San Mateo County Year End and Forecast

Hello all,



Here is the year end report for San Mateo County and the 2011 forecast. As in the Santa Clara report a graph attachment it above. This reflects activity over the last two years.



Cheers,



Ginna


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Here are some highlights to pay particular attention to as you review the data/graphs through October of 2010:



1. Median Price- The Median Price decreased slightly for the second month in a row in SMC to end the month at $600,000 (which is $20,000 lower than October one year ago) and down from last month’s mark of $616,500 The SMC Median reached its low point in January of 2009 at $515,000. We have essentially had one significant slowdown this year over the summer, however, pending sales have increased over the past 30 days and are poised to close out strong this year. We are revising our year-end Median projection down from $650,000 to $625,000 which would be $25,000 lower than the median one year ago.

2. Supply & Demand (Units)- We continue to see a significant distinction in pendings and solds, however, some balance in the inventory category as we compare October 2008 with 2010 in the following categories; For Sale (supply/inventory), Under Contract (pending sales) and Sold (closed escrows). To illustrate when we compare 2008 with the same month in 2010 we see the following- For Sale properties/supply continues to remain UP very slightly .2% (09 vs 10= 2808 vs 3114). The number of under contract properties (pending sales) continues to soar and increased from last month- UP 49.5% (09 vs 10= 501 vs 553) and the sold/closed escrows also increased from last month and remain up an impressive 41.2%. The overall pattern and direction of this market for the past 12-18 months has declining overall supply/inventory which has now leveled out, increasing new sales and closed escrows.

3. Month’s Supply of Inventory & Days on Market- The overall Months Supply of Inventory (months of inventory available based on the total existing supply divided by the rate of sales) remains near all-time low levels at 3.9 months supply at month end, substantially down from last month’s figure of 4.8 (also lower than Oct 09/4.1 months supply). This is down from a 2 year peak of 7.9 months in December of 08. Days on market has averaged between 45 and 60 days for the past 7-8 months, then increased slightly over the past three months to nearly 65 days and climbed again in October to in excess of 70 days on market .

4. Sales Absorption- The Absorption metrics are quite compelling with the comparison of October 2008 vs October 2010 with under contract properties up 46.3% and closed/sold escrows up 39.22%. 17.5% of the active properties/listings were under contract at the end of October 2010, which is up from a fully adjusted figure of 15.4 percent under contract in September of 2010.



The first half of 2010 was significantly stronger than the same time period 2009. We had a slight slowdown over the summer months of this year which is not all that uncommon from a seasonal perspective. This slowdown, however, did correspond with some global economic concerns mainly surrounding the Euro and resulted in a temporarily declining stock market in the US. The past several weeks have seen renewed confidence, and signs of hope that the economic recovery is picking up momentum. The DOW has responded and has mostly remained above 11,000 most recently and the past two days has climbed above 11,300. This is been powered by positive developments and reports mainly in areas of employment, retail sales and real estate. Two Bloomberg articles* posted today highlight the factors leading the reasons for increased optimism which is also driving up the US and Bay Area pending sales activity as we close out 2010.



*Bloomberg: Stocks Gain, Treasuries Fall, on Retail, Home Sales Data; http://www.bloomberg.com/news/2010-12-02/asian-stocks-rise-set-for-best-gain-in-a-month-dollar-commodities-climb.html

*Bloomberg: Pending sales of US existing houses jumps a record 10% in October, indicating the industry at the center of the last recession is stabilizing as the job market improves; http://www.bloomberg.com/news/2010-12-02/pending-sales-of-existing-homes-in-u-s-increased-a-record-10-in-october.html





I am now forecasting a 12% increase in overall sales volume in 2011 over 2010. I anticipate that prices will remain mostly flat with a 3-5% plus or minus variation depending on specific market areas, the rate of continued momentum in the economic recovery and other variables such as the Euro’s handling of its debt crisis. Overall, I expect that we will see an improved market in 2011 and we are now heading into the final stage of 2010 with headwinds that have more substance than the mostly government backed stimulus that drove the increased sales at the end of 2009.