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May 22, 2008 
 
The Last 30 Days (Apr'08 Data) 
 
(c) copyright View from Silicon Valley, 2008.  All rights reserved. 
 
 
 
The bold headlines were certainly exciting:  "Home Sales Rebound In Valley."
 
Would you be surprised to learn Santa Clara County "All Homes" (-13.3%) and "Resale Home" (-13.2%) prices were both down significantly compared to April, 2007.   Likewise year-over-year sales volume was down in both categories (-28% and -40%).
 
Before rushing out to plop down a megabuck-and-change based on the headline "spin," we hope folks stop off to study the underlying data.  Fortunately, we can help you with exactly that task!
 
Now we return you to our regular programming...
 
In the past, we expressed seasonal "resale home" price changes as:
2H03:   0.0%
2H04: +1.8%
2H05:  -0.7%
2H06:  -7.8%  (= -$60.5K!!)
2H07:  -7.7%  (= -$55K!!)
2H08:   tbd
 
Starting in 2008, we refined this data to:
 
      Feb-Jun  Balance
2003:  +$37K     -$4K
2004: +$126K    -$18K
2005:  +$95K     -$5K  
2006:  +$65K    -$56K
2007:  +$81K    -$52K
2008:  +$7.5K   -$47K (YTD= -$39.5K)
 
On balance, sellers made the most profits (or buyers paid the most premium) to buy in the February through June selling season.  Outside of those months, even during a once-in-two-generations bubble, prices fell.
 
Expressed in our usual historic chart, it looks like this:
 
Resale 
Median 2003   2004   2005   2006   2007   2008 
Jan    -$4K  -$47K    -0-   +$5K   -0-   -$47K
Feb_   +$7K  +$52K  +$22K  +$17K  +$39K  +$24K
Mar   -$10K  +$39K  +$33K  +$13K   +$6K  -$31.5K
Apr   +$15K  +$11K  +$17K  -$10K  +$48K  +$15K
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 
 
Netting this out to YTD price changes shows:
 
YTD  2003   2004   2005   2006   2007   2008  
Apr  +$8K  +$55K  +$72K  +$20K  +$93K -$39.5K
Next, let's peek at YTD volume:
 
Resales '03   2004   2005   2006   2007   2008  
Apr   1,564  2,248  1,924  1,465  1,236    738
YTD   5,593  7,118  6,271  4,989  4,479  2,676
 
We submit the relevant comparison year for normal prices is 2004, or maybe even 2003. Early-2004 was when the kool-aid of low rates and "sure thing" trumped common sense and the laws of economics.
 
As long as prices above late-2003/early-2004 levels, they're still too high.
 
In addition to "year-over-year" (y-o-y) and "year-over-two-years-ago"  ("y-o-2" ) we now use "year-over-four-years-ago" or  ("y-o-4") .  Conveniently, this nets us a comparison to 2004 sales: 
 
Resale
Units 2003   2004   2005   2006  2007_ 2008_y-o-y y-o-2 y-o-4 
Apr  1,564  2,248  1,924  1,465 1,236   738 -40%  -50%  -67%
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 DataQuick and the local Metro Listing Service (MLS) data on this very subject:
 
As of...  DQ    Change     MLS#   Change
Jan12'06 1,687  
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
Oct 5    3,389 +101%/YTD   3,899
Nov 7    3,070  +82%       3,496
Dec06'06 2,571  +52%       2,843
Jan09'07 1,969  +17%/y-o-y 2,554
Feb 8    2,238  +23%       2,901  +14%/YTD
Mar 8    2,841  +50%       3,156  +24%
Apr 5    2,812  +28%       3,680  +44%
May 3    3,332  +28%       4,255  +67%
Jun 7    3,809  +28%       4,501  +76%
Jul 5    3,972  +25%       4,510  +77%
Aug 2    4,156  +23%       4,936  +93%
Sep 7    4,701  +33%       5,097  +21%/y-o-y
Oct 11   4,866  +44%       5,222  +34%
Nov 8    4,780  +56%       5,123  +47%
Nov 29   4,596  +79%       4,642  +63%
Jan 10   4,145 +111%       4,699  +84%
Feb 7    4,529 +102%       5,008  +73%
Mar 6    4,815  +69%       5,694  +73%
Apr 10   5,408  +92%       6,144  +67%
May 8    5,624  +69%       6,510  +53% 
 
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).
 
Did you know home prices, even in Santa Clara County, are down double-digit(!) percentages since what now stands as their June, 2007 peak?
 
                                 Peak    Since 
All Homes     Current  Peak    Date     Peak   y-o-y 
Santa Clara Co. $615K   $714K  Jun13'07 -13.9%  -13.7%
San Mateo Co.   $672.5K $820K  Jun06'07 -18.0%  -24.7%
Santa Cruz Co. *$615K   $735K  May26'06 -16.3%   -9.6%
 
                                 Peak    Since 
Resale Homes  Current  Peak    Date     Peak   y-o-y 
Santa Clara Co *$700K   $817K  Aug27'07 -14.3%  -12.5%
San Mateo Co.  *$715K   $925K  Jun26'07 -22.7%  -20.0% 
Santa Cruz Co  *$665.5K $810K  Aug20'07 -17.8%  -10.8% 
 
* = as of April 25
 
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 rolling y-o-y price charts.  (Please let us know if you would still like to see them?)
 
Bottom Line:
If you decide to buy a house, please share with us the (financial, and emotional) details?
 
As always, buy at your own risk.
 
The above commentary and any linked article, website and advertisement are for entertainment purposes only.  Nothing in this page or web site is intended as advice to buy, sell or hold any stock, bond, real estate nor any other financial product or service. Buy or sell at your own risk.