San Lorenzo Valley Real Estate Prices – 2012 in review

San Lorenzo Valley Home Prices and Sales – 2012

The real estate market in the San Lorenzo Valley turned in a solid performance for 2012, with an average home sales price of $338,238, up 5% on average for the year.

SLV Home Prices

The key factor affecting home sales right now is a lack of inventory – the number of homes for sale is at an eight year low!    Yet, there are many buyers, including cash investors and first time buyers who want to lock in great interest rates.     The imbalance of supply and demand leads to competition, and that supports increasing prices.

A new home listing, priced properly and marketed well by your agent, is likely to get multiple offers, even over asking price.    There just aren’t enough homes on the market to match buyer demand.  Another measure of demand: Days on the market (before the house goes into escrow) is about 2-3 months, putting us solidly within what’s known as a sellers’ market.

SLV housing inventory 2012 by month

If you are contemplating putting your house on the market, there’s pent up demand right now!    Look at the typical upward swing in inventory during the summer months in the chart– is there really a reason to wait to list your property?    To find out what your San Lorenzo Valley home is worth now, click here

The Santa Cruz Mountains and San Lorenzo Valley are influenced by the hectic Silicon Valley and greater Bay Area markets which experienced rapid appreciation in the range of 20% during 2012.

Felton fields and clouds, photographed by John Urwin
Felton fields and clouds, photographed by John Urwin

With gas prices a bit lower lately, more working people are willing to make the 30-45 minute commute from the San Lorenzo Valley.   They feel it’s a great trade-off because they can come home to more affordable homes and a more relaxed lifestyle, with less crowding and more open spaces.  For the average price of $340k, buyers got a 3 bedroom, 1200 square foot home on lots averaging 1/4 acre or more!

Santa Cruz Mountains: Location, Location, Location!

Earlier this week I took the day off to enjoy a walk along Pleasure Point, dropping

Pleasure Point Egret
Pleasure Point Egret

occasionally down to the beach to look at the tide pools, then back up to street level where people were skateboarding and walking their dogs, enjoying the sunshine.   During dinner on the wharf in Santa Cruz, we watched the pelicans diving for fish, against the amazing backdrop of sunset and ocean.   Returning back home to the San Lorenzo Valley in the evening took less than half an hour, and I again felt so blessed to be living in such a diverse and gorgeous place.

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, because renting costs just about the same as owning.   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 with no loan at all.   Understanding the challenges involved in getting a loan, many sellers will choose a cash buyer if they have the option.   Buyers making a down payment of 3.5% or less may find themselves loosing in competition to buyers with a larger down payment, if the seller can choose amongst multiple offers.

2012 –year in review

299 homes sold in the San Lorenzo Valley – from Boulder Creek to the town of Felton (according to the Multiple Listing Service, areas 34-37).    The volume of sales is up about 16% this year compared to last, and the average sales price is up about 5% to $338,238.     (vs. $321,555 average price on 256 sales in 2011.)

In 2012, 46 homes sold for over $500,000, almost double the number in 2011, when just 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.

At the bottom end of the spectrum, 8 homes sold this year for less than $100,000 – all had serious deficiencies and would not qualify for a loan.

Distressed sales were still a big factor in the 2012 housing market in the Santa Cruz Mountains, particularly dominating the lower price range.  75 short sales and 76 foreclosures (REOs) caused about  50% of sales to be distressed properties.   It’s possible that there will be more short sales and fewer foreclosure sales in 2013.   This is in part because lenders have learned that unoccupied homes fall apart – loosing value quickly-  so they are seeing short sales as more advantageous.   For buyers, short sales are taking less time to get approved, so the risk is less than before.


National Home Sales Update

Home Sales rose again nationally,

       showing the 3rd gain in the last 4 months, while inventory shrinks

The average home price in the Western Region fell just 2% year over year.    The median price of a single family home across the nation was $154,400, down 2.6% from January 2011.    


Inventory, or the number of homes sitting unsold on the market, shrank to just over 6 months.   This is a key indicator, since a market balanced between and equal number of buyers and sellers tends to hover around 6 months supply.       Inventory is down 20% from a year ago.

All cash sales have steadily accounted for 31% of sales.   There are a lot of investors moving their cash into real estate, picking up rental properties and vacation homes.

Foreclosures accounted for 22% of January sales.

Short sales tallied up 13% of total January sales.   One of my short sale listings just went into escrow after getting 4 all cash offers over asking price.   3 of the 4 buyers wanted to live there themselves.

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Bright signs in the economy

Unemployment falls to 2008 level

As more people find jobs, consumer confidence will increase.    Employment, in my opinion, is one of the key factors that can lend strength to the housing market, so I’ve been watching this closely.   While I don’t see any point in talking about weekly numbers announced, the four week moving average looks good when the new claims for unemployment insurance fall to the lowest level seen since April 2008.

The US has created more than 200,000 new jobs for the last 2 months in a row – and our unemployment rate in January fell to a 3 year low of 8.3%.

During the last quarter of 2011, the economy grew overall at a 2.8% pace, which is respectable.    We’re not out of the woods – there are still a staggering 23 million people without work.   Read more at Reuters:

Meanwhile, the stock market is up about 7% so far this year.    Since about 20% of home buyers in this market are investors; this is indirectly another good sign for housing.

Amazingly, the weekly average 30 year mortgage interest rate last week was below 3.75%!

Finally, 2/3 of Californians have an optimistic outlook – believing their own financial situation will improve during 2012.    Since  our state is equivalent to the 8th largest country in the world, this is significant.     The San Francisco Bay Area and Silicon Valley Areas are the most optimistic about the future (versus southern Californians where economic conditions are worse.)

Traditionally, the Santa Cruz real estate market follows the Silicon Valley.Image