Buyers Continue to Bid Against Each Other
The average ratio of selling price to list price in the San Mateo real estate market continues to be over 100%. It was 104% in October 2012, the ninth straight month above 100%. Prior to this streak, the last time the ratio went above 100% was in late 2007. We are in the midst of a seller's market as buyers compete for a dwindling supply of inventory. The San Mateo real estate market is also benefitting from historically low interest rates and one of the strongest local economies in the nation, with robust job growth.
The average selling price to list price ratio measures how much the average home sold for relative to the asking price. A ratio above 100% means that the average sale is for more than the list price (though even in this market many homes still sell for less than their asking price, as some sellers price too far ahead of the market).
Why are buyers bidding above asking prices and competing so hard against each other? On the demand side, there are a lot of high paying technology, scientific and professional services jobs being created from San Francisco to San Jose. On the supply side, inventory has plummeted. A prospective buyer scanning the market online is seeing 1/4 as many homes for sale. At the end of October 2012, there were just over 50 homes on the market. Once a buyer narrows down their search by price, beds, baths and home type, there may only be a handful of listings that make the most basic cut. Two years ago, there would have been 15-20 homes.
Price Levels Seen Rising
Given that most homes are priced relative to recent comps, when buyers are willing to pay more than the asking price it is a sign that prices are rising. We are seeing solid signs of price increases in the San Mateo market. The 12 months moving average price per square foot, median selling value and average selling value are all at their highest since early 2009. The data suggests prices have risen somewhere around 5-10%, in the past 12 months. Some neighborhoods and price ranges have seen larger/smaller increases.
Sales Back Up in October After Slow September
Sales activity was slow across San Mateo County in September, and the city of San Mateo was no exception. Activity picked back up in October with 61 homes selling. Considering the lack of available inventory, it was quite an impressive month. The average months of supply measures how many homes were sold in a given month, divided by the amount of inventory left on the market at the end of the month. In October 2012, the measure was 0.9, meaning that there were more homes sold than left unsold at the end of the month. In the past few years, the normal ratio in San Mateo has been 3 to 4. It has not been below 1.0 since early 2005. Unless there is an influx of new listings, sales activity will likely moderate going forward.
Through the first ten months of 2012, there have been 589 homes sold in San Mateo, up 16% from 508 homes sold in the first ten months of 2011. Depending on how many sales there are in the next two months, 2012 will have the most sales since 2005 or 2006.
Homes that are listed are more likely to sell and more likely to sell quickly. The number of expired or cancelled listings are down 31% as more sellers find willing buyers. Some sellers may be pulling their home off the market as they expect prices to rise further. The average days on market that a sold home spends listed has been 35 days in 2012, about 2 weeks faster than prior years. In October 2012, it was just 19 days as buyers snatched up new listings. Eager buyers need to continually monitor what is coming onto the market or else miss out on a large chunk of listings.
By The Numbers - San Mateo Real Estate for 2012
|Current Month||YTD Total or Average|
|October 2011||October 2012||Jan - Oct 2011||Jan - Oct 2012|
|Days on Market||45||19||47||34|
|Months of Supply||2.4||0.9||3.0||1.4|
|Avg $ per Sq Ft||$517||$528||$471||$500|
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