Recent sightings of Vendus Encourigitis — a local Palo Alto insect that emits pheromones that make sellers drop everything they’re doing and get their home on the market immediately — indicate that 2008 may turn out to be a similar year to several of its predecessors.
Here’s how this insect affects the local inventory cycle…
Buyers, sellers, and real estate agents go into Trypophan-induced hibernation around Thanksgiving, and tend not to wake up till early January. Not many new homes come on the market during that time, and not many buyers are out looking for them. This tends to be a time of uncertainty in the market: sellers are not confident about putting their homes on the market because, well, other sellers aren’t putting their homes on the market; similarly, many buyers are spooked out of the market because they aren’t seeing crowds of competition at open houses — ergo, this must not be a good time to buy.
Putting aside all questions of whether such assumptions and actions are rational or not, come January, swarms of Vendus Encourigitis descend on the city and — kablooei!!! — before you know it, the market gets unstuck, sellers finally put the for-sale sign up, and inventory starts its predictable upward march. Shortly thereafter, a related insect — Achetus Encourigitis — begins its work on the buyers, and sure enough, they descend en masse on open houses and begin buying.
Data provided by our friends at Altos Research shows us the pattern for the last couple of years: inventory is at a low at the end of the year, and begins to increase as soon as January rolls around:
A number of nearby towns exhibit similar patterns…
Saratoga:
Los Gatos:
What’s interesting about Los Gatos is that its beginning of the year inventory is somewhat higher than it normally is. Arn Cenedella* of Coldwell Banker notes a similar pattern in Menlo Park real estate, while Dave Blockhus*, also of Coldwell Banker, notes that Los Altos’ real estate inventory pattern is more similar to Palo Alto’s.
Further up the Peninsula, Burlingame has a similar pattern:
Roughly the same trend happens in many of the marquee towns up and down the Peninsula, while in the less tony towns a completely different picture is emerging — more on that in a later post.
* Dave and Arn are both clients of 3 Oceans’ sister company Domus Consulting.
Tags: Altos Research, Buyers, Coldwell Banker, Inventory, Menlo Park, Palo Alto, Real estate, Sellers
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4 responses so far ↓
1 Inventory Levels in San Carlos and East Palo Alto | Peninsula Real Estate Guru // Jan 5, 2008 at 10:49 pm
[...] Kevin Boer a Palo Alto real estate agent has looked at inventory levels from Burlingame to Los Gatos including Palo Alto. [...]
2 richard bolen // Jan 6, 2008 at 8:32 am
we see the same pesky insects up here at the lake too. It’s either that, or the Lake Tahoe inventory follows the lead lemming.
Always like it when it’s clever. Terrific writing.
3 What happens when the market at lower price points is stuck? | 3 Oceans Real Estate, A Boutique Real Estate Brokerage Serving the San Francisco Bay Area // Jan 7, 2008 at 7:00 am
[...] A few days ago I spoke about the effect a mythical local insect, Vendus Encourigitis, has on housing…. It quite dependably comes out in the early part of each year, spraying homeowners with pheromones that make the notion of selling their home completely irresistible, thus putting an end to the seasonal problem we have here of low inventory. A close cousin of said insect, Achetus Encourigitis, tends to come out shortly thereafter, encouraging buyers to compete with eachother to buy the new inventory and drive prices up. [...]
4 Palo Alto market showing signs of life | 3 Oceans Real Estate, A Boutique Real Estate Brokerage Serving the San Francisco Bay Area // Jan 30, 2008 at 4:35 pm
[...] You heard it here first! A few weeks ago I posited that the Palo Alto market would soon see the stan…. [...]
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