2017 has been an eventful year for Willow Glen.
In July, The Primrose School of Willow Glen opened its doors in 1496 Hamilton Ave. To celebrate its opening, the school welcomed the community to a Saturday filled with games, music, tours, and other fun activities.
This story perfectly embodies the optimism around Willow Glen’s future.
As the month drew to a close, the real estate market in this tranquil and historic neighborhood stayed as promising as ever.
Here is our monthly Willow Glen real estate report for July 2017.
Prices of Single Family Residential (SFR) Properties
Good news for those who plan to sell their houses — now is the most opportune time to do so if you want to maximize your gains.
Our monthly findings show that home sales in the Willow Glen area have been in an upward trend in the past 12 months.
Important note: Although statistical averages are useful when considering the basis for your expectations in case you plan to enter the market, they cannot accurately predict how future transactions will go. Pay attention to the price ranges to level your risk management accordingly.
Average Weekly Price of SFR Properties Rise 23.5%
- According to our data, the average price of an SFR property rose 23.5% from $1,139,867 in the last week of July last year to $1,407,942 this year. This is 2.65% larger than the 12-week average of $1,371,522.
- During this period, a total of 14 homes were sold from a total of 43 properties listed. The median price for all sales also increased to $1,236,750 from $1,224,500 in the previous week. This translates to a 1% increase in Willow Glen SFR median prices.
- Additional data for the month of July revealed an increase of 4% in average sales price from last year.
In 2016, the average sales price was measured at $1,217,334. This rose to $1,264,934 this year.
- The median sales price, on the other hand, recorded a much bigger increase of 11% — from $1,152,500 last year to $1,280,000 this year.
Take note that the average price is calculated by adding the prices of all properties within a specific time frame, and then dividing the sum by the total number of properties sold.
The median price, on the other hand, is obtained by arranging the prices from lowest to highest and then focusing on the middle of the data set. This process can then be used to identify the properties in the higher and lower halves of the pricing scale.
For homeowners who are interested in the local property market, consider that both the average sales price and median price can help you determine the fair value of your home.
If you depend solely on the average sales price, then the valuation of your home might be influenced by the extremes of the pricing range, especially in smaller data sets.
A good strategy is to create a list of all the prices of active listings to check if there’s an “outlier” in the data set. This is a value that’s significantly larger or smaller than everything else.
If there is indeed an outlier in your market, then a median sale price may be more helpful in evaluating your property. If you prefer, you may also compare the prices of recently-sold properties in order to look for an outlier.
Here are some additional stats on the growth of Willow Glen SFR prices:
Average Price Per Square Foot Rise by 8%
- The price per square foot of SFR properties also increased significantly from last year.
During the months of May, June, and July of 2016, properties were sold at $668 per square foot. This is 8% or $51 less than the $719 price per square foot in May, June, and July this year.
- In May-July of 2017, a total of 2,012 square feet were sold as compared to 1,967 square feet in May-July of 2016. This shows an increase of 2.3% in square feet sold.
Prices of Pending Properties Rise by 7.2%
- By the end of July, the 12-week average price of properties that went pending is $1,359,392 — 7.2% bigger than last year’s 12-week average of $1,268,112.
- A property goes pending when if the buyer and seller already agreed on the sale’s pricing and terms. This means the home is already set to close once the loan and title documents have been processed.
Close Price Rise by 9%
- Based on 3-month rolling statistics, the average close price from May to July is $1,386,595.
This shows a 9% increase from last year’s $1,274,192 ($112,403 difference). It’s worth noting that these close prices were calculated using data from over 216 sales in 2017 and 190 sales in 2016.
What Drives Home Prices Up?
For Willow Glen homeowners, it feels reassuring to know that your investments are increasing in valuation. But what are the main factors that affect the prices of SFR homes?
In the real estate world, it usually boils down to the following four factors:
The Home’s Features
If you entrust the valuation of your home to a certified appraiser, the first thing they’ll look at will be your home’s features.
Take note that the impact of home features in its overall value is market-driven.
An indoor pool, for example, may be greatly appreciated in some markets, while others might prefer a simple and functional laundry room.
Since Willow Glen is known for its diverse architecture, it has something to allure just about any type of homebuyer.
What are the most sought-after home features in Willow Glen properties?
Of course, even the most luxurious homes would be difficult to sell if it is situated in bad neighborhoods — such as near a factory, correctional facility, and so on.
On the flip side, a modest home would sell easily if it’s in a peaceful neighborhood that’s rich in history and conveniences.
In the case of Willow Glen, certain areas — particularly Lincoln Avenue — are home to independent businesses and family-owned restaurants.
It’s also a pleasure to walk through one of its many tree-lined streets.
What areas in Willow Glen closed the most sales in 2017?
The economy has a direct impact on real estate. Simply put, real estate markets need cash to mobilize — just like any other industry.
If the economy is in turmoil, real estate sales in certain property types fall sharply. If it’s up to speed, then sales usually climb.
