We prepared the chart below so you can make up your own minds about the state of the market.
All things considered, including fluctuating interest rates and fear mongering by the media, prices paid for Single Family homes in Alamo have declined relatively little. Without a full year of sales data to review, it looks like unit sales are tracking significantly downward about minus 62 percent from the 170 reported in 2007 to 107 projected for 2008. This is not surprising, given the bad press and the difficulties in the credit market. Who can blame a buyer for being risk averse in what appears to be a declining market? In my view normal demand is still there, but the buyers are remaining hesitant, waiting for a sign that it's OK to jump in. On the other hand, the 86 buyers currently making deals are getting prices 10 percent below the peak prices.
In the face of this significant unit sales decline, it is pleasantly surprising to learn that average price has fallen only 8.3 percent this year (not the 15-30 percent declines we hear on the news), and median price has dipped less sharply at 2.9 percent, and price paid per square foot sits between the two at minus 6.5 percent. If you purchased your home between 2005 and 2007 at the absolute price peak, sadly, you have given up some fraction of your equity, and that is truly painful. However, if you bought your home before then you have only given up a small fraction of your overall gain and it probably feels more painful than it really is. If you bought in 2000 or before, I would encourage you to be thinking about the implications of the upcoming presidential election and talking with your tax advisor as it is likely that you are sitting just under the $500,000 capital gains exclusion limit for a married couple.
Both interesting and surprising is that during this century's peak unit sales for Alamo Single Family homes, which occurred in 2004 with 299 homes sold, average price paid was 11.4 percent lower than what is being paid this year for the average home. Price paid in 2004 was $1,399,972 compared to $1,560,126 paid in 2008. Price paid per square foot in 2004 was about 12 percent lower.
When real estate is viewed in the macro environment of all investments, it is generally accepted that the typical investment in a Single Family home returns between 5-6 percent per year in average annual appreciation for any given 10-year period. If you look at median price over the nine years listed here, you come up with 6 percent appreciation in Alamo during the 21st century. Price per square foot has grown on average about 5.3 percent in the same time period. Given the current environment it seems noteworthy that both numbers fall within the range of what we would consider normal average appreciation. Alamo is truly a remarkable place.
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Data presented in this column is based in whole or in part on data supplied by the Contra Costa and Alameda Multiple Listing Service and other quoted sources. Joe and Nancy Combs, Remax and the MLS Service do not guarantee the accuracy of this information.
Alamo Sales Single Family Detached Homes
Year No. Sold Avg. Price Median Price $$/Sq. Foot
2000 245 $1,086,167 $925,000 321
2001 168 $1,102,431 $950,000 333
2002 266 $1,110,638 $1,000,000 359
2003 249 $1,290,603 $1,194,500 383
2004 299 $1,399,972 $1,255,500 424
2005 221 $1,621,208 $1,480,000 505
2006 158 $1,721,075 $1,575,000 515
2007 170 $1,700,797 $1,450,000 508
Ytd 2008 86 $1,560,126 $1,424,000 475
Percentage change 44% 54% 48%