasons – a significant drop in mortgage rates and a large rise in stock markets – which then quickly faded when positive economic developments went into reverse. Market activity then slowed further through the rest of 2022. There are currently considerable hopes for a more lasting economic recovery in 2023.

During the long high-tech and pandemic housing boom – which peaked in April/May 2022 – as each new year began, the classic dynamic was for buyers to jump back into the market much more quickly than sellers, creating an immediate imbalance between supply and demand. Too few new listings compared to the quantity of motivated buyers sparked often ferocious bidding wars, leading to considerable home price gains virtually every spring. It is too early to conclude, after the general price declines and steep drops in market activity seen in the 2nd half of 2022, that a sustained recovery in market conditions is now underway, and if it is, how quickly it will develop and its impact on prices in 2023. Many economic conditions remain challenging – with critical indicators still much weaker on a year-over-year basis – and forecasts by economists and analysts vary widely. Hopefully, economic conditions will continue to improve, providing the foundation for the recovery in real estate. In the meantime, preliminary indicators are surprisingly positive, and the CEO of Compass recently stated his belief that Q4 2022 saw the bottom of the market.

The “spring market,” which can begin as early as February in the Bay Area, is typically the biggest selling season of the year, especially for luxury homes, and more data regarding new listings coming on market, listings going into contract, sales volumes, speed of sale, overbidding and sales prices will soon become available.*

* Most “hard” data in real estate is based on closed, recorded sales, a lagging indicator which generally reflects deal-making activity in the previous month, when offers were negotiated. January sales, the basis for many analyses in this report, mostly reflect the December 2022 market when new listing activity and buyer demand were typically at their lowest ebb in years. February and March listing and sales data will begin to better reflect early 2023 conditions.

Data from sources deemed reliable, but may contain errors and subject to revision. All numbers approximate, and may change with late-reported activity.

Statistics are generalities, essentially summaries of widely disparate data generated by dozens, hundreds or thousands of unique, individual sales occurring within different time periods. They are best seen not as precise measurements, but as broad, comparative indicators, with reasonable margins of error. Anomalous fluctuations in statistics are not uncommon, especially in smaller, expensive market segments. Last period data should be considered estimates that may change with late-reported data. Different analytics programs sometimes define statistics – such as “active listings,” “days on market,” and “months supply of inventory” – differently: what is most meaningful are not specific calculations but the trends they illustrate. Most listing and sales data derives from the local or regional multi-listing service (MLS) of the area specified in the analysis, but not all listings or sales are reported to MLS and these won’t be reflected in the data. “Homes” signifies real-property, single-household housing units: houses, condos, co-ops, townhouses, duets and TICs (but not mobile homes), as applicable to each market. City/town names refer specifically to the named cities and towns, unless otherwise delineated. Multi-county metro areas will be specified as such. Data from sources deemed reliable, but may contain errors and subject to revision. All numbers to be considered approximate.

Many aspects of value cannot be adequately reflected in median and average statistics: curb appeal, age, condition, amenities, views, lot size, quality of outdoor space, “bonus” rooms, additional parking, quality of location within the neighborhood, and so on. How any of these statistics apply to any particular home is unknown without a specific comparative market analysis.

Median Sales Price is that price at which half the properties sold for more and half for less. It may be affected by seasonality, “unusual” events, or changes in inventory and buying trends, as well as by changes in fair market value. The median sales price for an area will often conceal an enormous variety of sales prices in the underlying individual sales.

Dollar per Square Foot is based upon the home’s interior living space and does not include garages, unfinished attics and basements, rooms built without permit, patios, decks or yards (though all those can add value to a home). These figures are usually derived from appraisals or tax records, but are sometimes unreliable (especially for older homes) or unreported altogether. The calculation can only be made on those home sales that reported square footage.

