The BAREMN reports on market conditions individually for each of the five RE InfoLink Counties, San Mateo, Santa Clara, Santa Cruz, Monterey and San Benito. The data is separated for single-family homes and townhouse/condos. Multi-unit properties are reported for just San Mateo and Santa Clara Counties. Hopefully you will find the BAREMN informative and well organized.

Some of the unique data points in the BAREMN are:

            a)  90-day market indicator: This is where we expect public perception will be in another 90 days. This is based on
                today's market conditions using our objective proprietary formula. This calculation has fairly accurately modeled the market
                back to July 1993 and forecasted the market since September 1998.

            b)    DUI Days of Unsold Inventory. This is the length of time that it would take to sell the existing unsold inventory at the current rate of sales. This assumes no new or withdrawn listings and the rate of sales would stay unchanged. Unsold inventory is used as we only count properties currently on the market without a contract. This highlights the difference to many inventory counts that include some but not all listings that are in escrow.

1)     Inventory is the number of properties currently available for sale;

2)     Median and average days on market for available listings reports;

3)     10 percentile, median (50 percentile), and 90 percentile Sold price for monthly sales and monthly closings are reported (monthly sales data must wait until the Sold price for these properties become available);

4)     Percentage of properties where the Sold price is greater than List price;

5)     Percentage of properties where the Sold price is less than List price;

6)     Median DOM for monthly sales and monthly closings opposed to only reporting average;

7)     A measure of percentage of monthly sales which fail to close escrow;

8)     Median List price for monthly closings opposed to reporting only the Sold price;

9)     Updated number of closings for pervious months to account for late reporting.

Additionally, the BAREMN reports the more traditional real estate market data points such as:

10)   Median List price of monthly sales;

11)   Average Sold price to List price ratio for monthly closings;

12) Average days on the market for monthly sales and for monthly closings;

13) Number of monthly sales and monthly closings for the month;

14) Median Sold price for monthly closing.

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Warning: The research done to gather the data in the BAREMN involves examining about 90,000 listings. With that much data, inaccuracies will occur. Additionally, numerous assumptions are made on how to handle this volume of data. Care is taken in gathering and processing the data and the information within this report is deemed reliable. BUT IT IS NOT GUARANTEED. The real estate market is cyclical and will continue to have its ups and downs. Past performance cannot determine future performance. The purpose of the BAREMN is to give you current and consistent market conditions by reporting leading market indicators in addition to traditional real estate data.

You will find links to the above information through the web site via the following links.

INTRODUCTION

The purpose of the BAREMN is to give you current market conditions. Although some data reported tends to be leading indicators of the market, BAREMN does not forecast what the market will do. Unprecedented events like the terrorist events of September 11th will impact the real estate market at least in the short term. Past performance cannot determine future performance because the real estate market will adjust to past experiences thus changing the future performance.

Here are some quick abbreviations used throughout the BAREMN.

            DOM - days on the market

            LP - List price

            MLS - multiple listing service

            REIL - Real Estate InfoLink or RE InfoLink (the local MLS)

            SBT - San Benito County

            SCC - Santa Clara County

            SFH - Single-family home

            SMC - San Mateo County

            SP - Sold price

            SZC - Santa Cruz County

            TFT - transaction fallen through

            Status 1 - properties actively on the market without any contract

            Status 2 - properties on the market with an accepted offer but with a 72-hour release clause

            Status 3 - properties on the market that are in escrow but available for a backup offer

Most properties will fall into just one of four categories: Available, Sales, Closing and Off-Market. However, if a property has a quick escrow it might be in both the sales and closings category. Although DOM data appears in each of the four categories the value is different for each category and based on the properties in that particular category.

Available – This category groups properties that are available for purchase (status 1 only). REIL includes status 2 & 3, properties as inventory even though these properties are in already escrow. BAREMN uses only status 1 as it more accurately represents the market supply. BAREMN gathers market data on the 5^th of the month, as opposed to the end of the month, in order to concur with REIL’s policy. A column in the tables entitled “July” would actually preset data as of August 5^th.

