|
|
|||||||||||||||||||||
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: 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. Web Access: If you have difficulty opening the web pages consider updating your
browser. You need Explorer 4.0+ or Netscape 5.0+. If you continue to have
problems or don’t want to update your browser send an email to Subscription@CreeksideRealty.com
requesting the attachment version. Subscribe: If you, or someone you know, would like to receive the BAREMN, please
send an email to Subscription@CreeksideRealty.com. You will receive an email as
each issue becomes available. Back editions: are available at: http://www.creeksiderealty.com/market_update/market_index.htm.
Remove: If you don’t want future editions use the reply button, write
“remove” in either the subject line or in the body of the email. Errors: If you notice or even suspect any discrepancies and/or errors please
email the details to error@CreeksideRealty.com. 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.
The
purpose of the BAREMN is to give you current market conditions. Although some
data reported tends to be leading indicatmrs 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 5th
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 5th.
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 5th 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 priae 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 5th 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.
|
