Belmont, CA

Could Belmont Have Hit Bottom and Now Be Rising?

Tuesday is our Broker Tour Day. We get a list of all new listings available for us to see on Tuesday by late afternoon on Monday. Belmont, generally one of the hidden gems in our Fantasy Island had 10 homes over $1 Million Dollars today. Belmont had a total of 14 new properties on tour. That's saying something.

Altos Research sent me their latest data yesterday. Last week the average priced home in Belmont was $1,085,968 and the median priced home was $999,000. Bet that changes next week. Only 3 properties sold and 1/3 of the listings had price reductions. Altos tells me that Belmont is a Cold!Buyers Market. You'd never know it looking at how prices have risen and inventory has climbed since the first of the year.

Here's what's telling me that we might be past the bottom of the early 2008 market. Here's the Market Action Index. The Market Action Index illustrates the balance between supply and demand using a statistical function of the current rate of sale versus current inventory.

See the little curve upward at the end of the downward line? That's the first indicator that things have changed. What happens next week, and again the following week will tell us more, but something is going on in Belmont. Generally when the bottom end of a market improves that's a signal that the rest of the market is strengthening. This is something I'll be watching and reporting back about.

The price of single family homes is a function of supply and demand. It's simple economics at its best. While Belmont is still a strong buyer's market prices for new listings are coming to market at much higher prices than one would expect to see in a cold buyer's market. So what gives?

Inventory levels have been relatively consistent to sales but my bet is those new houses coming to market at these high prices may not sustain those prices for long. I bet we'll see a lot of price reductions unless all of the buyers out there, waiting and waiting for something to happen, decide to make offers.

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Belmont Housing Market Update-March 2008 (edit/delete)

BELMONT'S MEDIAN HOME VALUE IN MARCH

Belmont's median price rose $13,000 in March of 2008 to $984,500 from $971,500 in March 2007-a 1.3% increase. As always, we further examine the median size home to see if larger or smaller homes selling during the sample period could influence the numbers. Since the median size home for both periods was essentially the same, no adjustment was made this month.

SALES CONTINUE TO BE DOWN

Only 14 homes closed escrow in March as compared to 28 for the same period last year-clearly underscoring the unease in the housing market and the economy as a whole.

STRIKING A BALANCE

The existing inventory of homes for sale is lower than usual for this time of year which helps bring equilibrium to the supply vs. demand impact on housing prices. Factors which are not as readily born out by statistics can also influence local housing values such as sellers who feel no pressure to sell and hold firm on their price. One indication of that can be seen in the time it takes a home to sell, or the "Days on Market "statistic, (DOM) which has doubled from 9 days in 2007 to 18 in 2008.

BELMONT'S MEDIAN HOME VALUE IN MARCH

Belmont's median price rose $13,000 in March of 2008 to $984,500 from $971,500 in March 2007-a 1.3% increase. As always, we further examine the median size home to see if larger or smaller homes selling during the sample period could influence the numbers. Since the median size home for both periods was essentially the same, no adjustment was made this month.

SALES CONTINUE TO BE DOWN

Only 14 homes closed escrow in March as compared to 28 for the same period last year-clearly underscoring the unease in the housing market and the economy as a whole.

STRIKING A BALANCE

The existing inventory of homes for sale is lower than usual for this time of year which helps bring equilibrium to the supply vs. demand impact on housing prices. Factors which are not as readily born out by statistics can also influence local housing values such as sellers who feel no pressure to sell and hold firm on their price. One indication of that can be seen in the time it takes a home to sell, or the "Days on Market "statistic, (DOM) which has doubled from 9 days in 2007 to 18 in 2008.

Belmont

It's interesting to note that in the last two years, for the first six months virtually the same number of homes sold-94 in 2006 and 92 in 2007.

After the July news of the mortgage industry financial issues, the overall uncertainty of the market, and undoubtedly with anticipation that homes values may drop, 2007 saw only 127 sales as compared to 167 in 2006 for the second half of the year.

Can one believe the reported median price for Belmont?

The MLS system reported the aggregate Belmont real estate median home price in 2006 to be $925,000. That rose to $945,000 in 2007 or a little over 4%. Further analysis reveals that the median size home which sold in 2007 was 95 square feet larger.

Understanding the median home sold in Belmont during 2007 sold for $548 per square foot and the median size home sold in 2007 was 95 square feet larger, this could account for as much as $52,000 in the reported median sale price for 2007. Which means the actual median price in Belmont was closer to $892,000 or a decrease of 3.4%.

But it matter less what happened for the entire year if the market incurred a sudden and radial change later in the year. In other words, even if the market went up 10% for the first six months if it dropped 15% in the second six months the current value as of December is more important.

Looking at Belmont's median home price at the end of December in 2007 as compared to December of 2006, we see that in 2006 the median home price was only $850,000 and at the end of 2007 a whopping $1,025,000. Applying the same logic and adjusting for whether larger or smaller homes sold during the two periods, we see that in fact the median size home sold in 2007 was 370 square feet larger. Using our above price per square foot number of $548/sq. ft that eliminated $202,750 of apparent appreciation and means the true median price would be closer to $822,000 in 2007 as compared to $850,000 in 2006 or a 3.2% decrease year over year.

•· This report has been revised with the release of additional data. Sources used in data analysis included Multiple Listing Service searches and REILPro Statistics.

↑Belmont ended the year with 17 sales in December as compared to 14 in 2006 and off the high of 25 in 2005.

That's a glimpse the market may not be getting much worse.

↑Of those 17 sales, eight sold over the seller's asking price, two sold at asking and seven homes sold under asking. We indicate this to be positive since it underscores the market is still healthy in certain segments.

↓Inventory remains higher than usual for this time of year.

One of the factors which helped keep inventory levels in check was the paltry number of new listings to choose from in the spring and summer.