Tuesday, August 12, 2008

Sunnyvale CA Homes vs. Fremont CA Homes

I live and work in Fremont CA. I used to live in Sunnyvale CA for most of my years growing up. So, when I took a listing in the Parkmont area of Fremont in July of 07 and got 2 showings in one month, (very low), I got a bit involved in some unique statistic gathering.

I wanted to find out percentage of turnaround in competing areas. Percentage of turnaround is the number of homes that have been bought and sold within a measurable duration of time. It's important to know because this figure will tell us what areas are moving real estate. What's more, is that turnaround determines both supply and demand. Measuring the number of homes for sale on the market is one thing, but measuring the number of homes purchased within a unit of time reflects the demand for the area and completes it's economical circle.

Putting some of the math aside, the basic concept is to count all of the listings that have been listed within the last 3 months (this is the duration that I needed at that time). Out of those listings of homes for sale in Fremont (for example), you then need to determine how many have sold during that time. You now have the first part of the calculation, the difference between the two categories. Divide the difference by the number of total listings, and you will have a percentage of turnaround. I have the results below for competing areas of Fremont CA homes for sale and Sunnyvale CA homes for sale.

It turns out the Fremont CA homes http://www.tricityhome.com turnaround during May 1st--July 31st, 2007 were measuring in at 14.7% (yuk). That means that out of 100 homes listed for 3 months, less than 15 homes sold in that time. The other 85 homes out of 100 sat on the market testing the patients of both seller and agent. As an aside, interestingly, the sellers viewed the agents as the first target for the blame. I was included in this, and it is understandable from a limited point of view. We realtors are the window to the real estate world for the clients. However, in short, Realtors were not the blame. Let's get back to the point. Sunnyvale came in at a whopping 47% turnaround. About half sold in 3 months and in 6 months, most of the rest were gone too. That's more than 3X more turnaround than Fremont--Sunnyvale kicked the pants off of Fremont. Were the realtors better in Sunnyvale? No. What made the difference? I have my suspicions.

My chief suspect is socioeconomic. Most of the homes purchased in Sunnyvale were surrounded by the demand for a location relative to the center of the technology industry. It's been the heart of the silicon valley since the 70's. It still is. Schools also played an important factor. Although Mission San Jose High School in Fremont is ranked in the top 10 nationwide, it only makes up a small geographic area within Mission San Jose High School's attendance map. Home prices tend to be inflated in the Mission San Jose area as well anyway due to homeowner perceptions of value relative to a school. Schools in Sunnyvale rank very high as well. Although it may not be safe to say that Sunnyvale just happens to have more "established," and "high tech" buyers than Fremont, conversations with other brokers in both areas tend to support this thought in part.

As a by product of the statistical study, we noticed that home prices stayed stronger in Sunnyvale and were not shaken in the negative direction by the economy. In Fremont, sellers and agents were quick to reduce home prices in order to create a demand and help bring in the buyer force. The sellers who reduced quickly, got their homes sold. The home in Fremont (the one from our office that prompted this study) did not reduce quickly enough. The seller did not feel it necessary to do so. Hence, it became a statistic of one of the 85% of homes that sat. In fact, it never sold. I did, however, sell one of its neighbors who reduced their price. I handed them their keys last week. For those in Fremont who reduced too little too late, Ouch.

by Jeff Pereyda
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