With inventory tight in most markets, homes are selling more quickly. The National Association of REALTORS® (NAR) reports the typical amount of time it takes to sell a home is shrinking, and is now in the range of historic norms for a balanced market.
The median time a home was listed for sale on the market was 69 days in July, down 29.6 percent from 98 days in July 2011. The median reflects a wide spectrum - one-third of homes purchased in July were on the market for less than a month, while one in five was on the market for at least six months. At the end July there was a 6.4-month supply of homes on the market at the current sales pace, which is 31.2 percent below a year ago when there was a 9.3-month supply, according to NAR.
NAR chief economist Lawrence Yun said there is a clear relationship between inventory supply and time on market. "As inventory has tightened homes have been selling more quickly," he said. "A notable shortening of time on market began this spring, and this has created a general balance between home buyers and sellers in much of the country. This equilibrium is supporting sustained price growth, and homes that are correctly priced tend to sell quickly, while those that aren't often languish on the market."
A tight supply is clearly driving prices up in Silicon Valley. Data from MLSListings Inc. shows in a year's time, the median price of a single-family home in Santa Clara County jumped 13 percent, from $615,000 in July 2011 to $695,000 in July 2012.
July's inventory of 2,441 single-family homes in Santa Clara County was down from June's inventory of 2,589 homes and down 39.4 percent from July 2011, when inventory was at 4,028 homes. Inventory of single-family homes in Santa Clara County peaked at 6,237 in July 2008. Days on market dropped from 64 days in July 2011 to 43 in July 2012. July sales of 1,025 single-family homes in the county were 15 percent higher than July of the previous year, which had 890 closed sales.
"Our low inventory and high demand for homes are impacting on prices. The median home price in most communities in the valley has increased in a year's time," said Suzanne Yost, president of the Silicon Valley Association of REALTORS®. "If you're thinking of selling your home, now is certainly a good time to do so."
NAR data indicates during the peak of the housing boom in 2004 and 2005 when inventory supplies were historically low, averaging 4.3 months over the two-year peak period, the median selling time was four weeks. Prices in that time frame were bid up and rose at an annual rate of 10.3 percent.
In the economic downturn, time on market for non-distressed sellers peaked at 10 weeks in 2009 with a 10-month annualized supply. The median price fell 12.9 percent that year, which was the biggest annual decline on record.
NAR anticipates home prices will continue to rise due to the tight inventory. "Our current forecast is for the median existing home price to rise 4.5 to 5 percent this year and about 5 percent in 2013, which is somewhat stronger than historic norms because of the inventory shortfall that is most pronounced in the low price ranges," Yun said.
The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.
The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.
Variations of this article have appeared in local area newspapers.
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