If you study inventory trends in the Atherton real estate market, a question you might be asking is, “What happened to all the homes?” A detailed, analytical answer to that question isn’t easy to produce – there are so many variables. The simple answer, on the other hand, is no problem: They’re vanishing. In looking at real estate in Atherton, we see a trend that’s become widespread throughout the Silicon Valley region, a trend that garners mention in industry articles from coast to coast: There simply isn’t enough supply to meet demand.
And when this happens, the price of single-family homes typically increases, along with the pace at which homes are being sold. It’s a classic scenario that’s both interesting and concerning as bidding wars intensify for the relatively few available homes and buyers with less financial solvency are pushed out of the game.
Let’s look at three elements of this scenario.
Drop in inventory
In April, there were 26 homes for sale in Atherton. Based on numbers of available homes in the last five months, this seems to indicate that inventory is picking up:
• December: 17 • January: 16 • February: 19 • March: 25 • April: 26
But when you consider the inventory trend since April 2013, these numbers are dramatically low. For example, in the five months above, 103 homes were on the market. Here are the same months from a year ago:
• December: 48 • January: 40 • February: 40 • March: 44 • April: 45
That’s 217 available homes, more than double the number in the most recent five-month period. Here’s a broader time frame that paints a clear picture:
• May 2014-April 2015 inventory: 374 • May 2013-April 2014 inventory: 675
Assuming buyers are still actively seeking properties in a given area, shrinking inventory almost always results in rising prices.
The median sold price for Atherton homes in April 2015 was $6,600,000, 86% higher than the $3,550,000 in April a year ago. For the 12 months ending last April, the average monthly median price for sold homes was $5,461,875. For the same 12 months a year prior, it was $4,011,517. The difference is an increase of 36%.
Days on the market for sold homes
How long a home sits on the market before being sold is determined by various factors including how motivated the seller is to move the property and the quality of the offer(s) based on the seller’s estimation. Usually it’s a combination of these primary factors.
In April 2015, homes that sold averaged 27 days on the market (DOM). In April a year ago it was 60. Only two months in the last two years saw homes selling faster – 25 days in June 2014 and June 2013. Here is the average monthly DOM for 12-month periods:
• May 2014-April 2015: 51.2 • May 2013-April 2015: 72.4
In Atherton, we’re observing what happens when inventory is significantly reduced in a market where buyer numbers remain steady: rising prices and fast sales. Unless something changes in the financial world, look for this trend to continue in the upcoming months.