Compass is a real estate broker licensed by the State of California, DRE 01527235. Equal Housing Opportunity. This report has been prepared solely for information purposes. The information herein is based on or derived from information generally available to the public and/or from sources believed to be reliable. No representation or warranty can be given with respect to the accuracy or completeness of the information. Compass disclaims any and all liability relating to this report, including without limitation any express or implied representations or warranties for statements contained in, and omissions from, the report. Nothing contained herein is intended to be or should be read as any regulatory, legal, tax, accounting or other advice and Compass does not provide such advice. All opinions are subject to change without notice. Compass makes no representation regarding the accuracy of any statements regarding any references to the laws, statutes or regulations of any state are those of the author(s). Past performance is no guarantee of future results.

Santa Clara County Real Estate, January 2023

“Mortgage application activity sunk to a quarter century low this week as high mortgage rates continue to weaken the housing market. While mortgage market activity has significantly shrunk over the last year, inflationary pressures are easing and should lead to lower mortgage rates in 2023. Homebuyers are waiting for rates to decrease more significantly, and when they do, a strong job market and a large demographic tailwind of Millennial renters will provide support to the purchase market.” FHLMC, 1/5/2023

In 2022, the market saw a dramatic shift from Q2 (spring), at which time the market peaked after a dramatic 10-year upcycle supercharged at its end by the pandemic boom, through the 2nd half of the year, when the market cooled significantly. Prompted by a number of economic factors – especially inflation and interest rates, and financial markets – this played out in substantial declines in sales volumes, median sales prices, appreciation rates, and virtually all the standard measurements of buyer demand. However, tens of thousands of Bay Area homes continued to sell in the 2nd half, a considerable, but declining percentage still selling quickly at ov er asking price. On the other hand, some buyers are making the best deals in years. For sellers, pricing, preparation and marketing are now critical, while buyers shouldn’t hesitate to negotiate aggressively, especially on homes with longer days-on-market.

The period from just before Thanksgiving through mid-January usually sees the lowest levels of listing and offer-acceptance activity of the year, so it’s difficult to derive definitive conclusions about market trends from its numbers. The early spring market – which, weather cooperating, can begin as early as February in the Bay Area – would typically provide the next major indicator of market direction, but developments may occur sooner to provide increased clarity regarding what awaits us in 2023. For the time being, the market remains in a period of adjustment, with major macroeconomic conditions still in flux.

This report will look at the market from a variety of angles, including annual, quarterly and monthly data. Because of the large shifts in the market that occurred between the 1st and 2nd halves of the year, annual data will often disguise these changes, blending as it does heated, peak-market data with data in which very different conditions prevailed.

Statistics are generalities, essentially summaries of widely disparate data generated by dozens, hundreds or thousands of unique, individual sales occurring within different time periods. They are best seen not as precise measurements, but as broad, comparative indicators, with reasonable margins of error. Anomalous fluctuations in statistics are not uncommon, especially in smaller, expensive market segments. Last period data should be considered estimates that may change with late-reported data. Different analytics programs sometimes define statistics – such as “active listings,” “days on market,” and “months supply of inventory” – differently: what is most meaningful are not specific calculations but the trends they illustrate. Most listing and sales data derives from the local or regional multi-listing service (MLS) of the area specified in the analysis, but not all listings or sales are reported to MLS and these won’t be reflected in the data. “Homes” signifies real-property, single-household housing units: houses, condos, co-ops, townhouses, duets and TICs (but not mobile homes), as applicable to each market. City/town names refer specifically to the named cities and towns, unless otherwise delineated. Multi-county metro areas will be specified as such. Data from sources deemed reliable, but may contain errors and subject to revision. All numbers to be considered approximate.

Many aspects of value cannot be adequately reflected in median and average statistics: curb appeal, age, condition, amenities, views, lot size, quality of outdoor space, “bonus” rooms, additional parking, quality of location within the neighborhood, and so on. How any of these statistics apply to any particular home is unknown without a specific comparative market analysis. Median Sales Price is that price at which half the properties sold for more and half for less. It may be affected by seasonality, “unusual” events, or changes in inventory and buying trends, as well as by changes in fair market value. The median sales price for an area will often conceal an enormous variety of sales prices in the underlying individual sales.

