For quite some time I have been making references to the annual sales activity in all of San Mateo County but haven’t posted those charts because I have been waiting for the area I wanted to post them on this blog to be developed.  I felt that I could not wait any longer and have posted those charts on this special edition.  This information is a small part of a presentation I have done for the agents in our office to demonstrate that real estate business cycles are nothing new.   Many of their clients have told them that the financial meltdown is the worst thing that has ever happened to our economy and the real estate market will never recover.  The attached annual charts represent the activity for the years 1999 – 2009 and include information separately for Single Family Residences and Condominium/Townhouses.  In my office presentation but not included here, were significant historical events that I pointed out on these charts to show what happened to the market after each occurrence.  For example, some of these events were Alan Greenspan’s 1999 warning to senior investors about buying .com stocks, Pets.com failure in 2000 signaling the beginning of the “dot com bust”,  the horrific terrorist attacks of September 11, 2001, and several others.

Once this blog site is organized and set up the way I want it to be, I will occasionally post MLS survey statistics based on random locations, time periods, price ranges etc.  They will eventually be located in the box on the right entitled “Download Charts” and that box will probably be renamed “Random Surveys”.  I hope you will find this informative. 

San Mateo County Annual Single Family Residence Number of Sales

San Mateo County Annual Single Family Residence Average Sales Price

San Mateo County Annual Single Family Residence Average Days on Market

San Mateo County Annual Condo/Townhouse Number of Sales

San Mateo County Annual Condo/Townhouse Average Sales Price

San Mateo County Annual Condo/Townhouse Average Days on Market

This is a story about the real estate market in my little corner of the world.

The statistics for this week continue to show an improved real estate market based on the current number of homes listed in each MLS status in the six surveyed communities compared to the previous three years.  The number of homes in the Active Status is down 55.9% from the same time period last year, and up 29% from last week.  One would expect the Active inventory to increase as we enter what is historically the most active season in the real estate market.   To put the raw numbers in perspective, there were 224 Active Listings in 2007, 361 in 2008, 376 in 2009 and currently 355.  2004 had the highest number of closed transactions in all of San Mateo County from 1999 through 2009.  Using that year as a baseline for comparison, there were 198 homes in the Active Status for the six communities surveyed.

The number of homes with Pending Sales continues to be significantly higher the previous three years.  There are currently 248 homes in the Pending Status compared to 179 in 2009, 145 in 2008 and 155 in 2007.  In 2004, the banner year, there were 255 homes in the Pending Status.  By looking at the basic numbers one would presume that the Pending Sales for this year are not too far off from the number of Pending Sales in 2004.  With the market humming as it was back then, I did not track the short sales or REOs.  In fact, based upon what had a happened to Average Sales Prices from 2004 – 2008, it is probably safe to assume that there were little or no Short Sales in 2004.  However, as I had mentioned last week, the current stock of Pending Sales are laden with Short Sales mired in the Short Pay lender approval process.  In fact, of the current total of 255 Pending Sales, 59 (23.14%) are in the city of San Mateo alone.  And three of those Short Sales in San Mateo are listed above $1,000,000.  One last interesting observation is that Belmont and San Mateo each have more properties in the Pending Status than they do in the Active Status.  Redwood Shores is close.

Looking at the Month-to-Date Closed Sales, the current 28 total number of Closed Sales is better than the statistics I’ve provided for 2009 and 2008, but as a matter of disclosure, the high number of closed sales for 2007 is after the second week of May compared to the first week of May in all the other reports.  The reason is that the numbers for the Closed Sales in the first week of May 2007 are not available.  It is in the Closed Sale numbers where I find my optimism about the return of the market.  The number of Month-To-Date Closed Sales on May 9, 2004 was 35 and it appears that we are not too far off the track.  My disappointment comes from the matter I discussed last week and in the paragraph above; Lenders are still taking far too long to approve the Short Sale transactions.  Of the total 28 Month-To-Date Closed Sales…..ONLY ONE was listed as a Short Sale!  Please excuse my forthcoming rant:

What is wrong with these lenders and investors?  Maybe I’m not as smart or as educated as they are but let’s think about this; 1.  Many times, if not most, owners of homes in Short Sales have stopped making payments (A non-performing asset.)  2. By expediting the process, the investor/lender is getting the losing asset off their books. 3. The new buyers (unless the value takes a hit and they have no equity) will be making payments on their new loan.   Even if the new buyer gets a loan from a source other than the Short Pay lender, the Short Pay lender should be picking up new loans from other properties that have closed where they weren’t involved with a short pay. 5. The closed sale numbers should then look better than 2004.

