Well here we are, two months into the year, and 2013 is turning out to be quite a bit different than the year before it. Santa Cruz Real Estate prices rose steadily through 2012, but 2013 so far has been a market that may be moderating. The median home price for Santa Cruz County in February 2013 was $455,000 – down 8.9% from the median price of $499,900 in February 2012, and $500,000 in January 2013.
Sales volume remained largely unchanged from the prior month; 121 homes closed escrow in February 2013, which was down 7.6% from February 2012’s volume, and down 17.5% from January 2013, then 103 units closed escrow.
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The big story continues to be the lack of inventory – only 279 single-family residences were available for sale at the end of February 2013, up just slightly at 4.1% higher than the month before, but down a whopping 54.1% from a year prior in February 2012.
There is no shortage of “news” in the national media that says the real estate market has turned a corner, and things will only get better from here. Many people in Santa Cruz anticipate a “V” shaped recovery, with a fast and steep drop in prices followed by a similar fast and steep increase in prices. The more likely recovery is a “U” or “W” shaped recovery, where we reach a bottom and then prices bounce along it before eventually trending upward again. The upward trend in prices will likely coincide with a stronger economy and gradually diminishing distressed sales (bank “REO” foreclosures and short sales, mostly) as a percentage of the overall market.
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The fact is, the price increases we saw throughout 2012 have faltered now in the beginning of 2013, even in the face of strong demand and both historically low inventory and low interest rates. This should give pause to any seller who thinks that by waiting “a little bit longer” to put their property on the market they might net more money. They might, but there is signifiant cause to think that they might not, at least in the shorter term. One thing we do know is that right now, it’s a hot seller’s market, with low inventory and healthy demand. The advantages of listing a home in a seller’s market is really something a homeowner should weigh seriously if they have thoughts about selling in the none-too-distant future – because seller’s markets don’t last forever.
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