Dollar per Square Foot is based upon the home’s interior living space and does not include garages, unfinished attics and basements, rooms built without permit, patios, decks or yards (though all those can add value to a home). These figures are usually derived from appraisals or tax records, but are sometimes unreliable (especially for older homes) or unreported altogether. The calculation can only be made on those home sales that reported square footage.

Compass is a real estate broker licensed by the State of California, DRE 01527235. Equal Housing Opportunity. This report has been prepared solely for information purposes. The information herein is based on or derived from information generally available to the public and/or from sources believed to be reliable. No representation or warranty can be given with respect to the accuracy or completeness of the information. Compass disclaims any and all liability relating to this report, including without limitation any express or implied representations or warranties for statements contained in, and omissions from, the report. Nothing contained herein is intended to be or should be read as any regulatory, legal, tax, accounting or other advice and Compass does not provide such advice. All opinions are subject to change without notice. Compass makes no representation regarding the accuracy of any statements regarding any references to the laws, statutes or regulations of any state are those of the author(s). Past performance is no guarantee of future results.

Santa Clara County Real Estate, December 2022

The changes in market dynamics that began in late spring/early summer 2022 generally continued in autumn due to the ongoing economic headwinds, including high inflation and interest rates, reduced consumer confidence, and volatile stock markets, though all have fluctuated significantly over the period, and some readings have recently improved. The great majority of indicators – home prices and appreciation rates, sales volumes, overbidding, days-on-market, months supply of inventory, and so on – continue to describe a market that has substantially cooled and “corrected” since spring 2022, when it appears that a long, dramatic, 10-year market upcycle peaked. (Note that a “correction” is not remotely similar to a crash, such as was seen during the subprime loan/foreclosure crisis.) In recent months, luxury home sales have seen larger year-over-year percentage declines than the general market. But thousands of Bay Area homes continue to sell, some very quickly at over asking price: With the shifts in market conditions, pricing correctly has become an imperative for sellers.

December typically sees the low point of new-listing and sales activity – with an increasing number of homes taken off the market to await the new year – but listing, buying and selling continues. This can be an excellent time for buyers to aggressively negotiate prices, though the supply of listings to choose from declines. The market usually begins to wake up in mid-January and then quickly accelerates in early spring: In the Bay Area, depending on the weather and economic conditions, the “early spring” market can begin as soon as February. The single, most closely watched factor will be interest rates, since they have such an outsized impact on monthly housing costs and affordability, as well as on stock markets and consumer confidence. At the end of this report is a link to our extended review of macroeconomic issues.

Our reports are not intended to convince you regarding a course of action or to predict the future, but to provide, to the best of our ability, straightforward information and good-faith analysis to assist you in making your own informed decisions. Statistics should be considered very general indicators, and all numbers should be considered approximate. How they apply to any particular property is unknown without a specific comparative market analysis.

Source: Compass

It is impossible to know how median and average value statistics apply to any particular home without a specific comparative market analysis. These analyses were made in good faith with data from sources deemed reliable, but may contain errors and are subject to revision. It is not our intent to convince you of a particular position, but to attempt to provide straightforward data and analysis, so you can make your own informed decisions. Median and average statistics are enormous generalities: There are hundreds of different markets in San Francisco and the Bay Area, each with its own unique dynamics. Median prices and average dollar per square foot values can be and often are affected by other factors besides changes in fair market value. Longer term trends are much more meaningful than short-term.

Compass is a real estate broker licensed by the State of California, DRE 01527235. Equal Housing Opportunity. This report has been prepared solely for information purposes. The information herein is based on or derived from information generally available to the public and/or from sources believed to be reliable. No representation or warranty can be given with respect to the accuracy or completeness of the information. Compass disclaims any and all liability relating to this report, including without limitation any express or implied representations or warranties for statements contained in, and omissions from, the report. Nothing contained herein is intended to be or should be read as any regulatory, legal, tax, accounting or other advice and Compass does not provide such advice. All opinions are subject to change without notice. Compass makes no representation regarding the accuracy of any statements regarding any references to the laws, statutes or regulations of any state are those of the author(s). Past performance is no guarantee of future results.

