Hey there, it's Liz Kroft, with Sol Property Advisors and in today’s video, we’re going to talk a little bit about what the media is reporting - and what the media is reporting is that the real estate market is slowing. What does a slowing market mean?!
Before we dive in, I want to share with you that the data most media outlets are reporting to you is often very delayed data. The reason for that is that they report a lot of lagging indicators, which means they’re talking about things much later than when they actually happen.
So let’s get into it. When the media talks about the housing market slowing, there are a lot of different things that could mean. Part of what it means is consumers are going to click on articles that report something different and novel.
We’ve been hearing the market is hot, now they say it’s slowing. So, let’s get beyond the click and let’s talk about what’s really happening here in Santa Cruz County.
When I pull data from the local MLS Listings at the end of each month I study the information to a point of exhaustion. My degree is in economics, my background is in insurance analysis and I just love diving into charts, graphs, pivot tables and data in order to see what’s really happening in the market and share that with you.
Let’s take a look at what data from September shows signs of a cooling market.
In September, the number of homes going pending or going into contract was down by quite a bit, 24% month-over-month to be exact. Interestingly, pending numbers have been on the decline since April.
Homes are taking longer to sell, at an average of 24 days on the market in September compared to 19 days in August. This number has been on the rise since June.
Homes are selling closer to asking in general. In September it was an average of 2.1% above the asking price. Another data point that’s been cooling steadily since April when it peaked at 7.4% above asking.
The percentage of homes with price reductions has been increasing since April as well. From 10% of homes up to 20%.
Believe it or not the median price for single family homes dropped 6% month-over-month to $1,185,000.
Homes are also receiving fewer offers in general. Some still receive 20+ offers but they’re fewer and further between at the moment.
These data points all indicate that there are a few less buyers active in the housing market than what we’ve been used to.
My personal belief is that it is in part due to pent up demand from COVID since the beginning of 2020. More people have been taking vacations before school gets started and choosing to spend their time and money on concerts, sporting events and other things. So it’s kind of expected for things to slow down a little bit while some families prioritize other things in life over shopping for a home.
What was interesting looking at the data from September is that the number of homes coming onto the market for sale was down 16% month-over-month which is fairly surprising. I gathered the market would slow down on the buyer side, but it slowed down a lot on the seller side too. For most of the year inventory was on the rise, some of the highest levels we have seen since 2015 believe it or not. So unfortunately buyers taking a little bit of a break wasn’t enough to balance supply and demand since more Sellers stayed on the sidelines too. We had about 18% less homes coming on the market and 16% less coming off the market.
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The media’s not talking about that because that’s not super exciting. The inventory levels have been low and shrinking for a long time now, they keep reporting the same thing over and over. That doesn’t entice readers to click on headlines.
So, even though buyer demand slowed we’ve actually seen the contraction of inventory in September too. The media’s not reporting that, but it’s pretty noteworthy. Supply and demand is what moves markets.
When supply is decreasing, values tend to increase. So while we saw a dip in prices in September, I’m still confident we are going to continue to see values rise in the coming months - of course it will be very important to keep an eye on interest rates.
So what does this all mean for you?
Are you thinking of buying?
If you’ve been considering buying a property, it’s a great opportunity right now. There’s a little less competition than you saw at the beginning of the year and much of 2020. It is taking homes a little longer to sell, we’re seeing more price reductions and homes selling closer to their asking price. There’s logic and psychology involved too. A lot of sellers are getting stressed because their home is not selling as fast as their friends or neighbors did back in the spring. It might create some opportunities for you to come in and get the home you really want at a price you’re comfortable with, so some potential opportunity there.
Are you thinking of selling?
Now if you’re thinking of listing your property, again, prices are still holding steady. Though I do think we may see a continued slow down the rest of the year through to next February as the market returns to a more normal cycle. If you’re doing to sell keep in mind that it’s going to be a little slower and have a realistic expectation that it’s likely not selling in two or three days and you’re more likely to receive fewer offers than sellers were seeing earlier in the year.
That’s what is going on here in the Santa Cruz County real estate market in early October 20201. If you want to find out if it is the right time for you to buy or sell call me at the number down below, I’d love the opportunity to explore that with you and be the trusted guide to help you make the best decision for your future. 831-854-7489.
RELATED: Is The Housing Boom Over In Santa Cruz County?
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