An improvement in a market is more than just more homes selling.  It also means that prices are stable and/or increasing.  Of the current 28 Closed Sales, 14 of them (ONE HALF) have sold for the list price or more. 

Not that the Average Sales Prices are an accurate indicator the change in value, it is interesting data to follow.  Here are the Average Annual Sales Prices for the Single Family Residences in all of San Mateo County:

1999 = $619,583                 2005 = $1,095,951

2000 = $843,318                 2006 = $1,124,953

2001 = $791,141                 2007 = $1,209,838

2002 = $786,707                 2008 = $1,038,395

2003 = $805,310                 2009= $876,820

2004 = $956,229                 2010 = $913,325  (Through March 31)

Chart and Spreadsheets Attachments:

May 09, 2010 Chart

May 09, 2010 Spreadsheet

May 10, 2009 Spreadsheet

May 11, 2008 Spreadsheet

May 13, 2007 Spreadsheet

May 09, 2004 Spreadsheet

The trend lines for this week continue to suggest that the Active inventory is declining while demand is increasing.   Prices may have bottomed out and some factors are in place to see a potential reversal of the downward pricing spiral.  As stated in this blog frequently, it is important to note that the pricing and subsequent market value of homes varies dramatically from neighborhood to neighborhood and the condition and amenities of each home.

This week the number of homes in Active status is lower by 1.7% than last week and is 10.62% lower than last year at this same time period.  The number of homes in the Pending status is 58.64% higher than last year at this time.  Closed sales for April 2010 are 10.53% higher than last April.  The number of Closed sales skew the number for Pending sales because longer escrows are required for, including but not limited to; the short sales, tighter lending requirements for buyers and tougher lender requirements for the home.

Below are the numbers by cities and the count of short sales and bank owned properties:

City                                        Active Status                      Pending  Status                 Closed Escrows

                                                Short Sale/REO                 Short Sale/REO                 Short Sale/REO

Belmont                               1/2                                         1/1                                         7/3

Burlingame                         6/0                                         8/0                                         2/0

Foster City                          2/1                                         3/0                                         4/0

Hillsborough                       2/1                                         4/10                                       0/0

Redwood Shores             1/1                                         1/2                                         0/1

San Mateo                          26/5                                       57/10                                     4/0

Pay particular attention the statistics for the City of San Mateo.  57 Pending sales are short sales, yet there were only 4 of the 44 Closed sales that were reported as Short sales.  10 in San Mateo’s Pending sales were REO and no REO’s were reported as Closed in San Mateo in April.  tThese figures would clearly indicate to me that I would pay a nominal premium in price to purchase a home that is not a short sale because once I remove my contingencies, I know the home is mine.  But it is unlikely that most buyers will take this advice as everyone is out of the “deal”.  And many times they will be missing out of other opportunities while waiting for the bank short pay approval.  It will be interesting to see which markets, if any, will be negatively impacted by unemployment, short sales, bank-owned properties, and most likely, interest rates. 

 Lawrence Yun, Chief Economist of the National  Association of Realtors stated in their May 2010 issue; “Mortgage interest rates have been historically low for a long time, but expect them to start climbing soon.  Thirty-year fixed rates may rise to 6 percent by December and to about 6.5 percent at the end of 2011; rates were about 5 percent in early April. 

It’s tempting to think the Federal Reserve’s recent pullback from mortgage-backed securities purchases will drive interest rates higher.

But since it ended those purchases at the end of March, as it had planned to do, the impact on rates has been negligible.  By all appearances, private investors have filled the void and are absorbing the MBS supply, keeping rates down.   Predictable macro-economic factors – the continuing high U.S. budget deficit and the recovering economy – are the main reasons rates are likely to climb.”

I have been told that historically, but I haven’t verified, that the market activity increases just as rates start to go up because people want to lock in the low rates before they go higher.  The tax credits have been attributed to the surge in first time home buyers along with the affordability factor.  Will an increase in rates fuel the market as our economy improves?

Until next week.

5/2/2010 Chart

5/2/2010 Spreadsheet

5/5/2009 Spreadsheet

5/4/2008 Spreadsheet

5/5/2007 Spreadsheet

5/3/2004 Spreadsheet