As the South Bay real estate market falls through the looking glass, one piece of contrasting news has been released; average home prices fell in every Bay Area county except for Santa Clara County where they actually rose by 4.6% from December 2006 to December 2007.
During a time when total homes sold dipped lower than it has been in 20 years – this news was indeed startling.
Why is this so? First of all, the real estate market in Santa Clara County has split into two distinct areas; the mid and low end homes and high end homes. High end homes in areas with great school districts like Cupertino have experienced continued appreciation – and multiple offers with sales over asking price are still happening here. This is pulling up the average selling price of homes across Santa Clara County.
Secondly, the low to mid range homes are simply not selling. If you look in the $500K-700K range on the MLS, you will see many homes that have been on the market for 150 days or more. This means selling prices for this range of home are not being entered in the averages. What did they say about “Lies, Damned Lies, and Statistics”?
Usually, the average selling price for an area is a meaningful number. Given the strange dynamics of our unusual market, lumping in the average selling prices of Cupertino, Saratoga and East San Jose is about as meaningful as looking at average selling prices for California as a whole. Or, for Siberia plus Western Europe, for that matter.
What is telling about these results is that we are rapidly moving towards an area of “haves” and “have nots”. Our current market correction is making it even more difficult for those starting out to end up on the “have” side of the equation – and widening the gap between those already stratified.
What to do about this? Hang tight, the Bay Area is known for incubating new industries and creating jobs for many types of people. Our tax base and high housing costs have made it difficult for some types of industry to relocate here – however, this market correction may act like a good spring storm – sweeping out barriers to growth and allowing us to begin again.
This, like anything, will take time. Comments anyone?