This summer has been one for the record books. Crazy solar eclipse. Heat records shattered across California. Flooding of biblical proportions in Texas. Looming (nuclear?) war with North Korea. Are we nearing the end of the world, at least as we know it? Hopefully not – but it is getting near the end of the summer real estate sales season, so let’s dive in to my Summer 2017 Real Estate Wrap-Up for Santa Clara, Santa Cruz, and Monterey counties.
While we may be grinding our way forward to a dystopian near-future of nuclear fallout and inhospitable climate the world over – for now, the business of buying and selling residential real estate in California continues apace. It has been an especially busy summer for the Santa Clara county real estate market, but Santa Cruz and Monterey have been pretty hoppin’ too.
Santa Clara County
In Santa Clara county, the median home price has been up sharply this summer. To be frank, I’m surprised that the numbers are climbing so sharply this late into the housing recovery. Here are the Santa Clara county median single family home prices this summer:
- June: $1,176,000 (up 13.4% Y-o-Y)
- July: $1,165,000 (up 11.5% Y-o-Y)
- August: $1,151,000 (up 18.2% Y-o-Y)
The number of sales of homes in Santa Clara county is also up pretty solidly:
- June: 1,207 homes sold (up 9.1% Y-o-Y)
- July: 1,034 homes sold (up 12.9% Y-o-Y)
- August: 986 homes sold (up 7.9% Y-o-Y)
Given that the number of homes sold is up by around 10% this summer in Santa Clara county, you’d be excused if you thought that might have something to do with an abundance of inventory. Sadly, that’s not the case. In fact, the number of new listings hitting the market in Santa Clara county was down this year, substantially:
- June: 1,129 new listings (down 11.9% vs. last summer)
- July: 1,038 new listings (down 10.8% vs. last summer)
- August: 9765 new listings (down 9.7% vs. last summer)
The average sales-to-list-price ratio over those three months averaged an astounding 105.3%…and the average number of days it took to sell a home in Santa Clara county over the summer was just 19.3 days. You could maybe sell some hotcakes faster than that, but not much.
It looks like the market will remain boiling in Silicon Valley for the rest of the year. There are presently just 1,767 single family homes listed for sale on the Silicon Valley MLS – but 1,100 of them are under contract, leaving only 667 homes available to purchase, anywhere in the county, at any price. That works out to a 30 day supply of inventory – achingly low, considering this is the whole entire county we’re talking about.
Santa Cruz County
People who think housing is expensive in Santa Cruz county obviously don’t live in Santa Clara county. For them, Santa Cruz is like a bargain basement nirvana, with much better proximity to the beach, beautiful scenery, and an enviable climate. For Santa Cruz locals, however, the home prices are frightening. Check out the Santa Cruz median single family home price this summer:
- June: $860,000 (up 7.1% Y-o-Y)
- July: $810,000 (up 7% Y-o-Y)
- August: $825,000 (up 0.3% Y-o-Y)
The summer started off with a bang in Santa Cruz county, but over time it’s petered out. Check out the number of sales of single family homes in Santa Cruz in the summer of 2017:
- June: 203 homes sold (up 23% Y-o-Y)
- July: 143 homes sold (down 3.4% Y-o-Y)
- August: 174 homes sold (down 13.8% Y-o-Y)
How is Santa Cruz County doing with the supply of homes? This is the time of year when you hear anecdotal reports that the whole county is for sale. Let’s take a look at new listings over the summer:
- June: 233 new listings (down 2.1% vs. last summer)
- July: 211 new listings (up 0.4% vs. last summer)
- August: 240 new listings (up 16.5% vs. last summer)
While the number of sales in Santa Cruz has dropped considerably over the summer, the number of listings rose sharply in August. This is good news for buyers – but not so great news for sellers, as they’ll have more competition now in September and October than they may have had in years past.
But it’s not all bad news for sellers – they received an average of 99.5% of full asking price for their homes this summer…OK it’s not the 105% enjoyed by Santa Clara county, but it’s pretty respectable. And, Santa Cruz homes sold in an average of 34.3 days this summer – again, not too shabby.
Santa Cruz is entering the last trimester of the year with a total of 631 homes on the market – with 244 under contract and 385 available for purchase. The way I figure it, that pens out to a 71 day supply of homes – still a pretty low supply, but 236% greater relative supply compared with Santa Clara county.
You can now see why so many Santa Clara county residents are looking to Santa Cruz as a palatable alternative for their housing needs!
As Santa Clara county views Santa Cruz county as an “affordable” place to live, so too Santa Cruz county looks south to Monterey and wonders what the commute would be like from there. Indeed, Monterey county prices are nearly half the cost of those in Santa Clara county, and about 25% cheaper than Santa Cruz. So how did Monterey county do in the summer of 2017? Let’s take a look at the single family median home price:
- June: $620,000 (up 11% Y-o-Y)
- July: $610,000 (up 14% Y-o-Y)
- August: $580,000 (up 13.8% Y-o-Y)
Again, these are some pretty big price increases this late into the housing recovery…which makes me think this recovery might still have quite a lot of legs left in it.
However, the number of homes sold this summer in Monterey has dipped down compared to the year ago – but still remain healthy:
- June: 289 homes sold (up 0.3% Y-o-Y)
- July: 214 homes sold (down 12.3% Y-o-Y)
- August: 250 homes sold (up 7.5% Y-o-Y)
These are pretty decent numbers for Monterey…well, July was a bit weak in terms of units sold but can’t complain about that median home price. So how’s Monterey looking when it comes to new inventory this past summer? Here’s how it worked out:
- June: 325 new listings (down 5.8% vs. last summer)
- July: 327 new listings (down 6% vs. last summer)
- August: 306 new listings (down 3.5% vs. last summer)
Here too in Monterey, we see this amazing phenomenon: rising home prices, rising home sales, but declining amounts of new inventory. In fact, as of this writing, there are 1,132 single family homes listed for sale in Monterey county, with 388 under contract and 743 available for purchase. That comes out to an 86 day supply of inventory – much higher than Santa Clara county, a bit higher than Santa Cruz, but still well below the 180 days supply which is considered a market that is “balanced” between buyers and sellers.
There are a lot of unsettling headlines in the news – I started out by mentioning the hurricanes, record breaking heat, and the risk of (nuclear?) war with North Korea. The crazy weather is just the new normal – this is an issue we’ll be dealing with for decades, probably centuries to come. At this point, when it comes to housing, it’s really neither here nor there.
A war with North Korea could be devastating – and not just to the Korean Peninsula, but to the world economy. Setting aside the tragic potential of millions of lives lost, even a “minor” conflict could spell catastrophe for the northern California real estate market.
Last I checked, a lot of DRAM and LED and OLED screens come out of Korea – key ingredients in your mobile phone. A disruption in the supply of these crucial components (and I’m sure many more I’ve never heard of) could send the “app economy” (which Silicon Valley is in large part based on) into a tailspin. This could be the impetus that drives our economy into recession.
When the recession comes – whenever, and however – we’ll see these numbers soften up considerably. Expect to see the median price sink (or plummet?) and the amount of inventory climb sharply as people lose their jobs and exit the area.
Until the recession comes, however – you can expect more of the same. Discounting a “black sawn” event like war on the Korean peninsula, it looks as though we will remain in a robust seller’s market throughout the region for the rest of this year.
This gives you plenty of time to get your home on the market to take advantage of today’s sky-high prices. In August, it looks like a lot of people in Santa Cruz have finally made the move to take their chips off the table by putting their homes up for sale. It’s a smart move: the September->November selling season is almost always a very robust one, with plenty of buyers and fewer new listings hitting the market so “late” in the season.