Condo markets in the Bay Area are on fire, with most “priced right” properties getting multiple offers. Real estate experts agree that people have finally begun realizing it’s less expensive to buy a condo in many areas of San Jose, such as Cambrian, than pay rent. Because of their lower cost of entry, a 25% down payment on a condo is a manageable amount of money for many to come up with. Of course, at the current rate of price appreciation, this situation may not last for very long.
Since the summer, the average days on market (avg DOM) for condos in the Cambrian 95124 zip code has ranged from as little as 9 days to as much as 25 days (even thru the typically slow months of Nov and Dec). This is incredible when you think about it. On average, condos in Cambrian are basically selling the week after their 1st weekend open house. The stats are even better in Cambrian zip 95118, where the avg DOM in July was an unbelievable 6 days!!! Such demand inevitably causes bidding wars that raise prices well above list price. In 95124, selling prices above list price started in July and peaked at 107% of list in the month of August. That is pretty phenomenal until you consider condo sales in 95118, where selling prices were above asking every month of 2012, and peaking at an eye-popping 122% of list in the month of August.
It all makes sense when one considers that the majority of condos in both zip codes can be fetched for between $200K-600K. Considering the central location to great amenities, freeways and work places, as well as good public schools, these prices still look great for Bay Area living. In my opinion, this is exactly why the time to buy is now, before prices rise further.
A red hot sales market is always driven by the basic laws of supply and demand. For most months (since the summer), there have been less units being listed than sold, driving inventory levels of available units down to historically low levels. This lack of supply, coupled with demand that seems to be driven by higher consumer confidence, low interest rates and a sense of “buy now” before the market goes up further, is all combining to give us the crazy markets we are seeing today. Nobody knows how long it will last, although many of these factors such as low interest rates are expected to stay in place for some time to come. My prediction, don’t expect prices to come down or even slow down for some time to come.