JANUARY MARKET FLASH

Statewide
The median resale price of a single-family detached home in California for November was $548,400, an increase of 1.8% from October and 16.2% over November 2004. Unsold resale inventory in November was sufficient for 3.9 months, up from 2.8 months (according to CAR) a year earlier; median number of days until sale was 39, which CAR notes is a three day annual increase.

Top Ten-Plus List
The ten California communities with the highest median home prices in November were: Manhattan Beach, $1,803,000; Newport Beach, $1,474,500; Laguna Beach, $1,360,000; Palos Verdes Estates, $1,350,000; Burlingame, $1,277,250; Los Gatos, $1,260,000; Rancho Palos Verdes, $1,197,500; Calabasas, $1,195,000; Danville, $1,096,500; Cupertino, $923,000. Four in the top ten and fifth as our highest, but if we move the sales cut to ten from thirty, the results are quite different. (Northern California communities that would have made the price cut had they posted thirty sales: Los Altos with 26 at $1,502,500; Saratoga with 28 at $1,386,000; Alamo with 25 at $1,250,000; Mill Valley with 27 at $1,185,000; Orinda with 18 at $1,050,000; Woodside with 29 at $1,000,000; Lafayette with 19 at $995,000; and Palo Alto with 28 at $953,750.)

Bay Area
November median price, at $723,080, is up half a percent for the month and 9.4% from the November 2004 figure. The Santa Clara County median price of $745,000 has gained 0.5% for the month and 14.8% – or nearly $100,000 – for the year; Santa Cruz County at $789,500 is even stronger. The Bay Area overall, by most metrics, has posted its highest November medians on record.

Sacramento/Capitol Region
Prices are up about 10% year-over-year.

Interest Rates
The current consensus is that core rates have been managed in masterly fashion for the last year and a half to two years, but Greg McBride of Bankrate.com now speaks of “a growing chorus that says the Fed is going too far.” Most rates will probably bounce between high fives and low sixes for a while, but adjustable rates are now almost identical to the lower fixed rates.
Inventory: Obviously attractive. Our intuition says that inventory has almost ceased to be a factor in prospective buyers’ calculations; you of course, as always, can make generous inventory work to your advantage by showing your prospects the most compelling available properties.

News Media
“Homes for sale hit 19-year high,” trumpeted USA Today on December 30, and they were talking about the whole country. It’s a useful reminder that, while Northern California may generate extreme numbers and percentages because of our prices, sales activity is softening and inventory is growing nationwide. Most of the pundits now seem satisfied that, rather than a popping bubble or series of popping bubbles, what we’re in for is a very slow, very broad, and comparatively painless correction; the vogue term of the last month is “soft landing.”

Overall Assessment
Economic fundamentals are still jangled by Katrina and Rita, and inflation would look a lot better if we were able to correct high energy prices, but overall consumer confidence remains more robust than some people might think. The tools are at hand – and being used – to help the residential market lose some excess pressure without collapsing. Higher prices and larger inventories may imply longer negotiations with more affluent prospects, but people are still buying houses, which means you can still sell them.