Add to that interest rates are starting to tick up and home values in the San Diego market and a good part of Southern California for that matter are starting to increase thereby puttiing the average buyer out of the loop of affordability.
Add to that a shortage of inventory and new development starts has dulled the exuberance the market has been experiencing during the past couple of years. All this could lend itself to a general slowdown but to say it's going to be another bubble or fall back into a downward spiral I feel is a stretch.
I do feel, however, that only the strong will survive whence things begin to normalize. We may start seeing some atrition among the RE Professional ranks. Just my 3 cents worth. (adjusted for inflation).
I've heard the fewer bids comment-however sales still seem to be strong, just maybe not quite as many competitors.
Are you looking to buy in Mountain View?
Forget the sales statistics, they're skewed with a population of data that is too small to mean anything.
My belief is that we're seeing three things happen:
1) Many potential buyers are so tired of getting out-bid that they've stopped bidding. This gives the appearance of fewer buyers, though these people are likely to come back into the market once inventory increases. In the meantime, there are still enough buyers so that good properties are getting strong offers.
2) As the market improved for sellers, a lot of less-then-premium properties came on the market trying to ride the wave of increased prices. Some of these properties would be a hard sell at any price in any market and are not an indicator of the demand for the average Palo Alto home.
3) Good homes are still selling fast. Of the 48 Palo Alto homes and condos active on the MLS as I write this (not in escrow), 8 have been on the market over 60 days. 23 homes - almost half - have been on the market less than 10 days. An additional 40 homes are in escrow, of which 34 of those homes were on the market less than 30 days.
Certainly the amount of over-bidding will decrease as over-bidding buyers get their properties and are no longer in the market. But the market is still very strong.
Palo Alto is still seeing 3+ offers per home, but not as many as Feb-May. However, the list price to sales price is still selling well over. I made an offer on a home in Barron Park yesterday for a client and there were 3 offers (good amount for Barron Park), which tells me buyers are still aggressively active in Palo Alto, especially for homes under $2M. Los Altos and Mountain View are still strong but we're starting to see inventory stack up, PA as well but for homes over $2M. PA currently has 29 homes Pending Sale, MV currently has 34 homes Pending Sale and LA currently has 46 homes Pending Sale, all excluding Condos and Townhouses. I think it will continue to be a hot market throughout the summer for homes in PA under $2M as there isn't a shortage of buyers within that price point, especially with rates rising, locking in while money is still relatively cheap is even more attractive to buyers. MV and LA is already starting to cool down, but if the home shows nice and is priced well, it will still draw-in multiple offers (i.e. 2+ offers).
Thanks for the good question!
However, Listing Prices do not - and never have - been an indicator of market value. Sellers can set their price high above "market" to pull up offer values or low to generate multiple offers (sheer stupidity in my never humble opinion). This makes the difference between listing price and sale price a very inaccurate indicator of the market.
Final sale prices have long been considered actual market value, but those aren't necessarily accurate, either, when comparing one property to another. When some buyers over-bid, they'll throw whatever number they have to at the seller if they have the resources and want the property badly enough. If parents want their kids in a particular school district or an executive calculates that he can cut his work commute in half by buying in a certain neighborhood, market value may no longer be a consideration for the buyer. This confuses the hell out of real estate pundits who make a living quoting market statistics, but the broker on the ground sees through the confusion to get the deal done. One at a time.
I do not believe you are imaging this. There are fewer bids per home per my experience and everyone else in my office. However, what is missing are the low ball offers, not the excellent offers. Most people trying to get a deal are gone.
As for the average percentage over asking for Mountain View closed single family homes it was 5% in Feb,. 11% in March, 10% in April, 13% in May, and down to 11% so far in June.
In Palo Alto the average % over list was 13% in Feb,. 14% in March, 12% in April, 10.5% in May, and back up to 12.5% so far in June.
Historically most appreciation occurs in the first 6 months of the year with a leveling off of appreciation in the second half. However, % over list price also has to do with what the list price is to begin with. Many agents in Palo Alto are still falling all over themselves trying to under list each other to try to generate multiple offers and percentages over list price, so that could skew the statistics for Palo Alto.
Keller Williams Realty Palo Alto
In the areas of Palo Alto, Los Altos, Mountain View, Sunnyvale and Cupertino, I would not yet say there is a slow down. But with interest rates likely to increase in the next couple of weeks, I suspect we will see a frantic rush for homes followed by a slight reduction in demand as interest rates affect affordability.
So no slow down in demand as of yet. Perhaps soon there will be a critical market shift.
Didn't I just answer another one of your questions? Keep them coming, I love it!
So, I don't know that I would characterize the recent market changes in this area as a slow-down...yet.
It's true that there is a bit more inventory, and that interest rates aren't quite as low, and that some people are priced out of the buying etc. etc. etc...
But as a whole, we are slow to learn, and it might be a couple of months before things really settle to a new level.
I think we're getting there, mind. We're just not quite there yet.
There are still multiple offers, but fewer (it depends of course on the asking price).
On the level of experiences/anecdotes I would agree with you. We will know better in a few months.
On the link below you may find some recent local trends of interest to that effect.