Belmont, CA

If you're wondering where the housing market is headed in Belmont you can get a good indication by these two snap shots taken for the month of March 2007 and 2009.

We use 2007 as a benchmark since it was the last year where the impact of the housing crises had not yet been realized in our market.

Here are some startling yet revealing statistics:

The far right column of this chart says it all-every indicator in red illustrates a deterioration of the seller's market which has prevailed for so long.

You may notice that even though larger homes sold in 2009 the median price still dropped $161,500 in 2009. Adjusting for this, the real median price drop is actually $252,850 or 26%.

Today, on average it will take almost three times as long to sell a home in Belmont; when you do sell you are likely to receive under you asking price. In fact statistically you no longer have any chance of getting over your asking price and the odds of getting less than your asking price has increased by 50%. Sellers now receive on average only 96% of what they ask for their home compared to over 103% in 2007. In real dollars that translates into a swing of $52,000.

In the end, this much anticipated market correction will produce a more stable real estate market. Affordability is increasing and eventually sales will increase as buyers feel more optimistic about the future-including job security and housing stability.

Considering the drop in value we are experiencing, for sellers who are debating a moving out of the area, sooner rather than later will probably produce a better result. In all likelihood it will be many years before inflation drives price points back to levels seen in 2007.

A down market is typically an attractive time for sellers who are thinking of a move up. The logic behind this is a more expensive home is less in real dollars-and also saves you thousands of dollars in property taxes over the life of your ownership. Our current market also includes attractive Interest rates that are at historic lows-though Jumbo loans are not enjoying the full benefit of the government's intervention.

Buyers who have stable jobs and are planning to live in their first home for five years or more are benefitting the most from the current conditions. Prices are at a low not seen in years, interest rates are at historic lows, the government is paying them $8,000 to buy a home this year, multiple offers are for the most part non-existent and the high inventory levels means there are a lot of homes to choose from.

In every market, there are opportunities. If you would like advice on how to make the most of our current economic climate give us a call at (650) 508-1441.

*Data retreived from the MLS

The information contained in this post is educational and intended for informational purposes only. It does not constitute legal or tax advice, nor does it substitute for legal or tax advice.

This first month of the year is in the books as we close out the sales for January 2009 in Belmont.

With 40 homes on the market, inventory is showing signs of creeping up. Looking back on past January inventory levels, they usually hover in the low 20 range. Higher inventory levels typically means sellers will get less than their asking price as the supply and demand is in imbalance.

It's always interesting for us to look and see why inventory is up. There can be several factors but they almost all have a common thread and that's the market is slowing down.

Most buyers can easily get a loan, despite whatever impression from the media you might have. Sure you need to have a better credit score than last year, and you actually have to put some money down now, but lenders are happy to make good loans and they're doing so at a frenetic pace.

But if buyers are afraid that the market is tanking, or that they may be about of a job soon, they'll sit on the sidelines and the inventory will grow.

Seller's who think they had better get out now, or sadly ones who have perhaps already lost their job, need an exit strategy too-and they can't wait for the market values to return.

Together these factors cause inventory levels to grow and that has an inverse relationship on values.

Here are Belmont home sales for the month of January, 2009. The median price has dropped below $900,000 for the last two months in a row; and though we occasionally dip down under $ 900K due to a shift in the size of homes selling, one has to go back to 2004 to see the median price stay this low.

We’ve got a lot to cover at the beginning of a new year as we go back and examine all of 2008 as well as the month of December.

This is our month-end report of home sales in Belmont for the month of December 2008. Note that while the median price dropped significantly from November, so did the size home which sold in December. The difference in size of homes in the two months was 190 square feet. At the price per square foot of $514 that could account for $97,660 of the difference in median home price—meaning that home prices were actually higher in December if you factor in for the size of home which sold.

Sales were up too. There were eight sales in November and eleven in December. That’s an anomaly as typically sales in November are greater than December. We’ll chalk that one up to the dire economic news in October (October sales are November’s closings).

Click on the chart for a readable picture.

