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 We finally see a double digit drop in the average price of homes in July of 2007.
In addition, we see a continuing increase in the inventory and a drop in sales.
Will this end up being the lowest summer season on record? Read on for all the details.
Supply And Demand
Some interesting numbers this month. The rate at which inventory is going up has slowed. This is good news for a market that just seemed to see its homes available for sale continue into an almost orbital trajectory.
This month shows that the increase in inventory was held back to 5.6%. While the fact it is up at all is not good news, it is at least not the double digit increases we have been seeing. That increase gives us a grand total of 286 homes on the market in Morgan Hill.
On the sales side, we had 30 homes sell in Morgan Hill in July. That is down 18.9% from last year.
This tempers the good news about the inventory increase, but since sales numbers have been so low, this decrease represents less of an impact as the inventory numbers.
As for the last few months, the sales numbers have remained flat. In fact, we sold the same number of homes this month as we did last month. The even better news is that while we sold the same number of homes, we actually saw the over all inventory drop by 5.6%. In looking at the numbers, this can mostly be attributed to a decline in the number of homes listed in July.
However, in this market, we will take the good news where we can find it, and a drop in the overall inventory is good news.
Overall, we currently have enough inventory to last 9.5 months.
Home Prices
 We are finally there. Home values are finally starting to reflect the market influences that we have been talking about for over a year now.
W hen compared to the same time period last year, the average price of a home in Morgan Hill has dropped by 11.7%.
In dollar terms, that means that the average home in Morgan Hill sold for $930,854.
In relative terms, the median has kept its relationship with the average. What that means is that the number of homes above the average vs. the homes below the average are selling at about the same ratio we have gotten used to over the last few years.
 Looking back over previous months, we can see that we got the boost in average home price that you would expect for this season.
The average home in July of 2007 sold for 11.4% more than in June 2007. My suspicion here is that this means little relating to actual increases in home values, but rather in increase in the number of higher end homes that ended up selling in July.
However, note that the median in June indicates that about the same number of home sold were above the average as were below it. While for July, the median indicates that there were more homes sold below the average. This tends to contradict my belief that more expensive homes brought up the average - but I stick to my gut on this one. We had a few very expensive properties sell in Morgan Hill in July and I think it was enough to bring up the numbers.
Days On Market
We actually saw the number of days it took to get a home sold decrease when compared to the same time last year.
Remember, this number only reflects homes that have ACTUALLY sold. If we were to run the numbers for how long all the homes in inventory have been on the market, it would be a bigger number.
What we are seeing is a trend where only the "Best In Class" homes are selling. By that I mean that the best home in a particular price range is the one that tends to sell.
In July of 2007, we saw that the time it takes to sell a home was down 6% from the same time last year.
Right now, it is taking the 78 days to get the average home sold. If you would like to read a discussion of things that can skew this number, read my articles on the subject . 
In the short term, the days to sell is actually up. We saw the same trend last year, but to a lesser degree. Normally, we would see the days to sell drop a bit during the summer season. However, we have had weak summer seasons for the last two or three years.
The number of days it took to get the average home sold in Morgan Hill was up 2.6% from June. This only amounts to two days and is actually much better than what we saw last year when the days to sell jumped from 58 to 83 in the same time period.
Going on past performance, we can just expect this number to increase right up through winter.
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