Los Altos Real Estate Blog

The latest news reports show unadjusted figures for new home sales around the country dropped to 250,000 units sold in February.  This is below what was expected and is being used as a sign of possible issues with home sales in general.  This statistic is also being used by the media to cast a pall over the entire housing market, saying that existing home sales are also likely to continue to fall along with median and average selling prices.  The bottom line for Silicon Valley and most of the local markets is that this is all a lie and massive negative spin.

For starters, new housing units sold are a fraction of existing sales - about 20% of overall home sales.  Existing home sales rose in January and are expected to rise in February.  The decline in the sale of new homes was greatest in the Northeast, which has had one of the worst winters in history.  That has impacted the sale of new and existing homes in that region.  The midwest has also seen a downturn in sales which is funny because that region also had bad weather.  The media claims that the trailing 3 months have seen prices and sales drop, which is fine because being a slow period and having bad weather were the combination that created the drops. 

With February weak, I expect the numbers will be revised favorably, just as they were for January.  In addition, March is shaping up to be a great month in many states - based on reports I'm reading from around the country.  I have read very few market updates that were substantially down.  Most have been flat to slightly up.  I predict that's what we'll see and the media will weigh in again claiming that a double-dip is less likely.  in my opinion a true double-dip in the economy is never going to happen because job growth, consumer spending, and other factors are improving.

In Silicon Valley, our local markets are not seeing any of this.  While the San Jose Mercury is busy saying the average and median home prices dropped in February, the reality is that the better markets in Santa Clara County have all been doing well very in varying degrees.  Homes are selling with multiple offers, many to cash buyers, and some over the asking price in Palo Alto, Los Altos, Mountain View, Sunnyvale, Cupertino, and other towns.  Based on early numbers some towns will see substantial improvements in median and average selling prices, especially the high-end markets Los Altos Hills and Saratoga.  With the limited number of new home developments in the area, the sale of new homes is a poor statistic.  However, the few new homes that do existing appear to be getting sold at good prices.  One of the towns with the concentration of new home developments is Mountain View.  The new 50+ home subdivision in Waverly Park has had a lot of early interest and should sell out quickly.

The reality is that our local markets are as strong as they have ever been.  The days of limited inventory, fast sales with multiple offers, overbids, and fierce competition are back.  How long they stay is a good question but our market is not in line with what the media claims.