Market Trends Back Up--3Q09 Update

Following the national trends (see the cool NYT graphic we've been watching here.) Piedmont's average home sale price as reported by the MLS increased by 8 percent over prices last quarter. Recall that last quarter was the first time we saw a clear drop in prices--they were down about 16% compared to the second quarter of 2008. While the third quarter's prices are back up, they remain about 8-9 percent below the average we'd seen since November of 2005.

The average home price was $1.49 million, and $525/sf, and the typical home sold in 33 days at 95% of the original asking price. Prices ranged from $770,000 to $4 million, and $409/sf to $720/sf. No portion of the market seemed to have difficulty garnering an offer, once prices represented good value to serious buyers. Twenty one homes sold, moving us rather close to the typical volume of homes sold in the late summer.

Remember that these closed transactions reflect deals struck 30 to 60 days ago (as our escrow periods have lengthened due to changing financing and appraisal processes). If we look at pending transactions, the good news continues. Sixteen homes are pending (two were short sales, and several received all-cash offers), and while we don't know exactly how pricing will turn out yet, the typical stats based on asking prices are very consistent with this quarter's outcomes.

In contrast, Berkeley average prices are off 13 percent (to $671,000) compared to the third quarter of 2008. Oakland's situation is very complex. The average price across the city has declined 27 percent compared to 3Q08. There were 200 more sales, however, and 200 more all-cash transactions (now representing fully one-third of all sales in the city).

Note that of the 21 homes currently on the market in Piedmont, none is distressed (defined as either a potential short sale or a bank-owned property). But life is not necessarily rosy in all quarters. I imagine there are a number of Piedmonters who are underwater (that is, they owe more on the property than it is currently worth) but can keep up with payments as long as jobs or savings hold up. Today's news that personal expenditures increased 1.3% (1% excluding durable goods like cars-for-clunkers) offers a nice shot-in-the-arm for those concerned about the broader economy.

I have a vision of households going off to Costco to replenish their stores of paper towels and jarred spaghetti sauce, having subconsciously cleared out the shelves these last several months, a story line from one of Jhumpa Lahiri's short stories. The future looks bright if you're laying in the larder.

See details on transactions here and email me if you'd like a copy of Clarus MarketMetrics report on the Piedmont market.