Why have home sales gone down in December, January, and February while the median price has gone up?
First, is what is selling. The foreclosure market in the Bay Area makes up about 37% of sales. While this is a lot, it is down from the peak in February 2009 where foreclosures made up 52% of sales. This decline translates into a lower number of sales. In fact, in many hot foreclosure/short sale markets, inventory is down to one to two months.
Second, many buyers front-loaded their purchases in September, October, and November 2009 because they thought the first-time buyers credit would expire by November 30, 2009. This left fewer buyers in December, January, and February to buy homes.
Third, the middle tier of the market is becoming active with many areas seeing multiple offers. The result is that inventory is being bought up faster than new inventory is coming to replace it.
Fourth, many of these multiple offer situations are all cash deals (27% of all sales in February 2010). This means that the median price across the Bay Area is up over 20% from a year ago. Just remember that is not real appreciation – its simply the higher end markets selling again versus mostly the lower end last year. Yet, we can say that prices are really up in the Bay Area – not 20%, but 3-4% in real terms. Real estate is definitely looking better.
This is an excerpt from Carole’s monthly newsletter which contains great information on the Real Estate market of the Bay area and other helpful tips. Check out her site to sign up to receive her newsletter!
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Related posts:
- The Median Home Sales Price Fell Nationally, But “National” Data Is Irrelevant
- Existing Home Sales Unexpectedly Drop In February
- Why “Median Sales Price” Reports Aren’t Helpful For Housing Markets
Carole Rodoni was formerly President of Fox and Carskadon Real Estate, Chief Operating Officer of Cornish and Carey Real Estate, and President of Alain Pinel Realtors. She is a renowned speaker on the economy and real estate and is currently the President of her own consulting company, Bamboo Consulting.
Carole has served on the Board of Regents of Santa Clara University, is a Member of the Board of Directors of BayNet and CondoWorks, and has been a guest columnist for the San Francisco Examiner. She also is a frequent guest speaker on several radio and TV programs across the Bay Area.
