Danville Real Estate: Family Home Prices Up 3%
This month I wanted to focus on what I consider to be the average Danville Family Home of 4 bedrooms equipped with 2-3 baths and see if the upward market trend we observed throughout 2016 can be seen here at the half way point of 2017 as well. At the peak, the 2006-2007 time frame, the average price paid for one of these 2500 sq. ft. gems was $1,112,000, selling at a stratospheric price of $436 per square foot. Supply was very low and demand was very high.
Through the first 5 months of 2016 and 16 days of June, the price for a Danville Family home has increased somewhat compared to last year. Current average sales price stands at $1,261,000 compared to $1,226,000 in 2016. This represents a price increase of 3% over the previous year. Dollars per square foot decreased $474 to $467 for an -1.5% drop. Why the discrepancy? Looking at size of home sold, you will see that last year they were smaller by 86 square feet. It’s typical that larger homes sell at lower price per square foot. It’s also quite common for average home size to vary from year to year.
For the year a total of 150 Family homes have been sold. Inventory remains low with only 37 similar properties currently on the market. Last year 55 remained so inventory is down about 33% from last year. Danville Family Homes are selling at a rate of 25 per month. Current inventory sits at about 1.5 month’s supply. When you consider days on market stand at 19, less than one month on average, and inventory continues to shrink we should not be surprised to learn Danville is still a very hot market.
Everyone asks, “Are we in a Real Estate bubble?” Eleven years have passed since the beginning of the big crash which bottomed late 2011. With the recent run up in home prices, we are about 11% ahead of those 2006 prices. So, if you bought your home in 2006, on average you’ve earned about 1% per year on the investment. This doesn’t sound like much of run up or a bubble does it? If you bought your home anytime during the downturn, you’ve done significantly better enjoying robust rebound appreciation.
So just for the fun of it, where would prices be if the market had appreciated a mere 3% per year during those past eleven years? Figuring a simple 33% increase from our 2006 base, our average price would stand at $1,478,960. Average price per square foot would be $579. Will Danville Real Estate recover to this point without any price correction? It’s impossible to say but a number of factors favor it.
Today, mortgage interest rates are 30% lower than during the last peak and average income in Danville is up by more than $10,000 per household. Combine this with population growth, job creation, few net new home starts and you can easily envision continued strong demand. Low inventory is likely to persist as Proposition 13 has made it undesirable for older, long term home owners to sell their homes and give up their tax low tax base. Federal and State Capital gains taxes are punitive for long term California homeowners, at least until the passing of a spouse. So both of these situations discourage long term homeowners from selling. Further exacerbating low inventory, retirees are now unlocking their home equity with reverse mortgages. This enables them to stay put and pass the remaining value of their home to their children without huge tax consequences. This will likely continue and accelerate until home prices fall again.
Call me if you would like an honest estimate of your home’s value. 925-989-6086. Email me at firstname.lastname@example.org to receive the electronic version of this monthly article. To find archived articles for Alamo and Danville Real Estate, please visit our website at www.thecombsteam.com Visit our Facebook Page “Real Estate Services for Danville, Alamo and more”.
Joe and Nancy Combs, The Combs Team, have a high degree of focus on Danville Real Estate Market and Alamo Real Estate Market and sell Real Estate throughout the East Bay. As always, if you have any questions about the Alamo and Danville California real estate markets, or finding that perfect home for sale in the East Bay, please let The Combs Team know! Call Joe Combs 925-989-6086 or Nancy Combs 925-351-6999.
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Joe Combs, Nancy Combs, The Combs Team, J. Rockcliff Realtors and the MLS service do not guarantee the accuracy of this information. DRE #0144125.
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Buyer to investigate and verify all measures of square footage.