The New Year is here and according to the Chinese calendar, 2011 is the Year of the Rabbit. Happily, the Year of the Rabbit is traditionally associated with home and family, artistic pursuits, diplomacy, and keeping the peace. As predicted in Chinese folklore, 2011 is very likely to be relatively calmer than 2010 - both on the world scene AND on a personal level. Hey, I'm not Chinese, but that actually works for me (billions of people can't be wrong!). I joyfully embrace the concept of family, home and peace (who doesn't?).
Whatever celebrations your family took part in, I hope they were filled with good health, good cheer and good fortune. For me, the magic of the holiday season is that it offers the rare opportunity to indulge in wishful thinking and to fondly remember the years past with rose colored glasses.
Ironically, just the opposite is true in the world of Real Estate, where wishful thinking is the quickest way to a disappointing result. In Real Estate, I encourage you to look at the market with clear and focused vision. When a prospective seller begins our conversation with, "I had an appraisal conducted in 2006 and I can tell you my house is worth x . . ." I know I am going to have an uphill climb resetting more realistic expectations. As such, I offer the following market statistics to help you with your understanding of our current marketplace and how it compares to seasons past . . .
As we wrap up 2010, Piedmont homes sales were greatly improved. As of December 20th - 97 homes closed escrow in 2o1o, and another 10 were currently pending sale. Though less impressive compared to 2006, that's a whopping 32 percent more activity than 2009, when only 73 homes tentatively transferred ownership amidst fears of a growing recession (if we include those homes that are currently "pending," the increase is closer to 41 percent).
While the number of units was UP, prices remained relatively unchanged overall. Price per square foot in 2010 averaged $516 and homes spent an average of 27 days on the market, while in 2009, price per square foot averaged $522 and average days on the market was recorded at 32. (It's a slight tick upward but not statistically significant.)
How does this compare to 2006, when Real Estate hit its peak?
In 2006, 118 homes transferred ownership in Piedmont, but the average selling price was considerably higher at $612 a square foot, which translates to approximately a 16 percent difference in selling prices overall - while average DOM factored out to 29. ("Perceived value" sells in any market.)
One caveat, higher-end homes (those above $2,000,000) corrected more than those below and often took longer to sell (48 days on average). That makes sense in light of the fact that jumbo money costs more to borrow and fewer buyers qualify for these more expensive loans to begin with. Lack of competition tends to drive prices downward.
In fact, the best buys with respect to price per square foot in 2010, were often on these "grand dames." If you were in the market for a "significant" home in 2010, you probably found a bargain (relatively speaking). Last year's best Piedmont buy came in the form of a 5544 square foot Modern on Littlewood that closed significantly below market performance at $366.34 a square foot. Originally listed for $3,495,000, it ultimately sold a year later and closed at $2,031,000.(Ouch! More expensive homes have farther to fall.)
So yes, our values have in fact, softened in all price points, but unlike many nearby communities, Piedmont has never been in free fall. With Central Valley home sales off by more than 40-50 percent, Piedmont has by comparison, experienced solid stability and continued Buyer demand.
Looking ahead to 2011, industry experts project higher numbers still, given historically low interest rates that continue to make home ownership affordable to many who were previously priced out of the marketplace. Keep in mind that greater sales may not translate into higher prices. This is about number of units sold: volume as opposed to dollars.
No one - regardless of price point - is throwing caution to the wind. Above all else, buyers are still looking for "good value" as unemployment figures remain less than favorable and job creation is slower than anticipated. Moreover, I suspect it will be several years before the market climbs back to previous highs of 2005-2006.
In light of market realities, is 2011 a good time to sell?
Absolutely - as long as your expectations are grounded in 2010/2011 market performance and not 2006! If selling your home is high on your agenda, I can assure you that there is strong market demand for your property. Adjust your numbers accordingly and you should have very good results. Whether it be the birth of a new child, a job transfer or a probate reality, there are many practical reasons for selling a home in this, or any given year.
So cheers to the New Year. Bring on the rabbit! Our fair community has much to be grateful for as we hop forward into 2011.
I'm here to help. Happy New Year!
Julie Gardner, has been writing The Perspective for 18 years and has published more than 670 essays on life and real estate.