San Lorenzo Valley Home Sales through Oct 31, 2012
As tendrils of wood smoke curl lazily above homes in San Lorenzo Valley this chilly November morning, the day after the election, it’s time for me to share my reflections on our real estate market. Rising home prices in the Silicon Valley continue to boost our local housing recovery. Recently I helped some first time buyers secure a home in Felton, after being beaten out over and over by 20-30 offers on homes “over the hill” as we say.
We are just loving the beautiful weather here this fall: chilly in the morning, warm and sunny in the afternoons, with the promise of rains right around the corner. We are so close to wonderful beach towns like Santa Cruz and Capitola, and within commute range to Silicon Valley jobs. These factors combine with still relatively affordable prices to support continuing stability with hints of growth in the San LorenzoValley housing market.
A new home listing, positioned properly in the under $300,000 segment, is likely to get multiple offers, often over asking price. There still aren’t enough homes on the market to match buyer demand.
Days on the market (before sale) – another measure of demand – are shorter: anything below 6 months inventory is considered a sellers’ market.
One of our biggest challenges as the market recovers is appraisals. I think the lending risk pendulum has swung too conservative, too late. Government intervention into the appraisal process inserted a middleman into the system, increasing the cost for borrowers and taking money from the appraisers. Consequently, many experienced appraisers left the business; those that are left are working harder for less money. Some are not spending the necessary time to research for suitable comparable properties, resulting in appraisals not coming in at the market value negotiated between multiple buyers’ offers and the seller.
Mortgage rates for a 30 year fixed loan continue to average well below 4%, allowing people to secure their future housing costs. First time buyers are a big portion of the market, as rental costs continue to increase. Investor buyers are a big factor as well, often defeating first time buyers in competition, because they are putting down a lot of cash – often buying homes without any loan at all. Understanding the difficulties in lending, many sellers will choose a cash buyer over one needing a loan if they have multiple offers.
2012 –year to date
241 homes have sold in the San Lorenzo Valley – from Boulder Creek to the town of Felton – so far this year (according to the Multiple Listing Service, areas 34-37). The volume of sales is up about 15% this year compared to last, and the average sales price is up about 4% to $341,868.
35 homes sold in October, and the average home price for the month of October rose to $386,269. (June’s average was $371,714). The average sales price for the month of October rose nearly $100,000 from October of last year at $288,982. It’s critical to understand this increase in average prices is due to a much higher proportion of sales occurring in the upper price ranges in this last month….It’s not as if all homes have increased that dramatically in value!
So far this year, 38 homes sold for over $500,000, compared to last year when only 26 homes had sold for over $500,000.
At the high end of the spectrum, two homes this year sold for $875,000 – one in a good Boulder Creek neighborhood and one in Felton – both were on acreage.
Are we out of the woods yet? No. Right now I’m working on escrows for 3 short sellers, a buyer of a foreclosure, and one traditional sale on acreage. In the first ten months of 2012, of the 241 San LorenzoValley closed escrows, 56 were short sales, and 63 foreclosures (REOs). The percentage of distressed property sales was 49.3% (compared to 50% in June).
At the bottom end of the spectrum, 6 homes sold this year for less than $100,000 – all had serious deficiencies and would not qualify for a loan.
2011 –year to date (January 1st through October 31st)
By October of last year, 209 homes had sold in the San Lorenzo Valley. The average home price was $328,790 for the first ten months, and 129 of the homes sold were distressed sales, or 62%. 26 homes sold for over $500,000, while 9 homes sold for less than $100,000 by this time last year; again none were habitable and had to be sold for all cash, since no lender would touch them.
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