Bernard’s Danville Real Estate Blog

What a year! Maybe not quite so bad as 2008 for some, but many home owners will remember 2009 as the worst year of the decade.
 I think relatively few people will look back on 2009 with a good feeling. The recession continued to bite and the repercussions of the  “creative” home financing products that came about because of a lack of banking industry regulation forced many people out of their homes as a result of foreclosure or bankruptcy. Some home owners avoided this by selling as a “Short Sale” but they still lost their homes. Hopefully the worst is now over. This therefore looks like an appropriate time to take a look at what has happened to home values over the past couple of years in our area.
Analyzing The Value Of The “Typical” Home
 I am very wary of just looking at average or median sales prices of homes unless it is obvious that the comparison is of like with like. It always makes more sense to take a specific type of home and see what has happened to it’s value over a period of time.
 So let’s consider a 4 bedroom detached single family  home with between 1800 and 2500 square feet of living space (as depicted in the chart below).

Surprising Results
 The figures are interesting to say the least. Although prices continued to fall into the second quarter of the year, the third and fourth quarters increased in this popular segment of the market.
 These price increases are most likely due to a combination of factors. Interest rates fell to the point where homes became more affordable, the government incentive plans began to have an effect and buyers gained confidence that prices had bottomed out. And then inventory levels started to fall. Supply and demand kicked in. Note that as interest rates increase, home prices will probably settle down though.
 Now look at the second chart, this time for 3 bedroom homes, and we can see exactly the same pattern. Many of the buyers in this segment are first time buyers and there are still a lot of these about. Expect to see this trend continue until interest rates increase also.

 Finally, let’s take a look at the higher end - the luxury home market. Even here, as can be seen in the bottom chart, prices seemed to enter a recovery period in the third quarter, yet now it looks like this may not be quite so sustainable as in the other market segments. Prices here are certainly lower than at the start of last year.

Not Such A Bad Year
 There seems little doubt that most home owners in our area will have seen a small increase in value through 2009. This is not what you will read in the newspapers but you can’t argue with the facts. This data is actual sales figures from the Multiple Listing Service. So at least some of us may be on the track to real estate recovery. Only time will tell for sure.

Latest Full Months Statistics for Danville Homes
(including Blackhawk and Diablo)

Previous months figures shown in parentheses	Detached Single Family Homes	Condomiums, Townhomes, others
New Listings	80(92)	22(19)
New Sales Agreed	38(32)	9(10)
Closed Sales	30(14)	8(7)
Median Price - Closed Sales	$791,250 ($961,250)	$504,337 ($515,000)
Average Days on Market - Closed Sales	117(90)	91(54)

At the beginning of April, 2009, there were 286 detached single family homes for sale in Danville (up from 271 in March, 2009) and 64 condos and townhomes etc. against 65 a month ago. So there is around 9 months supply of single family homes in Danville and 6 months supply of condos etc. The supply of condos is still being taken up faster than single family homes, but still, 9 months supply is a lot less than in many parts of Contra Costa County.
     What is of particular note is that the median price of closed sales has fallen significantly for the third straight month. Danville home prices are not as resilient as many thought. The increasing time on the market suggests that sellers may have been trying to sell their homes for unrealistic prices but they eventually given up waiting for higher offers and accepted the reality of the situation.
     So what happens now in Danville? Certainly there are plenty of buyers about but they will still be cautious when they see these figures. Home sellers will need to price their properties very aggressively if they really want to achieve a sale.
     I still think it is a good time to buy in Danville. Interest rates are low and there is a lot of choice. If I was thinking about buying here now, I would make a very careful assessment of real value and base any offers on that, rather than just on the asking price. And there are still bank owned foreclosures that offer particularly good opportunities in many cases.