January 2013 Santa Cruz Real Estate Market Statistics
Hey everyone – Happy New Year 2013! Here we are at the beginning of the new year and the statistics for Santa Cruz Real Estate sales from the prior month are in. So how did the Santa Cruz market finish off 2012? It turns out we hit a few milestones on the road to the housing recovery. Specifically, sales of single-family resale homes went over 2,000 closings for the first time since 2004, when 2809 homes were sold (a banner year!).
The median home price last month in Santa Cruz county was $545,250 – that’s up sharply from December a year ago, when the median home price was $476,000 – an increase of almost 15% year-over-year. However if you look at the year as a whole, the median price for the entire year was $515,000 – a whopping 18.7% above the median home price for 2011.
The sales data wasn’t all peaches and cream – the sales volume was down year-over-year and month-over-month: just 152 homes closed escrow in December 2012, compared to 161 homes the year prior, and 166 from the month prior. And, there’s some really bad news for buyers: inventory stood at 278 homes county-wide at the end of December, compared to 349 homes available at the end of November, and 654 homes available at the end of December 2011, the prior year. I think it’s clear that a lot more homes would have been sold last month, but there just wasn’t anywhere near enough supply to meet demand.
I’m working with a lot of buyers at the moment, and to say that the buying public is angst-ridden is an understatement. They see the jumping median home price and think it’s inevitable that they will soon be priced out of the market. My advice? Don’t panic. If you ask me (and I’m sure a lot of other real estate professionals would agree), the defining characteristic of this market is not so much surging prices but lack of inventory. It’s supply and demand – limited supply, stronger demand – what’s that mean? Rising prices, sure.
What happens, though, when inventory picks up? I was talking to a buyer last week and he’s been having a very rough go finding a place to buy, surprised to see how many homes sell over asking price. The money quote – and this isn’t a quote, but he said something like, “It seems like last spring there were twice as many homes available in my price range!” – uttered in the context of discussing how much prices have risen. I responded by saying “It seems like that because last spring, there probably were twice as many homes in your price range!” – but not because the prices have risen so much, but because inventory has dropped in half.
I’ve also had the indistinct pleasure of looking at properties up in San Francisco for a client. It’s practically a whole different world up there – that market is hot as a pistol (whereas Santa Cruz is maybe more like a nice warm baked potato). I’ve put in a bunch of offers on properties for my client – and never received a counter offer. We just weren’t high enough over asking price to even warrant a response from the seller. So my client hops on Zillow and glumly reports that the median price in San Francisco is up 18% year-over-year, and for sure, he’s doomed, the window has closed, ship has sailed, the train left the station on the good deals in San Francisco.
Here’s the thing, though: the median home price can be kind of misleading, because it’s not the same houses that are selling month-to-month and year-to-year. When the Santa Cruz median home price was so low back in 2009-2010, it was because sales in the county were dominated by the low end of the market – distressed sales. Today, distressed sales – the low-end – have largely dried up, and what’s selling are more mid-range and upper-end properties. The median price increases we are seeing are driven to large degree by the change in which properties are actually being sold.
When it comes to San Francisco in particular, we have a different (better!) metric we can look at – the Case-Shiller Index. Case-Shiller is nifty in that they look at repeat sales of the very same home, factoring in renovations and upgrades that may have been made to those homes since the last sale. By going house-by-house, the Case-Shiller index tries to gauge the real price increase, rather than the crude number given by the median home price. We don’t have a Case-Shiller index for Santa Cruz, of course – our market is too small. But I had my client check out Case-Shiller for San Francisco, and he told me that the latest numbers were that San Francisco was up 7.8% from a year ago. Up – and up considerably – but nothing so dramatic as the 18% that Zillow was reporting.
So – buyers! Take heart. It’s not as bad as it looks, and when inventory does – inevitably – pick up, your train will come back into the station, waiting for you to hop on board the trip to home ownership. It’s tough right now, but when the inventory picture changes, happier days will come.
And sellers – what are you waiting for?! There is no time like the present. My advice is don’t wait til spring, when the inventory picks up. The iron is hot right now – better to strike now then wait for an uncertain future when buyer demand may be weaker and your competition will surely be stronger.
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