Cambrian Housing market is HOT!

For months now, the national news has been reporting that residential real estate prices have turned the corner and are rising throughout most areas of the country. Of course, real estate trends are local events, and nowhere is the rise in prices more evident than in the bay area. If you own a home in the Cambrian area of San Jose or have been considering this area, you may be surprised by the strength of the recovery.
I love the Cambrian area of San Jose for many reasons, including its central location to work and play, good public schools and reasonable prices, relative to other parts of Silicon Valley. Besides the economy, this combination of factors really helps home prices over time. The positive sales trends for homes in Cambrian area began in March 2012 and have continued mostly unabated right thru the generally slower seasonal period (Oct-Dec). My intention is to provide readers with an ongoing picture of the overall Cambrian area housing market, along with specific market topics that may be of interest.
Two key figures that indicate the strength of any real estate market are “average days on market” (avg DOM) and the “sale to list price ratio”. Prior to March 2012, the avg DOM in Cambrian area were well above 2 months and often pushing 3 months or more. In fact, this figure for all of San Jose was well above 3 months since the great recession began. Suddenly, beginning in March 2012, the avg DOM dropped to 40 days (95124) and 27 days (95118), and continued to mostly trend down all the way up to November (which is a notoriously slow period). The low point was an amazing 19 days in September (95124 and 19 days in Oct (95118). That means homes on average were selling in less than 3 weeks from the time they hit the MLS!!! At the same time, the sale to list price ratio rose to above 100%, which was a first in recent memory. This trend has continued strong thru today, realizing its highest point in October at 105% (95124) and December at just under 105% (95118). These two indicators are key to understanding the current strength of the seller’s market which we now find ourselves.
Ask any real estate agent, and they will likely tell you that this strong seller’s market is caused by simple supply and demand economics. On the demand side, historically low interest rates, strong investor demand and low prices (affordability), buoyed by higher consumer confidence, are all factors suddenly adding a sense of urgency to the markets. On the supply side, very little new inventory coming on the market during most of 2012, has made it difficult for buyers to find a home at their price points. Starting in the spring of 2012, most months we saw fewer new listings hitting the market than closed sales. With less inventory coming on in many months than was leaving the market, we continued to see the downward decline of inventory (ie supply). This combination of strong demand and weak supply has resulted in the strong upward push in median home prices.

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