What is an example of a nationwide economic event that affected Willow Glen home prices?
Lastly, while most of the factors indicated here can be seen as “macro-factors” in the real estate industry, there are also specific “micro-factors” that impact the price of an individual sale.
Apart from the home’s features, other micro-factors include existing upgrades, an official inspection report, and comparable properties in the neighborhood.
What particular micro-factor should homeowners watch out for in Willow Glen?
Lending Changes Make Mortgages More Accessible
Aside from the factors explained above, two major changes in the mortgage market came into effect in July 2017:
Dropping Incomplete Tax Liens and Civil Judgments from Profiles
The first major change is the agreement between three major credit reporting agencies — Equifax, TransUnion, and Experian — to drop all tax liens and civil judgments from some consumer’s profiles if they don’t have sufficient information.
In the past, a lot of liens and judgments led to mistakes due to the lack of basic information, such as the consumer’s full name, date of birth, social security number, and address.
By removing these unsubstantiated liens and judgments, a person’s FICO score (from credit rating firm Fair Isaac Corp.) can increase by up to 20 points.
Based on a study by FICO, tax liens or civil judgments pinned against roughly 7% in 220 million US citizens.
Higher Levels of Debt for Home Loan Borrowers
Apart from the dropping of liens and judgments, mortgage firms Fannie Mae and Freddie Mac also started lending to borrowers with higher levels of debt.
Previously, both firms had a debt-to-income ratio of 45% of pre-tax income. As of July 2017, they agreed to raise the qualifiable ratio to 50%.
This crucial change is meant for consumers who are deeply buried in student loan debts.
Fannie Mae also set new guidelines that take into account the applicant’s monthly student loan payment information to adjust their debt-to-income ratio and boost their loan qualifications.
According to the Department of Education, approximately 6.5 million US citizens are repaying $333 billion in student debt through income-driven repayment plans.
Unfortunately, such systems may result in loans that are “negatively amortizing”.
Furthermore, the firm is willing to disregard your student debt altogether if it is being repaid by a benefactor.
What other events accelerated the growth of SFR home prices in Willow Glen?
More Homes are Being Sold Faster
In addition to the positive trends in SFR unit prices, properties are also being sold faster. This means less hassle for owners who wish to either move or turn properties over.
Generally speaking, the days on market (DOM) for real estate property sales is ideally within the first 30-60 days.
A much shorter DOM indicates a healthy market in any given area.
If however, the DOM exceeds 60 days without receiving any offer, the selling party — the owner and real estate agent — should review certain factors that discourage inquiries.
Based on our data, Willow Glen is in a more than favorable position as of July 2017.
Houses are Being Sold in 17 Days
- This year, the 3-month rolling average of a property’s active DOM is only 17 days as opposed to 20 days last year. In all fairness, the property market in Willow Glen has historically performed well.
- Last year, properties were sold as early as 13 days in August. In 2017, the fastest DOM was 7 days in the month of February. That means homes were being turned over in as early as a week. During this period, a total of 9 units were sold at an average price of $1,224,767 and a median price of $1,049,950.
- For the month of July, the average DOM for Willow Glen SFR properties is 23 days. The 12-week average sits at 20 days since July 2017. This is one week faster than last year’s 12-week average of 27 days.
- The figures from June 2017, however, performed slightly better with an average DOM of 16 days. The most active periods during this month had a DOM of only 14 days. A total of 72 units were sold with the highest weekly median price of $1,399,995.
More Houses are Sold Despite Fewer Listings
- A total of 62 units were sold in July this year, which is slightly bigger than last year’s 60. This is despite the fact that fewer properties were listed for sale this year.
- Our data shows that only a total of 57 listings were posted in July this year, whereas a total of 140 listings were posted in the same period last year. The total number of new listings is also down to 73 from 102 last year.
- A similar trend can be observed in Greater San Jose. In 2016, there were 1,629 listings active and 1,469 pending. Both values decreased to 910 active and 1,410 pending this year — showing a difference of 719 or 44% and 59 or 4% respectively.
More sales with tighter inventory usually indicate a high demand for a commodity. In the case of Willow Glen, we can conclude that the single family residential market is in a great spot.
The basic rule of supply and demand in economics also plays a role in Willow Glen’s SFR property market.
Since fewer listings are posted, potential buyers have fewer options and therefore are open to more expensive deals.
For the rest of the US, you can also observe the decreasing number of active listings.
According to official stats from Realtor.com, the total number of active listings dropped 10% from last year. Despite this, the median list price for properties in markets increased by 10% — now sitting at $275,000 since May 2017.
Overall, the numbers and policies bode well for home sellers and owners who aspire to participate in the market sometime in the future. Not only are the prices for properties continue to climb, recent market changes also empower more consumers to finally get a mortgage.
I am a Real Estate Advisor and Investor. I have a background in tech startups within the real estate space.