Santa Clara County Real Estate, November 2022

After a brief rebound in market activity in August, pursuant to what turned out to be a very temporary decline in interest rates and an associated rebound in financial markets, macroeconomic conditions shifted again – with interest rates climbing rapidly to a 20-year high – which took a toll on early autumn, Bay Area real estate markets. Though across the Bay Area, thousands of homes continued to be sold – a significant, but declining proportion still selling quickly over list price – the general trend was one of cooling demand, less competition, and declining sales. And, after years of conclusively holding the balance of power, sellers have reacted to the changing circumstances in different ways: Besides increased price reductions since spring, the number of new listings comi on market is well down year over year, and a much higher percentage of listings than normal is being removed from the market without selling. The economy and housing market remain in a period of adjustment, causing many people to be more cautious as they wait to see how things will settle out.

All these factors added up in Santa Clara County to October 2022 having the lowest number of October home sales since 2007. On a year-over-year basis, home sales dropped approximately 40% in October.

The market now enters the 2-month holiday period which typically sees the year’s lowest levels of activity: The numbers of new listings and of listings going into contract usually plunge to their annual nadirs, and an increasing percentage of sellers, especially in higher price segments, pull their homes off the market to await the new year. (Many listings taken off market in November and  December will presumably be relisted in Q1 2023.) Still, buying and selling continues, though at reduced levels, and this can be an excellent time for buyers to aggressively negotiate prices.

Market dynamics and statistics vary by county, property type and price segment.

Our reports are not intended to convince you regarding a course of action or to predict the future, but to provide, to the best of our ability, straightforward information and good-faith analysis to assist you in making your own informed decisions. Statistics should be considered very general indicators, and all numbers should be considered approximate. How they apply to any particular property is unknown without a specific comparative market analysis.

Source: Compass

It is impossible to know how median and average value statistics apply to any particular home without a specific comparative market analysis. These analyses were made in good faith with data from sources deemed reliable, but may contain errors and are subject to revision. It is not our intent to convince you of a particular position, but to attempt to provide straightforward data and analysis, so you can make your own informed decisions. Median and average statistics are enormous generalities: There are hundreds of different markets in San Francisco and the Bay Area, each with its own unique dynamics. Median prices and average dollar per square foot values can be and often are affected by other factors besides changes in fair market value. Longer term trends are much more meaningful than short-term.

Compass is a real estate broker licensed by the State of California, DRE 01527235. Equal Housing Opportunity. This report has been prepared solely for information purposes. The information herein is based on or derived from information generally available to the public and/or from sources believed to be reliable. No representation or warranty can be given with respect to the accuracy or completeness of the information. Compass disclaims any and all liability relating to this report, including without limitation any express or implied representations or warranties for statements contained in, and omissions from, the report. Nothing contained herein is intended to be or should be read as any regulatory, legal, tax, accounting or other advice and Compass does not provide such advice. All opinions are subject to change without notice. Compass makes no representation regarding the accuracy of any statements regarding any references to the laws, statutes or regulations of any state are those of the author(s). Past performance is no guarantee of future results.

Santa Clara County Real Estate, October 2022

Virtually across the Bay Area, Q3 median sales prices retreated dramatically from their spring peaks. Part of this was due to seasonal trends – median sales prices often peak for the calendar year in Q2, then drop in summer – but part of the decline was clearly due to changing market conditions prompted by shifts in interest rates, inflation, stock markets, and consumer confidence. In this report, home prices will be reviewed from a variety of angles to provide greater context. On the supply and demand side, it appears that after the big drop in demand in early-mid summer, conditions have mostly stabilized: Generally speaking, sales numbers are no longer appreciably dropping, though overbidding statistics continue to decline and days on market to climb.

When looking at recent market changes, it is important to remember how overheated the market was in 2021 and early 2022 – many quarter-to-quarter, and year-over-year comparisons are distorted by the unusual (sometimes frenzied) conditions that prevailed then. It is also wise not to jump to definitive conclusions based upon a single quarter’s data: The economy and real estate market are still in a period of adjustment.

