The Last 30 Days (Feb'08 Data)

March 24, 2008

The Last 30 Days (Feb'08 Data)

House prices in Silicon Valley make most of their annual increases each spring.

We've been expressing this information as follows:

2003: 0.0%
2004: +1.8%
2005: -0.7%
2006: -7.8% (= -$60.5K!!)
2007: -7.7% (= -$55K!!)

Starting in 2008, we refined this data to:

Feb-Jun Balance Chg%

2003: +$37K    -$4K
2004: +$126K   -$18K
2005:  +$95K   -$5K  -0.7%
2006: +$65K   -$56K -7.8% (= -$60.5K!!)
2007: +$81K   -$52K -7.7% (= -$55K!!)

2008:* +$35K -$57.5K

*= so far, obviously...

On balance, sellers made their profits (or buyers paid the most premium) to buy in the February through June selling season. Outside of those months, even during once-in-two-generations price blow-off years, prices went down.

Expressed in our usual historic chart, it looks like this:

Resale

Median 2003   2004   2005   2006   2007   2008
Jan    -$4K -$47K    -0-   +$5K   -0-   -$58K
Feb_   +$7K +$52K +$22K +$17K +$39K +$35K
Mar   -$10K +$39K +$33K +$13K   +$6K
Apr   +$15K +$11K +$17K -$10K +$48K
May    -$4K +$15K   +$8K +$30K   -$9K
Jun   +$29K   +$9K +$15K +$15K   -$3K
Jul   -$24K   -$9K   -$5K -$20K +$15K
Aug   +$17K   -0-   +$14K -$25K   -$1K
Sep  _ -$3K   +$5K   -$9K +$10K -$30K
Oct   +$10K   +$5K   +$9K   -$2K  +$11K
Nov   _ -0-   -0-    +$1K    +1K  +$13K
Dec    _-0- +$10K -$15K -$25K -$60K
Tot   +$33K +$90K +$90K   +$9K +$29K

Comparing YTD numbers for those years, we find:

YTD 2003 2004 2005 2006 2007 2008

Feb +$3K +$5K +$22K +$22K +$39K -$23K

Next, let's peek at YTD volume:

Resales '03 2004 2005 2006 2007 2008

Feb 982 1,276 1,232 1,001 1,021 621

YTD 2,664 2,958 2,485 1,932 2,004 1,261

We predict this is the year people spending their own money, as opposed to real estate and political foofs spending someone else's, start wondering if it really is a good time to buy.

If so, we submit the relevant comparison year is 2004. This was when the kool-aid of low rates and "sure thing" over-rode common sense and the laws of economics.

IMHO, as long as prices remain above early-2004 levels, they're still over-inflated.

In addition to "year-over-year" (y-o-y) and "year-over-two-years-ago" ("y-o-2" ) let's look at "year-over-four-years-ago" or ("y-o-4") which BTW is, conveniently, 2004:

Resale

Units 2003 2004 2005 2006 2007_ 2008_y-o-y y-o-2 y-o-4

Feb 982 1,276 1,232 1,001 1,021 621 -39% -38% -51%

Part of the rationale for ignoring y-o-y (and even y-o-2y and y-o-4y) volume is the claim there aren't enough properties for sale. Fortunately, we have data from DataQuick and the Metro Listing Service (MLS) for Santa Clara County:

As of...  DQ    Change     MLS#   Change     Diff.
Jan12'06 1,687                           (DQ vs.MLS)
Feb 9    1,818
Mar 9    2,103
Apr 9    2,194
May 7    2,606
Jun 8    2,974
Jul 6    3,185
Aug 10   3,389
Sept 7   3,401             4,201            +23%
Oct 5    3,389 +101%/YTD   3,899            +15%
Nov 7    3,070 +82%       3,496            +14%
Dec06'06 2,571 +52%       2,843            +11%
Jan09'07 1,969 +17%/y-o-y 2,554            +30%
Feb 8    2,238 +23%       2,901 +14%/YTD +30%
Mar 8    2,841 +50%       3,156 +24%      +11%
Apr 5    2,812 +28%       3,680 +44%      +31%
May 3    3,332 +28%       4,255 +67%      +28%
Jun 7    3,809 +28%       4,501 +76%      +18%
Jul 5    3,972 +25%       4,510 +77%      +14%
Aug 2    4,156 +23%       4,936 +93%      +19%
Sep 7    4,701 +33%       5,097 +21%/y-o-y +8%
Oct 11   4,866 +44%       5,222 +34%        +7%

Nov 8 4,780 +56% 5,123 +47% +7%

Nov 29 4,596 +79% 4,642 +63% +1%

Jan 10 4,145 +111% 4,699 +84% +13%

Feb 7 4,529 +102% 5,008 +73% +11%

Mar 6 4,815 +69% 5,694 +73% +18%

MLS data is pulled within a day or two of creating this table (meaning the MLS "as of" date tends to be a few days later than DQ's).

The number of listings is clearly on the increase. We see the difference between MLS and DQ listings as one measure of the "games" being played by sellers and their agents to try and mask the true number of listings...

We find it's also useful to examine current prices relative to their recent peak. The monthly headlines and details somehow never seem to mention how current prices compare to recent highs or lows:

Peak Since

All Homes Current Peak Date Peak y-o-y

Santa Clara Co. $658K $714K Jun13'07 -7.8% -1.8%

San Mateo Co. $646.5K $820K Jun06'07 -21.2% -12.4%

Santa Cruz Co. $631K $735K May26'06 -14.1% -4.2%

Peak Since

Resale Homes Current Peak Date Peak y-o-y

Santa Clara Co $716.5K $817K Aug27'07 -12.3% -3.2%

San Mateo Co. $745K $925K Jun26'07 -19.5% -6.8%

Santa Cruz Co $680K $810K Aug20'07 -16.0% -7.5%

San Mateo and Santa Cruz numbers are much more volatile than Santa Clara County. They bounce, up and down, on lower volume, more than Santa Clara County, on a regular basis.

In the interest of brevity, we dropped the y-o-y price charts. (Let us know if you want to still see the details?)

Bottom Line:

View from SIilicon Valley readers were not shocked to see a price rebound in February. The annual spring bounce arrived right on schedule.

However, with only 621 resale houses sold in the four weeks ending February 29, volume is down -51% from 2004. At the same time, listings are up +70% from this time last year. This month's MLS number of listings is the highest since we started tracking.

As always, buy at your own risk. If you do, please feel free to forward us the (financial, and emotional) details?

Coming soon: A review of the cost to rent vs. own on several properties up for rent this spring.