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San Lorenzo Valley Real Estate Prices and Sales – 3rd Quarter 2013

So often people ask me – how’s the real estate market?    San Lorenzo Valley Real Estate prices rose 6% during the 3rd quarter*, compared to the 2nd quarter.    102 homes sold on the MLS between July 1st and September 30th, at an average price of $459,503.    The 87 acre Johnson ranch in Boulder Creek fetched $2.25 Million; while a red-tagged home with severe erosion issues sold for $50,000.   *Excluding the two outliers from my calculations, the average price was $445,693*, up an astonishing 30% from the same period last year.

Fall Color - Downtown Boulder Creek
Fall Color – Downtown Boulder Creek

My outlook for fall and winter is for a stable market – the above gains are not sustainable, and we’ve just  emerged from a potentially disastrous government crisis.    Even though government went back to work, the projected economic cost of those two weeks is predicted by economists to be about $20 Billion dollars.    Consumer sentiment fell to a 9 month low.    There’s a backlog in refinancing and home purchase loans.    The only bright light is the Federal Reserve decided to keep their policy easy to support the economy.     Although most of this year the market has favored sellers, perhaps the next few months will be a good opportunity for buyers.   Click here if you’d like help finding your dream Santa Cruz Mountains property.

This last quarter, I’ve worked with 4 buyers on distressed property purchases: 2 short sales and 2 foreclosures.    The challenges are often condition – short sellers have lost all their original equity and don’t have money for repairs.    Bank sellers have no idea what’s wrong with their properties, until buyers’ inspections reveal defects.   In my clients’ cases, both bank owned properties had failed septic systems.   We were able to negotiate either having the seller pay for buyers closing costs, and/or reducing the prices to offset the buyers’ costs for these expensive repairs.

Another successfully closed escrow / short sale
Another successfully closed escrow / short sale

One client that I represented on their short sale got 9 offers, many significantly over asking price! – unfortunately still not high enough for the sellers to recoup any money.    The offers came in during the month of February, and the closing occurred in July.    This 6 month time frame is about typical for short sales, although I’m representing a buyer now where the timeframe should end up at about 4 months.

Listed and Sold so my clients could move from San Jose to Boulder Creek
Listed and Sold so my clients could move from San Jose to Boulder Creek

Also this quarter, one of my clients needed to sell their home in San Jose quickly, in order for the seller of the home they wanted to buy in Boulder Creek to accept their offer.     Despite a tight timeline plus their vacation, I was able to help them achieve their dream of moving from a home where they could hear their neighbors’ TV to a home twice the size on 10 sunny, end-of-the-road acres.

This past quarter, 15 % of homes went pending sale within 7 days of being listed on the MLS, compared to 12% in the 2nd quarter and 22% in the first quarter.   Considering the market as a whole, homes went into escrow on average within 57 days of being listed.   The average days on market was 69 days during the first quarter.      SLV already turned in a great second quarter  2013 – 78 homes sold at an average price of $420,858, up 18% over the same period last year  (66 homes sold at an average price of $355,435 in 2012).

There simply aren’t enough homes for sale in the San Lorenzo Valley The chart below shows we’ve just 3.5 months of inventory – meaning we’re still in a seller’s market.

Low Inventory of Homes for Sale in the San Lorenzo Valley

Competition amongst buyers is what has forced home prices higher.   While some sellers hope to wait for higher prices, but if interest rates continue to rise, that just might dampen future price increases.

If you have been thinking about selling your house,  there’s still pent up demand.  I just put a property back on the market.   I updated everything I could find all across the internet and contacted everyone who’d called about it  as well as all the agents who’d  shown it.   Although the previous escrow fell through after the buyers’ inspectionsthe seller now has multiple offers to consider – again.     Even if you have a distressed property to sell, don’t worry  – about 40% of my transactions this year were short sales.

Click here to  find out what your San Lorenzo Valley home is worth now, or call MC Dwyer, Century 21 Showcase REALTORs at (831) 419-9759.

