Santa Cruz County Market Update September 2021

Santa Cruz County Market Update September 2021

  • Liz Kroft
  • 09/2/21
Santa Cruz County realtor Liz Kroft breaks down the leading indicators of the local Housing Market going into the month of September 2021.
 
 

Santa Cruz County Market Update In September 2021

What's going on in the Santa Cruz County real estate market going into September 2021? Hey there, it's Liz Kroft with Sol Property Advisors and today we're going to talk a little bit about what's going on in the local real estate market here in September of 2021. And for the first time in a long time, we're getting some change in the market.
 

A Slight Change in the Market

I feel like a broken record because I’ve been saying the exact same thing over and over and over again BUT today I have some new news for you. So I’m excited for this update. 
 
As always when I shoot these videos I want to give you the information that the typical media is not giving you. Because the typical media is giving you data that’s 2, 3, 4 months delayed. I want to give you the most relevant data possible and that data is what’s happening in the market today so that you can make an educated decision on whether you should be buying, selling or investing here in Santa Cruz County. 
 

Leading Indicators

The first piece of data that I like to look at is the number of new homes coming onto the market for sale - often referred to as inventory.

Now this number hasn’t changed a whole lot. In August it is up 10% from the same time in 2019 - I’m looking to 2019 because 2020 was such an odd year due to COVID. 

Year to Date listings are up 12% from 2019 - and 30% from 2020 in case you’re curious.

That’s been pretty consistent, we’ve seen the number of new homes coming on the market trending slightly above the number of new homes that came on the market in 2019 and 2020. So not a lot of change there. 

The next number is where the big change has been. Every month for as long as I can remember, it feels like at least a year maybe two years the number of homes that have gone off the market or gone pending has gone up. 

What we’ve grown accustomed to seeing is less homes coming on the market and more homes going off the market which has been shrinking the inventory. 

This year - May, June, July - the number of homes that have gone off the market, or gone pending, has actually gone down since April.

In fact, roughly the same number of homes that went on the market in August went Pending. When I looked at the data in the Multiple Listing Service - also known as the MLS - this week 230 homes went on the market and 221 went pending. So inventory levels didn’t really change much.
So something to keep an eye on, it could just be a fluke thing. 
 
Part of my personal belief, I know that when the governor said COVID is going to end on June 15th, we said “yeah right, I don’t believe you” and then lo and behold they actually eased lot of COVID restrictions on June 15th and it felt like the world pretty much opened back up to a large degree. I think it was a big surprise for people but I think once they realized things opened back up again people were like “Oh my gosh, let’s go take that vacation now” “let’s go visit family." I know when I’ve been scrolling through my social media feeds on Facebook and Instagram everybody is on vacation - they’re in Hawaii, they’re visiting family on the East Coast, they’re going to Mexico, they’re all over the place, traveling going to baseball games and concerts and doing fun stuff - far more people than normal because there is a lot of pent up demand. So my personal belief is the reason we have seen the pending number in Santa Cruz County’s housing market decrease this summer is because people just took a break from buying to go on vacation and do other things in life.

So when we talk about the next two numbers these are going to be a little bit skewed because supply is down 30% from a year ago and the time it takes to sell a home is down 32% from this time a year ago. But the number of days it takes a home to sell has actually creeped up a little bit in August and the total number of homes for sale has creeped up a little bit again because you had less homes go pending. SO its going to be something we definitely want to keep an eye on here over the next couple of months. Is this kind of a fluky thing because of the post COVID pent up demand for vacation, recreational activities and perhaps kids going back to school or are we seeing a market trend? It’s going to be interesting.

My personal opinion, I think this is more of a pent up demand for vacations. We’ve had a little bit of time between June 15th and kids starting school in the middle of August so we’ve all kind of had this 1-2 month window to go get vacation in. That’s my personal belief of why you’re seeing that pending number go down and things like sale-to-list price have been declining since April - meaning homes are selling for increasingly closer to asking price instead of way above - and more and more sellers are reducing their asking price before receiving offers since May.
But make sure to stay tuned to the videos that I put out there so we can see if this trend continues or not.
 

So with all of that said, what does this market data mean? 

If you are thinking about buying a home what should you be doing? 

I think right now is an amazing time to buy. I think this is the best time you have had to buy in awhile because as I mentioned the number of homes going off the market or pending is going down. A lot of buyers are taking a breather, so where we were seeing a lot of homes getting 10, 20 offers a few months ago now they’re maybe getting 1 ,2, 3 offers so its creating a little bit more opportunity. For the last four months homes has sold for increasingly less above asking on average. From 107% of the list price in April down to 103% in August. We’re also seeing a gradual rise in price reductions the last three months. I believe while everyone else is taking a breather that’s the chance to pounce and capitalize on the opportunity. 

If you’re thinking about selling what does this mean for you?

It’s going to depend. If you’re thinking about selling and moving up to a new home I think you take advantage of it because I think you’re going to have a little bit more opportunity on that new home that you want to buy. If you’re thinking about selling and you’re getting out of the area I think you capitalize on it. Right, you’re getting a great price on the home and moving on. The person who I don’t think it makes to sell is the person who is thinking about selling and you’re going to then rent. I’m not a fan of that at all. I still have a very strong belief that values are going to continue to rise even though the number of people buying is down a little bit prices are still going up. I think maybe we’re not going to see crazy month-over-month appreciation like we've been seeing, but we're still going to see appreciation. I would rather get a little appreciation on my home far more than I would like to get the annual 5 or 10% rental increase. So I think if you’re thinking about selling and renting I might not do that.  I might hold onto that a little bit longer, continue to ride until we see values crest then maybe you unload that property. Is it going to happen? I don’t know. When is it going to happen? I don’t know. But I don’t think its going to happen any time soon. I think we’re going to continue to see a 1% increase.

Thats what I’ve got for you. I’m excited, I finally get to have something new in one of these market updates.

So if you’re watching this, you’re thinking about buying, selling or investing. My team and I would love an opportunity to help you out. Give me a call, shoot me a message, I’d love that opportunity.

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