Comparisons with the crash of 2008 continue to be made, but the precipitating factor in the 2008 crash – tens of millions of households talked into home loans they could never afford, forcing a tsunami of frantic sales during the great recession – simply does not apply today. Mortgage payments as a percentage of income, and loan delinquency rates are both close to all-time lows; most homeowners’ mortgages are held at historically low rates. There has been no surge of desperate sellers: New listing numbers are actually down from last year. Stock market declines, though substantial, cannot compare with those seen in 2008-2009, and employment remains very strong. This is not to minimize the correction the market is going through: There are certainly major economic challenges at play right now, but a market correction is not a crash, being more like a slow leak in an over-pressurized tire than a blowout on the highway at high speed.

The relatively short autumn selling season began after Labor Day and runs through mid-November. The midwinter holiday slowdown then runs through mid-January. Though sales continue in every month of the year, listing and sale activity drops dramatically as we near Thanksgiving. Slower markets can offer opportunities to buyers, but the selection of homes for sale usually tumbles.

Our reports are not intended to convince you regarding a course of action or to predict the future, but to provide, to the best of our ability, straightforward information and good-faith analysis to assist you in making your own informed decisions. Statistics should be considered very general indicators, and all numbers should be considered approximate. How they apply to any particular property is unknown without a specific comparative market analysis.

Statistics are generalities, essentially summaries of widely disparate data generated by dozens, hundreds or thousands of unique, individual sales occurring within different time periods. They are best seen not as precise measurements, but as broad, comparative indicators, with reasonable margins of error. Anomalous fluctuations in statistics are not uncommon, especially in smaller, expensive market segments. Last period data should be considered estimates that may change with late-reported data. Different analytics programs sometimes define statistics – such as “active listings,” “days on market,” and “months supply of inventory” – differently: what is most meaningful are not specific calculations but the trends they illustrate. Most listing and sales data derives from the local or regional multi-listing service (MLS) of the area specified in the analysis, but not all listings or sales are reported to MLS and these won’t be reflected in the data. “Homes” signifies real-property, single-household housing units: houses, condos, co-ops, townhouses, duets and TICs (but not mobile homes), as applicable to each market. City/town names refer specifically to the named cities and towns, unless otherwise delineated. Multi-county metro areas will be specified as such. Data from sources deemed reliable, but may contain errors and subject to revision. All numbers to be considered approximate.

Many aspects of value cannot be adequately reflected in median and average statistics: curb appeal, age, condition, amenities, views, lot size, quality of outdoor space, “bonus” rooms, additional parking, quality of location within the neighborhood, and so on. How any of these statistics apply to any particular home is unknown without a specific comparative market analysis.

Median Sales Price is that price at which half the properties sold for more and half for less. It may be affected by seasonality, “unusual” events, or changes in inventory and buying trends, as well as by changes in fair market value. The median sales price for an area will often conceal an enormous variety of sales prices in the underlying individual sales.

Dollar per Square Foot is based upon the home’s interior living space and does not include garages, unfinished attics and basements, rooms built without permit, patios, decks or yards (though all those can add value to a home). These figures are usually derived from appraisals or tax records, but are sometimes unreliable (especially for older homes) or unreported altogether. The calculation can only be made on those home sales that reported square footage.

Compass is a real estate broker licensed by the State of California, DRE 01527235. Equal Housing Opportunity. This report has been prepared solely for information purposes. The information herein is based on or derived from information generally available to the public and/or from sources believed to be reliable. No representation or warranty can be given with respect to the accuracy or completeness of the information. Compass disclaims any and all liability relating to this report, including without limitation any express or implied representations or warranties for statements contained in, and omissions from, the report. Nothing contained herein is intended to be or should be read as any regulatory, legal, tax, accounting or other advice and Compass does not provide such advice. All opinions are subject to change without notice. Compass makes no representation regarding the accuracy of any statements regarding any references to the laws, statutes or regulations of any state are those of the author(s). Past performance is no guarantee of future results.