            Inventory is how many properties are currently available for purchase. This data includes only status 1 properties. Inventory measures the supply level.

Days on the Market (DOM) reports how long the current listings have been on the market without selling. BAREMN reports both the median and the average DOM. Although average DOM is more widely used, the median is more representative of the market trends, just as median price is more representative than average price. The median DOM indicates that 50% of properties sell in less than that amount of time. Average DOM is the average time on the market for all properties and is subject to skewing even if just one property takes much longer than normal to sell. One property has bee on the market continuously since June 1996. A method of determining market equilibrium is when DOM is the same for the sales and closings categories. Another alternative method is when the DOM for available properties remains unchanged. DOM data is based on continuous days on the market and is only reset to zero if a property is off the market for at least 30 days. Many sources report DOM based on the list date that can be reset by RE-LISTING for a $25 fee. Therefore this is not representative of the market conditions. Re-listings have increased this year. The five county area has used 64,862 listings in 2001 compared with 52,227 listings in 1999 and 51,592 listings for 2000. BAREMN uses continuous original list date because this can only be reset if the property is off the market for at least 30 days.

Sales category This second category covers properties for which a sale was initiated (offer accepted) during the month indicated. Only sales that are still in escrow or have closed by the 5^th of the following month are counted. This data is significant as it groups properties based on when the contracts were negotiated and therefore is more reflective of market conditions. The drawback is the Sold price information is not available until the escrows close. This is why any figure requiring the Sold price is not available for the current month and does not become an accurate estimation for a couple additional months.

            Sold Price is the price received by sellers. BAREMN reports 3 different Sold prices. 1) 10 percentile Sold price; 2) median or 50 percentile Sold price; and 3) 90 percentile Sold price. Only the median Sold Price is widely reported. The additional prices give the reader a better understanding of the price distribution. 80% of all properties are sandwiched between the 10 and 90 percentile price. Average (mean) price is not reported in the BAREMN as one high-end sale can have a significant impact. For example, during April 2001 if just one additional home sold at $5 Million the average price would have increased by $6,600, while the median would have remained unchanged. Unfortunately, the Sold price is not available until the escrows close which takes another month or longer. The Sold price data is recalculated each month to reflect additional closings and is subject to change for several months. Individual property values tend to drop more than the median, because buyers willing to purchase in a buyer’s market spend the amount for which they qualify. These buyers will get more house or nicer areas for the same purchase price. This means median price is relatively more stable than individual property values. During the 1989 slowdown median prices dropped about 10% while property values dropped 25 to 30%. Property values fell 2.5 to 3 times more than the median price. The 2001 slowdown disproportionately impacted properties above the median price.

            List price is the median asking price at the time the offer was accepted. This masks any price reductions the sellers made prior to accepting the offer. Although data based on the original List price would be useful information, current MLS policy resets the original List price every time a listing agent pays $25 to “re-list” the property. This makes data based on the original List price useless because the listing agent can control it. It is unfortunate that the same 30-day rule used for OLD is no longer applied to OLP.

            SP/LP average - Sold price to List price ratio is one of the few times average is appropriate. This is because some homes sell above asking price (even in a buyer’s market) and other homes sell below asking (even in a seller’s market). Therefore, there is a strong tendency for the median to always be 100%. Unlike price, when taking a ratio it is difficult to have one property significantly influence the figure for the rest of the transactions. It would be nice to calculate this ratio based on the true seller’s original List price, but that data is not readily available. BAREMN uses the List price at the time the offer is accepted. The ratios contained in the BAREMN will NOT agree with the REIL’s ratio, because REIL uses the price at the time the property is re-listed. Read the “re-listing” comment in the DOM paragraph above.

            % SP>LP is the percentage of properties where the Sold price was greater than the List price at the time the offer was accepted. Because this compares the asking price at the time the offer was accepted, if a seller reduces the initial asking price and then gets more than the new reduced asking price the ratio would be greater than 100%, even if the Sold price is lower than their original asking price.

