As summer officially kicks off in Santa Cruz County, we say goodbye to the wild flowers and hello to warmer temperatures. But even though it might be heating up outside, there are still foggy days and plenty of cooling off opportunities...surfing, hanging out at the San Lorenzo River or enjoying a cold beer at one of our local breweries.
As we analyze the real estate statistics from May, it would seem that the market has found ways to keep cool too.
The tides of low inventory may be turning. Both April and May saw a year over year increase in listings that came to the market. In May 265 single family homes were listed for sale, thats 15% more than in April and 6% more than May 2017. Keep in mind that it is common for more inventory to start coming to the market this time of year as the summer buying season kicks into gear. Last year new listings only jumped 13% from April to May in 2017. Perhaps things may be looking up in the inventory department this year.
While the foggy mornings this time of year keep our temperatures cool there has also been a cooling of home price appreciation. For the second month in a row the median price of single family homes in Santa Cruz County dropped. Yes, you read that right, dropped. Not exactly what we have grown accustomed to hearing over the last few years is it? The median price in March was the highest the market had ever seen at $910,000. In April it dropped to $899,000 and in May the median price was $864,000. This is 1.3% below what it was the same time last year.
Many homebuyers will find the bump in inventory and dip in prices welcome news after months of frustration with swift price growth, rising mortgage rates and a low supply of homes for sale. Sellers on the other hand? Well, more inventory means more competition and they may be left wondering if the market has peaked.
Single family homes spent an average of 25 days on the market, a whopping one day less than in April and seven days less than in May 2017. Single family home sales increased 11% from April and 33% from May 2017 to 181 sales. It would seem that while inventory is going up and prices are cooling Buyer demand is still strong.
The increase in inventory that came to the market was enough to offset the demand (closed sales) and raise the months of inventory currently available. There are currently 2.2 months of inventory available. This is the first time in eight months that there have been two months or more of inventory available. The same time last month there were roughly 1.9 months. What months of inventory means is that if no new homes are listed for sale it will take about that long for the current properties to be snatched up by buyers. A market with less than four months of inventory is typically considered a Sellers' market, four to six months is historically the sweet spot for a balance between Buyers and Sellers and anything above six months of inventory is considered a Buyers' market.
Despite some signs of cooling in Santa Cruz County's housing market, other statistics from May indicate that demand is still high and its going to be a robust summer for the market. Only 15% of homes that sold in May reduced their price before accepting an offer compared to 19% in April and 18% in May of last year. In addition, homes sold for increasingly above their asking price. Last month they sold, on average, for 2.09% above the asking price. In April homes sold for 0.92% above asking and in May 2017 homes were selling for 0.02% below asking.
As more homes are listed for sale in the summer months and interest rates eek up will appreciation slow? Will more buyers flood the market in the coming months to offset those changes and cause prices to continue the upward trajectory we've been seeing in recent years? We will see...