Santa Clara County Real Estate, September 2022

In early August, we mentioned agents reporting that buyer activity – renewed interest in getting back into the market, visits to open houses, and so on – was picking up due to a number of issues: Price reductions, less competition, an increase in listings for sale, the drop in interest rates, and the dramatic recovery in stock markets. And a sizeable rebound in sales and listings going into contract did show up in August data, though volumes were still well below last year at this time.

Across the Bay Area, since spring, year-over-year, home-price appreciation rates and overbidding statistics have generally plunged, and days-on-market rapidly climbed. In the midst of the prevailing uncertainty, many sellers have pulled back on listing their homes, with the number of new listings coming on market remaining well down year over year. In August, the number of active listings for sale dropped after 6 months of steady gains, but we may see an increase in new listing activity after Labor Day.

As of early September, interest rates have increased again and stock markets declined once more: They continue to see substantial short-term volatility and it remains difficult to confidently predict their future movements and effects on real estate markets. The next major indicator of buyer and seller psychology and market dynamics will be what occurs during the next 2 months of the autumn selling season, prior to the mid-November to mid-January holiday slowdown, typically the slowest market of the year.

Our reports are not intended to convince you regarding a course of action or to predict the future, but to provide, to the best of our ability, straightforward information and good-faith analysis to assist you in making your own informed decisions. Statistics should be considered very general indicators, and all numbers should be considered approximate. How they apply to any particular property is unknown without a specific comparative market analysis.

Source: Compass

Statistics are generalities, essentially summaries of widely disparate data generated by dozens, hundreds or thousands of unique, individual sales occurring within different time periods. They are best seen not as precise measurements, but as broad, comparative indicators, with reasonable margins of error. Anomalous fluctuations in statistics are not uncommon, especially in smaller, expensive market segments. Last period data should be considered estimates that may change with late-reported data. Different analytics programs sometimes define statistics – such as “active listings,” “days on market,” and “months supply of inventory” – differently: what is most meaningful are not specific calculations but the trends they illustrate. Most listing and sales data derives from the local or regional multi-listing service (MLS) of the area specified in the analysis, but not all listings or sales are reported to MLS and these won’t be reflected in the data. “Homes” signifies real-property, single-household housing units: houses, condos, co-ops, townhouses, duets and TICs (but not mobile homes), as applicable to each market. City/town names refer specifically to the named cities and towns, unless otherwise delineated. Multi-county metro areas will be specified as such. Data from sources deemed reliable, but may contain errors and subject to revision. All numbers to be considered approximate.

Many aspects of value cannot be adequately reflected in median and average statistics: curb appeal, age, condition, amenities, views, lot size, quality of outdoor space, “bonus” rooms, additional parking, quality of location within the neighborhood, and so on. How any of these statistics apply to any particular home is unknown without a specific comparative market analysis.

Median Sales Price is that price at which half the properties sold for more and half for less. It may be affected by seasonality, “unusual” events, or changes in inventory and buying trends, as well as by changes in fair market value. The median sales price for an area will often conceal an enormous variety of sales prices in the underlying individual sales.

Dollar per Square Foot is based upon the home’s interior living space and does not include garages, unfinished attics and basements, rooms built without permit, patios, decks or yards (though all those can add value to a home). These figures are usually derived from appraisals or tax records, but are sometimes unreliable (especially for older homes) or unreported altogether. The calculation can only be made on those home sales that reported square footage.

Compass is a real estate broker licensed by the State of California, DRE 01527235. Equal Housing Opportunity. This report has been prepared solely for information purposes. The information herein is based on or derived from information generally available to the public and/or from sources believed to be reliable. No representation or warranty can be given with respect to the accuracy or completeness of the information. Compass disclaims any and all liability relating to this report, including without limitation any express or implied representations or warranties for statements contained in, and omissions from, the report. Nothing contained herein is intended to be or should be read as any regulatory, legal, tax, accounting or other advice and Compass does not provide such advice. All opinions are subject to change without notice. Compass makes no representation regarding the accuracy of any statements regarding any references to the laws, statutes or regulations of any state are those of the author(s). Past performance is no guarantee of future results.

