The third quarter of the year is behind us which of course means pumpkin spice everything and all of the stores are playing Christmas music now. The change in season also brings a shift in real estate market conditions. Inventory tends to decline and buyers may become more aggressive in their home search. This change can affect real estate sales in a number of ways.
Lets take a look at where that puts us in regards to the real estate market in Santa Cruz County, besides pumpkin spice cookies at Open Houses and holiday decorations making an appearance in listing photos.
Home Sales & Inventory
Inventory - In September 206 Single Family Homes were newly listed for sale. This was a whopping 19% less than what came to the market in August yet interestingly enough 21.2% more than the 171 in September 206. When we tally new listings by quarter Q3 this year was 12.2% above Q3 in 2016.
As it goes with seasonal trends each year, it is no surprise that the number of new listings in Q3 was lower than Q2 this year. Totals for October, November and December are expected to continue to be on the decline as the story goes with the market trends each year.
So far this year only 1835 Single Family Homes were listed for sale on the MLS, substantially below the average of 2384 for the nine years prior during the same time period.
Closed Sales - Despite the paltry supply of homes of sale, Santa Cruz County home sales rose in September, albeit only by 1.7% from 175 to 178. Demand remains strong as the summer market wound downed buyers remained hell-bent on securing a property before the year end or perhaps interest rates and prices rise further. Buyers continued to grab at almost anything they could with Q3 having more closed sales than in Q2.
Prices Continue To Inch Up
The median price for Single Family Homes was $850,000 in Santa Cruz County in September. This was a 3% increase from $825,000 in August and up 9% from September 2016. Many weregrateful to see that the median price is below May’s peak of $875,000.
Of the 178 Single Family Homes that wold, 33% were purchased for more than one million dollars. This has been a fairly steady trend of the course of the year. In fact, of the 1304 homes that have sold in the county in 2017 30% of them went for one one million with 44% below $800,000.
More and more we are seeing that homes under the median price are priced such due to what are considered condition issues and required repairs. The necessary work is often difficult to pay for for many entry level buyers. So while there the purchase price may be within their bandwidth, the cost to fix things may be above and beyond what cash on hand can cover.
Meanwhile, condominium/townhomes have been holding steady in the mid $500,000s for the majority of the year. In September the median was $545,000.
- August - $550,000
- July - $552,000
- June - $531,750
How long will prices continue to appreciate or hold at this level? There is speculation that prices could dip if interest rates creep up in December or if the Trump tax reform initiative goes through. The impact of the Northern California fires, hurricanes and other disasters still remains to be seen as well.
Other Noteworthy Statistics From September
Days On Market - Homes sold (accepted an offer) in an average of 41 days in September, compared to 36 in August. This is a bit of a flip flop from 2016 where it was 37 in September and 43 in August.
Price Reductions - More homes reduced their price before selling in September compared to August, 33% and 29% respectively. Compared to 31% and 27% in 2016 respectively these price reductions aren’t too far off what the market has experienced.
Sale To List Price - Homes sold for 99.49% of their list price on average (that is below what they are asking) in September. This is up from 99.23% in August and down from 100.05% in September 2016.
Affordability remains at nearly a decade low and the market will need a combination of slowing appreciation and increased wage growth to balance out. How long will prices continue to appreciate or hold at this level
Strong demand tempered by lack of supply and limited access to affordable housing will define 2018’s housing market, but that could all change and we will need to keep our eyes on interest rates and other factors in the economy that affect the housing market.