            % SP<LP is the percentage of properties where Sold price was lower than the asking price at the time of the offer’s acceptance.

            Days on the Market (DOM) see explanation in the “Available” category above. The data is based on the properties that accepted a offer during the month indicated.

            # Sales is the number of sales initiated (offers accepted) during the month that are either still in escrow or closed by the 5^th of the following month. This does not account for the significant weekly cycle in reporting sales, but it is included for thoroughness, as most other reports will compare monthly volume.

%TFT is the percent of transactions fall through (fail to close). This number will increase rapidly for the first few months as transactions continue to fall out of escrow. Consequently, direct month-to-month or year-to-year comparisons are difficult until most of the escrows have either closed or failed, but significant trends can be noticed. %TFT is not an absolute number because July transactions that fail prior to August 5th are not counted as a July sale. %TFT does give a consistent objective method of measuring the relative percentage of transactions that are failing to close. As expected, %TFT increased significantly from 1999 and 2000 to 2001. During the earlier period a seller could pick the best offer. Now the seller must decide to work with whatever offer is written. In a slowing economy, some buyers lose their jobs while in escrow and the frequency of buyers’ remorse typically increases. Both prevent those transactions from closing.

Closings category This third category is based on properties that closed escrow during the month. Most types of data are the same as for monthly sales category. The difference is the information is based on properties that closed during the month. The advantage is the Sold price is immediately available. Refer to the sales category for explanation of the types of data. The offers on this group of properties were accepted during a multi-month time period. Therefore, marketing trends are less obvious especially during times of rapid change.

#Closings the number of closings reported to the MLS monthly. There is a weekly cycle with more transactions closing on Friday and fewer closing on Monday. However, there is a much stronger monthly cycle with more transactions closing at the end of the month to minimize prepaid interest. Comparing the number of closings monthly does make some sense.

Updated# is an adjusted number of reported closings during the specified month. These “missing” transactions are NOT included in the other data. Nor is this missed data reported by REIL. This discrepancy is typically caused by agents failing to report closings in a timely manner, or failing to stop an automatic reporting when a transaction falls out of escrow. The updated number will usually be higher than the figure originally reported. The updated number lets you know the magnitude of the problem and is a good reminder that in statistics there is no right answer. General trends are what are important.

Off-Market category The fourth and last category is information based on properties that were taken off the market during the month without being sold. In 1999 and 2000 the number of properties in this category was insignificant. However, in recent months Off-Market represented significant number of the properties. In October Off-Market properties actually exceeded the number of closings in SCC. Clearly, the off-market category has become significant.

            DOM is the same as for available listings but based on those properties taken off the market.

            % Off is the percentage of properties that were take off the market during the month compared with the number of monthly sales.

Condo/townhouse market – accounts for approximately one-quarter (1/4) of the total transactions in each County and a significantly smaller percentage based on dollar volume due to their relatively lower price. The condo market tends to follow the single-family market. By reading the single-family analysis while looking at the condo data you can understand the local condo market. In general, condos are also slowing and values are declining. Condo prices are approaching the previous year’s level but are still slightly higher than one year ago. San Benito County condo data is not reported because there are not enough sales to justify a statistical analysis.

Media vs Creekside Realty
The media typically uses data from public records that often combine condos/townhouses with single-family homes. Our data is based on MLS data, which allows separation of this data. We believe the MLS data is more reflective of actual real estate market conditions in part because related party transactions are excluded. Because the media uses public records a lot of the most expensive transactions are not counted as the transfer tax is recorded on the back of the grant deed. The media frequently combines data for the 9-Counties that touch the Bay. Although Santa Clara / San Mateo border often leads local trends, the current market trends seems to being influenced by the slow-down in the outlaying areas and collapsing back onto the San Mateo/Santa Clara County border. We believe it is important to look at each County separately to more accurately determine real estate market conditions because real estate remains a local investment.