Let’s cut right to the chase. Is there anything new in the Santa Cruz Real Estate Update May 2015 update? Or is it just a broken record, playing that same wheezing off-pitch merry-go-round music? Well…would you believe me if I told you that the median home price has increased yet again, to $779,000 in April 2015? This represents an increase of 21.7% from a year ago, and the median price is now just 1.33% below the all-time peak of $789,500 set in November of 2005.
That probably seems outright crazy to a lot of people – myself included. How is it that Santa Cruz home prices just keep going up and up?
The Santa Cruz Real Estate Market of May 2015 is, without a doubt, a very strong seller’s market. Pity the home buyer – it is just brutal out there. It seems that all a seller needs to do put their property on the market with something resembling a “reasonable” price, and the buyers will swarm like sharks after a bloody bucket of chum.
To illustrate what it’s like to be a Santa Cruz home buyer in today’s market, check out this little snippet of text messaging between a would-be Santa Cruz home buyer and myself a few days ago:
To help understand what’s going on, let’s pull back the lens a bit and look a little further afield. Our eyes drift north, to Santa Clara county, where last month the median price reached $975,000. This makes Santa Cruz county 25% less expensive than Santa Clara county. To a lot of home buyers, Santa Cruz seems like a bargain compared to Santa Clara – and we’ve got much better surf!
Of course, it’s not just that our home prices are still considerably lower than in Santa Clara county. Many of our homes are also considerably more desirable than homes in the Valley. Let’s face it: Santa Cruz is a destination location. People want to own homes here – and for many, they’re not looking to buy a primary residence. In fact, all kinds of people view Santa Cruz as a secondary home market.
How much does this contribute to our soaring real estate prices? Well, 226 houses, condos, and townhouses were sold in April 2015 – and 57 of them (that’s a full 25%) were sold for cash. The average cash price purchase? $800,679. That’s $44.6 million in pure cash being invested in Santa Cruz last month alone. I’m willing to bet that most of these buyers are not folks who are going to be driving over the hill to punch a virtual timecard. A lot of these people are wealthy, retired, semi-retired, or not yet retired but just want to have a bangin’ pied-à-terre by the beach to share with their friends and families on the weekends.
We also have the issue of the incredibly vanishing housing stock. And by that, I mean that inventory continues to vanish.
This time of year, one would expect that more inventory would be coming on the market to meet demand from spring and summer buyers. And to a small extent, it is. There was a 12.2% increase in available listings at the end of April, with 286 single family homes available, county-wide, compared to the end of March (when 255 homes were available). But in fact, this is only a drop in the bucket. Here is how April 2015’s inventory levels stack up against years recently gone by:
- April 2014: 467 units available (38.8% fewer today)
- April 2013: 615 units available (46.5% fewer today)
- April 2012: 809 units available (65% fewer today)
- April 2011: 831 units available (65.6% fewer today)
- April 2010: 1,084 units available (73.6% fewer today)
The Rest of the Story
Sales volume in April 2015 was 133 units sold – that’s an increase of 8.1% compared to the month before, but down 15.3% from a year ago, when 157 homes closed escrow in April of 2014. This year-over-year drop in unit volume probably has much more to do with constrained supply than weak demand.
The sales-to-list-price ratio came in at an even 100.0% last month. Ahh, must be nice to list your home and get every penny you’re asking for, right? Such are the times. Last month though, sellers received 100.4% of asking price, and a year ago they received 100.2% of full ask.
Those 133 single-family homes that sold last month did so with a quickness: the average days on market for these homes was 44. Last month, homes took 49 days to sell (10.7% longer), and a year ago, they took 53 days to sell (17% longer).
Please share my newsletter with anyone you think is interested in what’s going on with the Santa Cruz real estate market – just send them the link and they can sign up to receive an e-mail every month when the newsletter is ready. Thanks so much for taking the time to read this – I hope to hear from you soon!