Recent real estate market data in Walnut Creek and the nearby Contra Costa communities of Concord and Lafayette reveals an interesting, though not completely surprising, correlation between median home prices and the amount of activity in the market.
First, let’s take a look at median home prices over the past year in these three locations:
As you can see, Lafayette is by far the priciest of the three, with home prices just under $1 million. Walnut Creek is next, with median prices just over $700,000, and Concord is the most affordable for home-buyers with median prices in the $300,000 range. So that’s the pricing landscape we’re dealing with…now, let’s take a look at market activity in each place, using Altos Research’s proprietary Market Action Index metric:
As you can see, Concord has the highest market activity ranking, followed by Walnut Creek and Lafayette, meaning that their level of market activity is inversely correlated with their respective pricing ranks. The simplest conclusion to draw from these two graphs is that value-conscious buyers are most active in the market at the moment, while those with larger budgets are either chosing to bide their time, or may have found that their budgets aren’t so large after all following the tough economic conditions of the past few years. I’d guess many of those buyers with reduced budgets are shopping for homes in Concord whereas in the past they may have been looking in Walnut Creek or even Lafayette.
Lafayette’s relatively low level of market activity is also reflected in its declining home prices, which have fallen from above to below $1 million over the past year. Without the support of buyer activity, prices have only one place to go…down. Looking ahead a few months, this could mean that we’ll be seeing an uptick of activity in Lafayette as word gets out that luxury homes are going for bargain rates.
You may also be wondering how exactly this Market Action Index I’ve been using actually works. As Altos Research explains it, “The higher the Index goes, the hotter the market. Like a thermometer, the measurable scales goes from zero to over 100.” Anything with an index value of 30 or above is considered a seller’s market, and anything below 30 is considered a buyer’s market. And as you can see, despite the differences in activity between Concord, Lafayette and Walnut Creek, all three indexes fall below 30, meaning they are all technically buyer’s markets at the moment. So if you’re considering buying a new home in Contra Costa County, you might want to do it while those graphs are still well below 30!