Santa Clara County Real Estate, August 2022

Across the Bay Area, markets have continued to slow and cool. As illustrated in this report, dramatic changes in demand, inventory, overbidding, price reductions, and year-over-year appreciation rates have usually occurred. Buying and selling continues: Over 5200 home sales were reported to MLS from Napa County to Monterey in July 2022 – many of them selling quickly for over asking price – but that number was down 38% from last year. Median home price appreciation rates in the Bay Area have seen steep declines from those in 2021/early 2022. All these changes vary in degree by location and market segment, but the direction of these shifts is near universal.

This report will review year-over-year changes in prices, and in supply and demand, reflecting the significant adjustments from the heated (often overheated) conditions recently the norm, but also look at longer-term trends to provide greater historical context. There is also a comparison of home prices within the local market, as well as across the Bay Area.

As of early August, the average, weekly mortgage rate for a 30-year fixed rate loan fell below 5% for the first time since April, and stock markets have seen large rebounds since early July – but these and other indicators have been subject to sudden and often dramatic volatility, and their future directions can’t be taken for granted. Within this report is a link to a review of many of the macroeconomic factors at play.

According to some agents, buyer interest has begun to rekindle with the decline in competition, increase in inventory, and economic changes mentioned above, but if this is part of a broader recovery in demand, it has not yet shown up in the statistics – which are lagging indicators of what’s occurring on the ground right now. Monthly data can be volatile, fluctuating according to a wide variety of factors, including market seasonality. Longer-term trends are more meaningful than short-term fluctuations.

Mid-late summer is typically a slower period compared to the big, spring selling season. Autumn sometimes sees a significant spike in new listings and sales prior to the big mid-winter slowdown.

Our reports are not intended to convince you regarding a course of action or to predict the future, but to provide, to the best of our ability, straightforward information and good-faith analysis to assist you in making your own informed decisions. Statistics should be considered very general indicators, and all numbers should be considered approximate. How they apply to any particular property is unknown without a specific comparative market analysis.

Source: Compass

It is impossible to know how median and average value statistics apply to any particular home without a specific comparative market analysis. These analyses were made in good faith with data from sources deemed reliable, but may contain errors and are subject to revision. It is not our intent to convince you of a particular position, but to attempt to provide straightforward data and analysis, so you can make your own informed decisions. Median and average statistics are enormous generalities: There are hundreds of different markets in San Francisco and the Bay Area, each with its own unique dynamics. Median prices and average dollar per square foot values can be and often are affected by other factors besides changes in fair market value. Longer term trends are much more meaningful than short-term.

Compass is a real estate broker licensed by the State of California, DRE 01527235. Equal Housing Opportunity. This report has been prepared solely for information purposes. The information herein is based on or derived from information generally available to the public and/or from sources believed to be reliable. No representation or warranty can be given with respect to the accuracy or completeness of the information. Compass disclaims any and all liability relating to this report, including without limitation any express or implied representations or warranties for statements contained in, and omissions from, the report. Nothing contained herein is intended to be or should be read as any regulatory, legal, tax, accounting or other advice and Compass does not provide such advice. All opinions are subject to change without notice. Compass makes no representation regarding the accuracy of any statements regarding any references to the laws, statutes or regulations of any state are those of the author(s). Past performance is no guarantee of future results.

Santa Clara County Real Estate, July 2022

Leaning into Market Headwinds, Appreciation Rate Drops

The impacts of this year’s severe economic headwinds – soaring inflation and interest rates, stock market declines, fears of recession – on Bay Area real estate markets are accelerating. The first effect was on buyer demand (fewer buyers, offers and listings into contract), leading to changes in supply (more homes for sale, more price reductions), which began to alter buyer and seller psychology and the balance of power between them. Especially after one of the longest, most dramatic upcycles in history, the psychology, circumstances and plans of individual buyers and sellers shift unevenly in the early months of a transition as they try to make sense of changing market realities. Eventually statistics based on closed sales – prices, appreciation rates, overbidding, days on market – slowly start to adjust. Generally speaking, closed sales are lagging indicators of what occurred in the economy and market weeks and months earlier.

