ARTICLE
Here we are — it is June 15th and we’re calling for Summer to join us. We are experiencing an occasional sunny day dispersed between foggy and gray mornings. A quick reminder that our summer months usually kick off with high school and college graduations. The Cabrillo College graduation ceremony went smoothly earlier this month, high school graduations are in process and UCSC graduation ceremonies are happening this week. This translates into parents flocking to Santa Cruz for the festivities. But somehow, the summer season has not taken off just yet — but it will. Summer in Santa Cruz County also means the general time that the local real estate market heats up. Those of us who follow our economic trends in Santa Cruz — our housing market is one of the most expensive in the country. We can debate the reasons for the why and the how, but let’s leave that discussion for another time. I jumped on a couple of real estate websites to get the latest trends. Here is Redfin’s information about the current housing market: https://redf.in/Y6liJ7. In April 2023, Santa Cruz home prices were up 1.3% compared to last year, selling for a median price of $1.6M. On average, homes in Santa Cruz are on the market for 28 days compared to 13 days last year. There were 14 homes sold in April this year, down from 53 last year. The graph in the link (above) pulls out a comparison between Santa Cruz ($1.6 m), Watsonville ($627,500), Scotts Valley ($1.215 m), Capitola ($1.150 m) and Santa Cruz County ($1.250 m). Zillow’s Market overview shows a projected median house price in Santa Cruz ($1.3 m), Scotts Valley ($1.256 m), Watsonville ($812,172), Capitola ($1.212 m) and Santa Cruz County ($1.131 m). Zillow’s information is found here: https://www.zillow.com/home-values/3025/santa-cruz-county-ca/. As you can see these national real estate analyses vary significantly. Zillow's metrics aim to inform and support the decision-making process with relevant market data by measuring monthly market changes across various geographies and housing types. In reviewing their market trends what jumps out to me is the rising housing prices over the last eight years. An example for Santa Cruz County, in March 2015, the median-priced home was $609,000 so we have seen a doubling in housing prices. A quick comparison between Santa Cruz County and Monterey County brings a different perspective. While Santa Cruz County is logging in at $1.3 m, Monterey County is at $829,000. Of course, we realize that Santa Cruz County is a smaller geographic and lower populated county but the range of housing prices shows that your dollar stretches farther. Here is a closer comparison between the City of Santa Cruz ($1.3m) and the City of Monterey ($1.1m), which provides a narrower gap between the two central coast communities. Another trend that I found interesting is about Santa Cruz Migration and Relocation trends: People searching to move to Santa Cruz and people searching to relocate out of Santa Cruz. https://redf.in/Nhxyr2. One interesting statistic in the analysis shows that in March 2023 and May 2023, 395 people from Ukiah, CA are ‘thinking about moving to Santa Cruz.” On the reverse side of those people searching to relocate out of Santa Cruz the top three destinations are Sacramento (11,287), Los Angeles (5,459), and Seattle (4,442). 76% of Santa Cruz homebuyers searched to stay within the Santa Cruz metropolitan area. It is not clear whether those people are in transition or just searching for their options. What about our local real estate professionals who live and breathe real estate analysis every day? Let’s see if their analysis paints a different picture. Here are the local stats from the Santa Cruz County Realtors Association: https://mysccar.org/wpress/market_statistics/. In addition, the regional numbers from May 2023: https://www.mysccar.org/upload/files/Stats_May2023.pdf. I reached out to a chamber member, Greg Lukina, David Lyng Real Estate who provided the following perspective. “Since the start of Q2 of 2022, we have seen a market shift. Interest rate rise cooled buyer demand and properties sat on the market for a longer period of time. News reports of a real estate “collapse” or “meltdown” made people rethink selling the property and fewer people listed their home for sale. Fast forward to Q1 2023, we started the year with an increase in buyer morale.” “Buyers had become more comfortable with the higher interest rates and entered the year ready to buy. I thought that this increase in buyer confidence would spread to property owners and we would see the number of new listings on the market stay steady. But then we were hit with storm after storm. Road closures, mudslides, flooding, and even snow, put a huge damper on the real estate market. As we move through Q2, we are still seeing the number of new listings remain low. The number of new listings in the first five months (January-May) of this year dropped 32.5% versus the same time period last year. While we have experienced a 30+% reduction in the number of available homes (year over year), we are not seeing a 30+% reduction in the number of people that want to purchase homes. This has resulted in overcrowded open houses, the return of multiple offers, and overall home pricing that has not experienced the huge drop that some anticipated. We are now finding that a lot of homeowners love their low-interest rate (and subsequent low mortgage payment) more than they love their actual house resulting in a lower number of homes for sale. Homeowners who are putting their home on the market are reaping the benefits of low inventory and still getting great value for their property.” Greg Lukina concluded his comments, “As we move more into the summer months, we will be closely monitoring the homeowners' insurance marketplace and its impact on properties throughout the county and more specifically in the high fire zones. With the recent exit of State Farm and Allstate from the California insurance market, homeowners with properties in high fire zones are left with limited options for insurance outside of the FAIR Plan, which typically carries larger premiums. We will have to wait and see how this higher cost for insurance impacts property values for homes throughout the county.” In summary, you can see that national data analysis collection can vary from a local perspective. The Motto here has been Think Global, Act Local. We have a shortage of housing inventory in Santa Cruz County. The Governor and State Legislature are putting pressure on local governments to produce more housing — at all income levels — especially at the very low, low and moderate levels. It will take time, patience and persistence to see the housing market grow.