Those of you who have been following us for some time know at the beginning of each year we re-cap the previous year and take a stab at where the market might be headed in the upcoming year. We’re still compiling the numbers for 2008 and the analysis will take another few days to complete but preliminarily, it appears Belmont fared better than most of the Bay Area and even her neighboring cities. Check back next week for a full run down and re-cap of 2008.

Before I wrote this post, I went back and re-read our assessment of where the market might be headed in 2008. Of course very few people could have predicted that the dire real estate woes would drag the entire economy to the brink of collapse and we were no better at guessing that than most. However, for your enjoyment we’ve clipped a segment out of our 2008 market forecast made on January 4^th 2008—we’ve highlighted some of the more interesting comments:

EXCERPT FROM OUR 2008 MARKET FORECAST:

“This is precisely why the Peninsula should fare better than other areas [in 2008].

· There is little room for expansion

· Few new development has occurred in the past five years as compared to areas with growth potential

· High paying jobs are plentiful

· Low rate of speculative ownership

· Few sub-prime loans

Of course not to be overlooked or under-appreciated is the desire to live in the technologically and culturally rich Bay Area.

However, it’s entirely possible we are on a precipice which could collapse at any time. What is impacting the Peninsula is the rising cost of energy—especially gasoline. What could have an incalculable impact would be a prolonged recession and loss of local jobs; either of these would undoubtedly bring a decrease in home values to the Peninsula. So much of the values in the Bay Area rely on the perception that it’s a great place to live. A natural disaster (such as a large earthquake) or terrorist attack would also have a detrimental economic effect on housing. Buyers who are sitting on the sideline and not availing themselves of the current conditions are essentially betting on any one of the former conditions manifesting in the near future.”

Thankfully, the events we eluded to which did not occur was a terrorist attack or natural disaster. Investors did begin to snap up undervalued properties in the central valley and a few of the nine bay area counties which were hard hit by foreclosures. This had the desired effect of liquidating the tidal wave of inventory but the undesirable effect of sinking the reported median price by skewing the sales mix to smaller homes (since smaller and distressed properties sell for less). The media continued its relentless and incessant reporting of the falling median home price without the slightest application of responsible journalism. Bombarded by the media’s reckless lack of analysis, invariably many buyers were frightened by the reports of falling home values and quite reasonably and expectedly took a “wait and see” attitude. That’s not to say the media was wrong, they just reported numbers without the necessary perspective leading many to believe the housing situation to be far worse than it was in some areas, and far better in others.

What’s in store for 2009?

With the perfunctory disclaimer that past performance does not predict future results, we fear in 2009 it may however be quite true. We wouldn’t be surprised at all to see a continuation of the stagnant real estate market which has had a choke-hold on home values for the past two years. Interestingly, the last major downturn in real estate which began in 1989 was caused by an overall weak economy and most importantly the loss of jobs. In contrast, the current housing downturn has in effect created the recession—a causal reversal from past cycles.

That’s a long way of saying that housing cannot recover until the economy does. And while it appeared in the second quarter of 2008 that the real estate recovery might begin in 2009, we since believe that will be pushed out another year. That said, any recovery will begin with a leveling off of inventory and declining home values. A period of stagnant home values will invariably last for another year or two following the price plateau as buyers still wary of a volatile market will only reluctantly reenter the market. Most will wait too long and catch prices on the way back up but there’s no telling when that will happen. We’re not telling you to run out and buy a home as part of a fear based campaign, “Hurry or you may miss the bottom”. We learned long ago to resist trying to explain to people why they should buy a home and rather help those who are already motivated. Like the old saying, “You can lead a horse to water…” but he has to be thirsty.

Cheers,

Drew

Many of you saw this home on our web page and at the open house. Several homes in the Hallmark area of Belmont have languished on the market for months without selling and everyone has been asking us how we sold our listing so fast. Well, here's the answer in video form. Obviously we had to price the home attractively but we also had to add value. Preparing a home for sale takes a lot more than staging. Thanks to a cooperative seller, we transformed this home in only a few weeks and the transition was phenomenal--then we listed and sold the home in a week. Take a quick peek at this short video where we show you before and after results--then call us to transform your home for sale.

Download Revitalized Belmont Home