Spring has sprung – and with it, a raging seller’s market. The first two months of 2013 showed a market that appeared to be moderating after steady price increases throughout 2012 – recall that the median price declined for the first two months of 2013…but in the third month of 2013 – wow. The median home price in March of 2013 soared to $583,500 – up 18.6% year-over-year, and up a gi-normous 28.2% from February 2013, the month prior. What is going on?
A lot of things are going on – there’s a lot of moving pieces to this real estate market. But please watch the video below to get a quick summary of where we are at.
Aside from the median price, there are some other interesting numbers to look at – such as inventory, which remained virtually unchanged at the end of March, at 277 available units county-wide (vs 279 units at the end of February). The sales volume did pick up strongly in March, with 156 homes having closed escrow – an increase of 28.93% over the month before, but a decrease of 8.2% from a year ago, March 2012.
Last week I attended a conference where the keynote speaker was Leslie Appleton-Young, a VP and the Chief Economist of the California Association of Realtors. Leslie gave a very well received presentation about the state of the national and California real estate markets. As you might expect from someone as high up in the Realtor® organization as Leslie, she is very bullish on the California real estate market.
There’s a couple of questions that get asked a lot these days:
- Why is inventory so low?
- Why don’t more people sell their houses now, given this raging seller’s market?
There are a number of reasons why inventory is at the lowest level in memory. None of these reasons is dominant and they are listed in no particular order, but here are a number of factors:
- Banks are foreclosing on far fewer homes in California, a key source of inventory over the past several years
- Little new housing has been constructed over the past 5 years
- Many homeowners are “trapped” in “underwater” mortgages and cannot easily sell
- Many “move-up buyers” lack equity to sell and then move up
- Demand for housing has been outstripping supply for over a year
- Government policy (think HAMP, HARP) encouraging owners to stay in their homes
- Investors are in the market in greater numbers, buying-and-holding
As for the second question – if this is such a great seller’s market, why aren’t more people selling? – that’s open to speculation. But the common wisdom in the industry seems to be that people aren’t selling because:
- They are expecting prices to keep rising in the near term
- They are underwater and need prices to rise more before they can sell without doing a short sale
- They don’t have enough equity in their homes to use that as a stepping stone to a “move-up” house.
As always, to get the full, PDF version of my newsletter, broken down by different areas of the county and also by Single Family Residences as well as Condominiums, click here to download the full the Santa Cruz Real Estate Market Trends newsletter.
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