At last, some rain has fallen, and spring is in the air! Trees are in bloom, the grass is green, and everything’s looking good – especially the Santa Cruz real estate market, depending on your perspective. The real estate bubble and bursting thereof seem to already have faded in the minds of many. Real estate prices have made a very strong recovery, which continues to hold two months into the year.
The median home price in February 2014 for single-family homes was $625,000 – that’s up an astounding 37.4% compared to a year ago (when the median price was $455,000) but up just 0.8% compared to the month prior. The average price was $680,310 – up 22% compared to a year ago, but down 12.8% compared to the prior month when the average price came in at a remarkable $780,000.
Last month, we noted that the sale-to-list-price ratio had dropped slightly, and that the average days on market had increased as well. This month, both those numbers again pointed to a weaker market:
- Sales price vs. list price ratio dropped a full 0.7% to 98.1% vs. 98.8% the prior month
- The average days on market increased by 17.2% to 75 from 64
While inventory rose in February to 286 units available at the end of the month (an increase of 10.4% in a month, and 2.5% higher than this time a year ago) – the sales volume also rose in February, with 109 homes sold…that’s an increase of 3.6% compared to January, but down 9.9% compared to February 2013, a year ago.
Although there is now slightly more inventory than there was last month, the days of inventory has decreased; we ended February with just 71 days of inventory. That is, if no new houses came on the market, we’d be sold out in just 71 days at the current rate of sales. A “balanced” market is considered one that has a 180 day (6 month) supply of homes.
With only 71 days of inventory available, this is still very much a seller’s market. However, we are now entering what could be thought of as a make-or-break period for the current pricing levels. In the spring and summer, more inventory – usually, a lot more – comes on the market. Given the dramatic increases in values we’ve experienced over the past 12-18 months, will the flood gates finally open this spring, with homeowners finally moving en masse to put their homes on the market? And, if there is an abnormally strong surge of new inventory, what will that mean for prices?
I have been talking to lots of homeowners for the past couple of months, and I’m getting the feeling that a lot of property owners are still going to be sitting on the fence this spring, and possibly into summer. I get the sense that a lot of folks feel that the market will continue to keep on rising, and this is one big reason that a people are keeping their homes off the market. If they wait another year to sell, the reasoning, goes, they’ll be able to eek another 4-5% of value out of their property.
What’s YOUR home worth in today’s market?
Home prices have risen steadily in this year – how much is YOUR home worth in today’s hot market? Find out now with this free, quick, and accurate tool!
I confess that I am somewhat surprised that comparatively few people appear, at least from the anecdotal evidence I’ve been able to collect, to be planning to sell their homes this year. A lot of this is because many owners are still in a situation where they have little or no equity in their homes, and need just a little bit more before they can comfortably sell and avoid a short sale. However, it does seem to me that many owners are trying to do that which can’t be done, namely, they’re trying to time the market, thinking that the price increases will continue for another year or so.
The real estate market crash was not so long ago that anyone should have forgotten it, and it’s proof positive that in fact, prices can go down. I know from long experience that it is usually a much more enjoyable experience selling (and buying, too) in a market that is appreciating rather than one that is depreciating. Once a market starts to weaken, it’s a slippery slope, and it’s not where you want to be if in fact you really do need to sell.
If you are on the fence about selling this year or next, I advise you to keep a sharp eye on what’s going on with the market. Look at prices, sure – but also look to see if there’s a jump in inventory or a leveling off of sales. If there is, it could be a sign that we really have hit the market peak, and we’ll soon be headed down again. Or, remember that a bird in hand is indeed worth two in the bush – and the market right now is indeed very conducive to selling. What it’ll be like in six months or a year is anyone’s guess.
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.
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!