If stock market prices are like a jet skier on a triple-espresso, home prices are like a giant cargo ship, which decelerates and turns slowly. It took a few months from when the big economic changes began, but the high year-over-year appreciation rates of recent years are now dropping fast in Bay Area markets, though the degree of any actual, longer-term “correction” to prices, if it occurs, remains to be seen.
A correction is not a crash. The precipitating factor in the 2008 crash – tens of millions of households talked into home loans they couldn’t afford, forcing frantic sales during a recession – does not apply today. Indeed, mortgage payments as a percentage of income are close to all-time lows (and most homeowners’ mortgages are also at historically low rates). Outside the 2008 crash, market corrections over the last 4 decades typically ran from a simple flattening in appreciation, to price adjustments of 5% to 10% (relatively small compared to the appreciation rates which preceded them). It is far too early, with far too many factors at play, to make predictions.

Our reports are not intended to convince you regarding a course of action or to predict the future, but to provide, to the best of our ability, straightforward information and good-faith analysis to assist you in making your own informed decisions. Statistics should be considered very general indicators, and all numbers should be considered approximate. How they apply to any particular property is unknown without a specific comparative market analysis.

An overheated market cooling or normalizing, slowing from an unsustainable rate of acceleration, does not necessarily imply a weak market by historical standards, even if the speed and scale of the change is startling. This report will review year-over-year changes in supply and demand, reflecting the significant adjustments occurring, but also longer-term trends to provide greater context to these recent changes.

Monthly data can be volatile, fluctuating according to a number of factors, including market seasonality. For example, in most Bay Area markets, it is not unusual for median sales prices to peak for the year in spring or early summer. It is best not to jump to definitive conclusions based on a few months of data: Longer-term data is more meaningful than short-term fluctuations.

Different regions and market segments are cooling at differing speeds and each region has unique conditions – and in the Bay Area, each home is relatively unique as well. But barring very special circumstances, markets across the Bay Area (and the country) can be expected to eventually move in roughly parallel directions because of the broad macroeconomic factors at play. Within this report is a link to a review of many of these factors. As of July 7, 2022, according to FHLMC, the average weekly mortgage rate for a 30-year fixed rate loan fell to 5.3% from 5.81% two weeks earlier.

Our reports are not intended to convince you regarding a course of action or to predict the future, but to provide, to the best of our ability, straightforward information and good-faith analysis to assist you in making your own informed decisions. Statistics should be considered very general indicators, and all numbers should be considered approximate. How they apply to any particular property is unknown without a specific comparative market analysis.

Source: Compass

It is impossible to know how median and average value statistics apply to any particular home without a specific comparative market analysis. These analyses were made in good faith with data from sources deemed reliable, but may contain errors and are subject to revision. It is not our intent to convince you of a particular position, but to attempt to provide straightforward data and analysis, so you can make your own informed decisions. Median and average statistics are enormous generalities: There are hundreds of different markets in San Francisco and the Bay Area, each with its own unique dynamics. Median prices and average dollar per square foot values can be and often are affected by other factors besides changes in fair market value. Longer term trends are much more meaningful than short-term.

Compass is a real estate broker licensed by the State of California, DRE 01527235. Equal Housing Opportunity. This report has been prepared solely for information purposes. The information herein is based on or derived from information generally available to the public and/or from sources believed to be reliable. No representation or warranty can be given with respect to the accuracy or completeness of the information. Compass disclaims any and all liability relating to this report, including without limitation any express or implied representations or warranties for statements contained in, and omissions from, the report. Nothing contained herein is intended to be or should be read as any regulatory, legal, tax, accounting or other advice and Compass does not provide such advice. All opinions are subject to change without notice. Compass makes no representation regarding the accuracy of any statements regarding any references to the laws, statutes or regulations of any state are those of the author(s). Past performance is no guarantee of future results.

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