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 Ouch, sales down, inventory up! Not what you usually want to see in a real estate market. Despite these trends, we are STILL seeing the average price of homes increasing in Morgan Hill.
Can we sustain a market where there are fewer buyers, more homes for sale and homes that take longer to sell and STILL see the average price of homes increasing?
Not likely. There is no telling what the key factor is going to be that brings our market back into balance. Read more to take a look at all the nitty gritty details of the real estate market for Morgan Hill in January of 2007.
Supply and Demand
The numbers for January are telling an interesting story. Our inventory numbers are the highest they have been going all the way back to 1998. Even if you look back on the last dip we saw in our market back in 2002, we have more houses available for sale now than during that time.
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While the inventory numbers are the most impressive for this month, Sales have at least managed to outpace this time last year by 26.1%.
However, that does not help overcome the 30.6% increase in inventory, when compared to the same time last year.
New listings for the month fell in line with what we saw last year - which was only a 7.6% increase.
Are there any surprises here? Not really. At least these numbers are not surprising when you consider what the last 6 months to year has been like. It would have been nice to see inventory levels flatten at the first of the year, but clearly that was not to be.
The next big question will be whether or not the coming summer months will have enough new buyers to bring this number down.
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Even from this small image, you can clearly see the overall trends over the last 12 months. The inventory surged during the summer months as the number of new listings per month remained relatively flat, but homes just refused to sell.
Just look at those flat sales numbers! As more and more homes were added to the inventory each month, there were no buyers waiting to purchase them. In fact, if you look at the numbers, what eventually brought those inventory numbers down had a lot less to do with homes getting sold and more to do with sellers simply taking their homes off the market.
If what we have seen over the past year has been more of the "speculative" seller, that might help to explain why homes have continued to sell at a higher average price. Since there is no real motivation to come down, sellers have simply stuck to their prices and if they could not get what they wanted for their home, they took their marbles and went home.
This is at least one possible explanation for home prices remaining high and increasing despite these market conditions that would suggest prices should be dropping.
Home Prices
Look at those numbers. A steady increase in home prices going back to 2002.
While we are not seeing the double digit increases we have seen in previous years, growth is still what we are seeing.
When compared to the same time last year, home prices are up on average 8.9% in Morgan Hill.
 When we look at the average prices over the last 12 months, we see some fluctuations. Much of it can be explained by seasonal influences, but the fact remains that the average price now stands over 1 million dollars!
Three out of the last 12 months had an average price over 1 Million.
The real question is what will the coming months bring for these numbers? Can we take on this record breaking number of homes on the market? Are sellers now in a position where they must sell and are therefore more willing to consider lower prices? If so, we might see that average price finally move down. It would seem that the quickest way to bring the market into balance would be for prices to drop. This would then attract more buyers which in turn would bring down the inventory.
At this point, I think even a flattening of prices for a period of time might just have the same effect.
Days to Sell
The days that it takes to sell a home has risen steadily over the last year. This clearly indicates that most sellers are willing to wait till they can get their price.
 Looking at years past, you can see the steady increase. This trend has been going on since 2004 when the first stirrings of a downturning market were felt.
Over just the last year, we have seen a 24.2% increase in the amount of time it takes to sell a home. It is nearly DOUBLE the time in took in 2005!
While sellers used to be able to count on multiple offers on their home, now sellers need to be patient just to get someone to look at their property.
Despite any other numbers we look at, the next chart tells an unmistakeable story.
Look at that trend. A steady climb over the last 12 months that just cannot be denied. At some point, sellers who have got to move or sell their property are going to have to be willing to come down on their price in order to draw in buyers.
With all the properties on the market, buyers have plenty of choices and feel no need to rush since homes are remaining on the market for so long. If your a homeowner who HAS to sell, then your most powerful tool is your asking price.
Perhaps our current market has seen many of the speculative sellers step back from the market. If so, the sellers that are left will be willing to move on price. If this is the case, we are likely to see the first signs of this as we enter spring and the summer months.
Stay tuned for what happens next!
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