The market stats are in for San Jose’s home sales in November. When we aggregate the data from all our wonderful neighborhoods across San Jose we see that single family home prices are slightly down in November, while San Jose townhomes and condominium homes saw an increase in sales price. Overall, home prices year over year are down by approximately 4-5%. How much of that is due to the economy and how much is just due to the late fall seasonality of buyer slow-down? It’s hard to quantify as both are factors that affect home values.
SAN JOSE SINGLE FAMILY HOME SALES IN NOVEMBER
Single family home prices across San Jose came down slightly in November to $1.39M, while the time (number of days) it took to sell a home was shorter at 15 days versus 17 days in October. With less inventory to choose from (as seen by less listings of homes for sale, down 22% from a month before) we’re still seeing a strong market with homes continuing to sell quickly at close to list price (average was 99% of the list price). See the chart below for more details.
SAN JOSE TOWNHOUSE & CONDOMINIUM HOME SALES IN NOVEMBER
For San Jose’s townhomes and condominium homes, median sale prices went up from $750K in October to $775K in November. They did take a little longer to sell at 24 days versus 15 days in October (and 11 days in November 2021), but this is still an enviable number by any measure, where in contrast, according to the St Louis Fed, the median days on market in the United States was 56 days. See the chart below for more details about San Jose’s townhome and condo market.
SAN JOSE MARKET TRENDS - IS THERE A SLOW DOWN?
Typically in late fall we see prices dip a little bit due to seasonality and continue to decline until after the holidays in January. Then in February we start our spring market here in Silicon Valley while other parts of the country are in a deep freeze. However, with interest rates climbing to near 7%, we have seen about a 4-5% decline in prices year over year despite a significantly lower inventory. When you add in high inflation and fears about a recession and job security, many buyers are either priced out of the homes they could have afforded earlier in the year when the rate was hovering at 3%, or they’re just pressing the “pause button” on their home search to wait until they feel these factors have stabilized a bit more.
So the answer is definitely “yes”. We’ve seen a slow down in new listings and in the number of buyers.
Here’s the good news for both buyers and sellers - those buyers that remain looking for a home to purchase, they are the ones that are very serious, well qualified, and in need of housing, despite the holiday vortex! They may not have as many homes to choose from, but as long as there are homeowners that need to sell their homes due to life events, there are eager buyers that are still putting in offers. If the home is priced well, we continue to experience buyer competition with multiple offers for the few homes that are for sale during this holiday season.
So that brings us to the next point and that is that pricing a home properly for this market is key.
Home buyers are looking for value, and will wait until they find it. Unlike the recent past, we see many more price adjustments where homes start out a little too high, and then need to be adjusted if they’re not selling as quickly as the norm of the market. We see that when we look at the difference between the list price and the sale price. A year ago in November 2021, sellers were getting up to 110% of their asking price, on average. Now in our current fall market, we’re seeing more price reductions and subsequent sales at approximately 100% of the final list price.
Another gauge of our market is seeing how quickly homes are purchased, also referred to as “days on market or DOM”. In San Jose, that number came down from 17 median days on market to 15 DOM for single family homes, and went up for condos and townhouses from 15 DOM in October to 24 DOM in November. As mentioned above, one needs to gauge this in comparison to other markets across the US. When we contrast our DOM with the rest of the US, Silicon Valley’s market is still a fast paced market, and if the home is priced correctly, will sell in less than a month, often in just a couple weeks.
BOTTOM LINE FOR SAN JOSE HOUSING
In summary, if homes are priced well and have characteristics buyers are looking for (good location, open concept floor plan, etc), homes are still selling quickly, oftentimes with multiple offers, and at very close to the list price.
If you’re interested in understanding more about home price forecasts for 2023, please check out my blog here
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