Is The House Market On The Peninsula Cooling Off?

If you followed my earlier posts regarding brisk home sales on the Peninsula in the earlier part of the year including Burlingame, San Mateo and Menlo Park you might wonder if the market has continued its upward trend since the interest rates increased by 1% during in June. In short, the rates have stabilized since. The number of investors and the number of homes being listed by sellers reduced. The consensus among professionals is that good listings (read: new, remodeled or at least well prepared for sale homes) are still selling well, however, those with just paint slapped on the walls and clattered with seller belongings definitely see the drop in demand. And how about prices? Again, the general impression is that price increases we observed since the end of last year tempered of. But is this true?

To verify these observations I asked friends from Local Vector to provide us with several graphs illustrating changes that took place since the beginning of June in three cities in San Mateo County I was writing earlier this year about - Burlingame, San Mateo and Menlo Park. The first graph presents the number of homes sold each month from the beginning of the year in these cities.

Fig. 1 Number of homes sold in Burlingame, San Mateo and Menlo Park since the beginning of the year (Courtesy of Local Vector)

As you can see, the amount of transactions has dipped in San Mateo and Menlo Park in June and the trend continued in July. Only 24 homes were sold in Burlingame in July (down from 31 in June), confirming the cooling of the market there as well.

But the market continues to be brisk. Homes continue to sell fast as one can see at the graph in Fig. 2 illustrating the number of the Days On the Market (DOM) for these three cities.

Fig 2. Average Days on the Market from the beginning of the year (Courtesy of Local Vector)

While the number of transactions is much smaller, the DOM continues to be very short for all three locations. Fig 3 displays the number of listings sold at above Listed Price (asking price).

Fig. 3. Listings sold above the Listing Price (Courtesy of Local Vector)

The number of homes sold above the Listing Price decreased in Burlingame and Menlo Park, but continues to increase in San Mateo. The last graph shown in Fig 4 presents the changes in the price per square foot.

Fig. 4. Sale Price Per square Foot (Courtesy of Local Vector)

While prices in Menlo Park and San Mateo seem to be leveling of, prices in Burlingame continue their steep increase.

To summarize, what we observe is certainly not a downturn. Homes are selling fast, but the number of transactions dropped.  A smaller number of investors keeps potential seller away from selling again and this in turns keeps demand almost as high as before.