Danville Alamo Real Estate Market: It’s Running Hot and Cold!
We’re near the end of May so we have enough data to review this year’s market performance against the same time period last year (January 1-May 19) and be fairly confident that it has meaning.
On average home prices continue to rise both in Alamo and Danville. A key driver to that growth appears to be relatively low inventory at the mid to lower price points for homes as well as great interest rates for buyers. Low inventory coupled with steady demand has been the price driver in Danville and Alamo for 4 years. The Danville homes that have sold so far in 2015, have sold on average within 23 days. Let’s contrast that with the 88 active listings (homes not sold) that carry an average of 53 days on market with a list price ranging from $695,000-$7 million. As I mentioned last month, it is indeed a tale of 2 markets.
The dearth of inventory has not yet been resolved by market forces delivering a sufficient number of desirable properties for sale to tip the balance in the favor of buyers, although I am beginning to believe that change is much closer than it was in 2011. The upper price tiers are pretty much flooded with homes for sale and last month I reported more than a year’s worth of inventory and a cold Danville Luxury Home Market.
Many of the homes listed in the upper price tiers are significantly over priced. Some are listed above $1000 per square foot. Of note, when and if these homes do sell, they will only need to fetch a little more than $500 per square foot, to drive average prices higher, so I would not be looking for average sales price to decline in the foreseeable future.
I think it is also worth noting that some of the homes in this analysis sold for a lot less than $400 dollars per square foot. Proving that not every Danville home is worth the market average (mean) price in the minds of buyers and sellers, distressingly unlike Garrison Keillor’s Lake Wobegon where every home is above average. Not listed on the chart is median price. It stands at $1,100,000 and is a really important number to aid our understanding of the market. It means simply that half of the 88 Danville sold properties closed for more than this number and half sold for less. Shockingly, it is true that half of all Danville sales were below median price and significantly more than half were below the average (mean) price.
Home sales increased in Danville by 2% from the previous year, while average purchase price moved up 6% year over year. This suggests that except for the very top tiers of price, where inventory is overwhelming demand, Danville’s low and moderately priced inventory is beginning to come smoothly into balance with buyer demand. If I am right in this assessment, it is a good thing.
Danville dollars paid for square foot came in at a 5% increase. If it doesn’t sound like much growth, please think again. That’s more than one half percent a month, although last year’s year over year rate of growth was 16%. Remember too, as the base price grows, a single percentage point is worth more dollars. The average dollar growth, year on year is equal to $65,819. A percentage point last year was worth $11,348. Moving forward, a percentage point will be worth $11,971. We’re talking really nice growth in terms of dollars. If we obtain the same level of growth next year as we did so far in 2015, Danville average price will move to $1,269,092. Although the Danville Market has run hot and fast during the past years, I see nothing on the horizon to seriously limit that rate of growth.
Also, something of consequence worth noting is that actual selling price in Danville is running above list price, but just barely. We might expect to see this dial back even more as the market comes into greater balance. Harkening back to a statement made earlier, what all this means is that homes that sell in first few days are selling above list price. Bottom line, if you have owned your Danville Home during the amazing run up of the last four years, you have done really well, and if you price it right, it will sell.
It’s important to remember that there really is no “average” home and no two homes are exactly alike. Computer generated estimates of your home’s market value are probably wrong. If you would like multi-dimensional analysis of your home’s current market value, based on years of Alamo market experience, please give me a call 925-989-6086 or send me an email firstname.lastname@example.org. For more Alamo and Danville Real Estate articles, please visit our website at www.thecombsteam.com