Distressed sales continue to decline as a percentage of overall sales to 21.5%, compared to 25% earlier this year.    However, of homes priced under $400,000, 19 were distressed, or 44%.      Only 12 homes sold for $250,000 or less in the San Lorenzo Valley during the 3rd quarter; this segment of the market is shrinking quickly.

The average price for a 3 bedroom, 2 bath home rose from about $530,000 last quarter to $559,000 during the 3rd quarter.     Only two 3 bedroom 2 bath homes sold for under $300,000 last quarter, and as of today there was only one for sale.

Source: MLSListings.com statistics as of 10/23/13 for single family homes in zones 34-37 between 7/1 and 9/30/2013

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SLV Home Prices – Second Quarter 2013

The San Lorenzo Valley turned in a smoking hot second quarter of 2013 – 78 homes sold at an average price of $420,858, up 18% over the same period last year  (66 homes sold at an average price of $355,435 in 2012).

The San Lorenzo Valley residential real estate market was still red hot this July, when 32 homes sold at an average price of $439,818.    Similarly, 36 homes sold in August at an average sales price of $426,613.   In order not to skew the average, I removed the most expensive property from the calculation.    Because the 87 acre Johnson ranch in Boulder Creek fetched $2.25 Million, if it had been included in my calculations, the average price would have been $477,263.

This year, for the first time since 2008, a Boulder Creek home sold for over one million dollars.    According to the MLS, only a dozen other homes have sold in this price range, all between 2005 and 2008.

This 4800 square foot 5 bedroom home featured a gourmet kitchen, pool, and about 4 private, usable acres with an adjacent parcel sold separately.

Average prices are the highest they’ve been since August of 2008.  SLV Real Estate prices have recovered well from the low point in February 2009 and September 2011, when the SLV average home prices briefly touched $270- $280k.

The pace in the first quarter of 2013 was 63 sales, with an average price of $348,842 between January and March.

This quarter, 12% of homes went pending sale within 7 days, compared to 22% last quarter, giving buyers just a little more breathing room.   Homes went into escrow on average within 43 days of being listed.   The average days on market was 69 days during the first quarter.

The San Lorenzo Valley simply doesn’t have enough sellers willing to sell their homes, compared to all the buyers who want to buy.

Graph of SLV Homes for sale
Graph of SLV Homes for sale

The chart on the right shows we’ve just 4 months of inventory – a seller’s market.    (6 months is considered a balanced market.)   This competition puts upward pressure on home prices.

Multiple offers are common.   It takes steel nerves to persist as a buyer right now.   Many buyers want to lock in affordability: even though interest rates have gone up, they are still very low by historical standards.    My sense is this market flurry is a result of buyers watching their purchasing power diminish as both interest rates and home prices rates rise.

The Federal Reserve has been talking for a couple of months about curtailing their bond repurchase program, which they’ve used to keep interest rates low until unemployment and other economic indicators stabilizes at an acceptable rate.   This week their remarks show they’re poised to reduce their economic stimulus package as early as September.

Distressed sales are declining as a percentage of overall sales to just 25% of the total, although they account for about 50% of the sales of homes priced under $400,000, and about 75% of homes priced under $300,000.

Only 17 homes in the San Lorenzo Valley sold for $250,000 or less: all but a couple of 1 bedroom homes were contractor specials requiring cash buyers.

Although a couple of lesser quality 3 bedroom 2 bath homes sold for under $300,000, the average price for a 3 bedroom, 2 bath home is now about $530,000.

If you have been thinking about selling your house, there’s still pent up demand.  Even if you have a distressed property to sell, don’t worry  – about 40% of my transactions this year were short sales.     To find out what your San Lorenzo Valley home is worth now, click here or call MC Dwyer, Century 21 Showcase REALTOR at (831) 419-9759.

Source: MLSListings.com statistics as of 8/6/13 for for single family homes in zones 34-37 between 4/1 and 7/31/2013