AFFORDABLE HOMES NEAR THE SILICON VALLEY:
With average single family home prices of $1 to $1.5 million across the Bay Area, affordability concerns continue to push people who work in the Silicon Valley to seek affordable housing anywhere within about an hour’s commute. The San Lorenzo Valley sparkles with some of the most attractive prices anywhere in the greater bay area, within just about a 45 minute to 1 hour commute to most major employers (Apple, Alphabet (Google), Facebook, Netflix…). For those who prefer a small city, Scotts Valley offers a quick commute, followed by Santa Cruz with its great beaches, shopping, night life and many amenities.
The 2nd quarter trend picked up momentum in the number of sales as well as price appreciation across all areas. On average in our region, it takes three to four weeks for a home to go into escrow with a buyer now; slightly longer than last year. Looking at statewide numbers, California Association of REALTORS just reported May’s statewide median home price was $611,190, up 1.4 percent from April and up 1.7 percent from May 2018. The National Association of REALTORS reported that the national median existing-home sales price (all housing types) was $277,700 in April, up 4.8% from a year ago, the 87th consecutive month of year-over-year gains. CoreLogic reports serious mortgage delinquencies are at their lowest rate in 20 years nationally.
After a slow start to 2019, many more homes were listed and sold during the second quarter. After a brief increase in interest rates earlier this year, recently the 30 year mortgage rate has fallen back down to 3.99%, historically very low and appealing to buyers who’d paused, waiting for better conditions. Consumer confidence is rising, and the number of IPOs (Initial public stock offerings) in the SF Bay Area has brought new wealth to the region….some of which is funneling into real estate.
As you look at the price chart, remember some of these micro markets (like Brookdale & Lompico) have so few home sales, that percentage changes aren’t statistically significant and average prices can be dramatically skewed when one of the few sales exceed a million dollars. It’s more useful to look at the San Lorenzo Valley as a whole, where prices rose about 5% over the 1st quarter of 2019, and were a tad lower than the same time last year.
Scotts Valley had the largest shift with 35 million dollar plus sales during the 2nd quarter of 2019, up from just 12 home sales in that price segment during the 1st quarter of 2019. The most expensive home, a 5500 square foot Pasatiempo estate with Monterey Bay views, sold for $4.5 million, while the least expensive home sold for $650,000.
Santa Cruz County as a whole rose a solid 9% over the first quarter, and 13% over the same time last year, closely following the trends in Santa Clara County.
These charts illustrate housing inventory over the past three years. Around six months of housing inventory is considered a market that is balanced between buyers and sellers. These graphs show that both regions continue to experience an inventory shortage of just two to three months of inventory. That means, at the current rate of sales, we’d run out of homes for sale in just two to three months.
At the time of this writing, San Lorenzo Valley has 84 single family homes for sale (up from 40 in January and similar to this time last year. Scotts Valley has 51 (up from January’s 24 homes and more than last year). Santa Cruz, despite having four times the population of Scotts Valley, has 76 single family homes for sale, (up from just 38 in January and more than last year).
The bond market has already priced in the expectation that the Federal Reserve will lower interest rates soon. As a result, interest rates on the 30 year fixed mortgage have fallen to around 4.00%, (down from 4.6% in January.) Click here to see today’s 30 year fixed rate mortgages rates People who purchased at recent levels of 5% or higher may want to discuss the prospect of refinancing with their lenders.
Economic growth as measured by GDP (Gross Domestic Product) rose to 3.1% during the 1st quarter of 2019, (2.2% in the 4th quarter). Consumer price increases (a measure of inflation – something the Federal Reserve monitors closely) was 1.8% in May (up from 1.5% in January but down from 2.9% in July 2018). The unemployment rate is holding steady at 3.6% (3.7% nationwide in January). Wages grew 3% (over May 2018), about 1.3% growth after inflation.
DAYS ON THE MARKET:
In contrast to Santa Clara County homes, which went into escrow within about three weeks of being listed, San Lorenzo Valley homes take on average three weeks to a month to go into escrow. Some properties still sell within the first week or two, while others take a couple of months to find a buyer. Scotts Valley and Santa Cruz city homes typically take 4-5 weeks to go into escrow, while Santa Clara County is back down to about 3 weeks.
SANTA CRUZ COUNTY’S APPEAL:
People from the Silicon Valley are enchanted to discover Santa Cruz County with all of our parks for hiking, mountain biking, climbing, horse-back riding, and skateboarding. There are dozens of beaches, from popular to serene, walk-in to hike-in, some dog-friendly. The Santa Cruz lifestyle is informal: we cherish our slower pace. With 1/3 the population density of Santa Clara County, there’s more room to spread out in Santa Cruz County, and consequently lower stress and crime rates. (Just 440 people/square mile live here, compared to 1400 people/square mile living in Santa Clara County.) Many people say they enjoy driving through the mountains to work, versus sitting in traffic and spending a lot more money to live in Santa Clara County.
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REAL ESTATE MARKETS ARE LOCAL:
The advice of a knowledgeable local REALTOR®, who can intelligently discuss neighborhoods and price trends, is invaluable. Hire a REALTOR® you can trust, who has enough time to dedicate to you! I will help you untangle the maze of decisions, preparations, negotiations, inspections, title and disclosures as you buy or sell your home. Relocating? – I can also connect you to a trust-worthy REALTOR® wherever you’re going. My goal is to make the entire process easier to understand, less stressful, and as cost effective as possible for you.
Whenever you have real estate questions, just text or call MC at (831) 419-9759, or, e-mail me at firstname.lastname@example.org
I’d love to help you buy or sell your home. Your home is your castle; I’ll treat you like royalty!
Sources: MLSListings.com, Reuters, REALTOR.org, ActiveRain.com, Mercury News, CoreLogic, FreddieMac, BankRate.com, Google. Month to month home sales prices fluctuate widely in small communities and cities, especially when property sales range between million dollar estates and fixer upper properties. Because of this, percentage and average price changes often aren’t statistically meaningful for short time intervals. *All stats as of July 9, 2019: MLSListings.com single family residences.