Here we are — it is June 15th and we’re calling for Summer to join us. We are experiencing an occasional sunny day dispersed between foggy and gray mornings. A quick reminder that our summer months usually kick off with high school and college graduations. The Cabrillo College graduation ceremony went smoothly earlier this month, high school graduations are in process and UCSC graduation ceremonies are happening this week. This translates into parents flocking to Santa Cruz for the festivities. But somehow, the summer season has not taken off just yet — but it will.
Summer in Santa Cruz County also means the general time that the local real estate market heats up. Those of us who follow our economic trends in Santa Cruz — our housing market is one of the most expensive in the country. We can debate the reasons for the why and the how, but let’s leave that discussion for another time.
I jumped on a couple of real estate websites to get the latest trends. Here is Redfin’s information about the current housing market: https://redf.in/Y6liJ7. In April 2023, Santa Cruz home prices were up 1.3% compared to last year, selling for a median price of $1.6M. On average, homes in Santa Cruz are on the market for 28 days compared to 13 days last year. There were 14 homes sold in April this year, down from 53 last year. The graph in the link (above) pulls out a comparison between Santa Cruz ($1.6 m), Watsonville ($627,500), Scotts Valley ($1.215 m), Capitola ($1.150 m) and Santa Cruz County ($1.250 m).
Zillow’s Market overview shows a projected median house price in Santa Cruz ($1.3 m), Scotts Valley ($1.256 m), Watsonville ($812,172), Capitola ($1.212 m) and Santa Cruz County ($1.131 m). Zillow’s information is found here: https://www.zillow.com/home-values/3025/santa-cruz-county-ca/. As you can see these national real estate analyses vary significantly.
Zillow's metrics aim to inform and support the decision-making process with relevant market data by measuring monthly market changes across various geographies and housing types. In reviewing their market trends what jumps out to me is the rising housing prices over the last eight years. An example for Santa Cruz County, in March 2015, the median-priced home was $609,000 so we have seen a doubling in housing prices. A quick comparison between Santa Cruz County and Monterey County brings a different perspective. While Santa Cruz County is logging in at $1.3 m, Monterey County is at $829,000. Of course, we realize that Santa Cruz County is a smaller geographic and lower populated county but the range of housing prices shows that your dollar stretches farther. Here is a closer comparison between the City of Santa Cruz ($1.3m) and the City of Monterey ($1.1m), which provides a narrower gap between the two central coast communities.
Another trend that I found interesting is about Santa Cruz Migration and Relocation trends: People searching to move to Santa Cruz and people searching to relocate out of Santa Cruz. https://redf.in/Nhxyr2. One interesting statistic in the analysis shows that in March 2023 and May 2023, 395 people from Ukiah, CA are ‘thinking about moving to Santa Cruz.”
On the reverse side of those people searching to relocate out of Santa Cruz the top three destinations are Sacramento (11,287), Los Angeles (5,459), and Seattle (4,442). 76% of Santa Cruz homebuyers searched to stay within the Santa Cruz metropolitan area. It is not clear whether those people are in transition or just searching for their options.
What about our local real estate professionals who live and breathe real estate analysis every day? Let’s see if their analysis paints a different picture. Here are the local stats from the Santa Cruz County Realtors Association: https://mysccar.org/wpress/market_statistics/. In addition, the regional numbers from May 2023: https://www.mysccar.org/upload/files/Stats_May2023.pdf.
I reached out to a chamber member, Greg Lukina, David Lyng Real Estate who provided the following perspective.
“Since the start of Q2 of 2022, we have seen a market shift. Interest rate rise cooled buyer demand and properties sat on the market for a longer period of time. News reports of a real estate “collapse” or “meltdown” made people rethink selling the property and fewer people listed their home for sale. Fast forward to Q1 2023, we started the year with an increase in buyer morale.”
“Buyers had become more comfortable with the higher interest rates and entered the year ready to buy. I thought that this increase in buyer confidence would spread to property owners and we would see the number of new listings on the market stay steady. But then we were hit with storm after storm. Road closures, mudslides, flooding, and even snow, put a huge damper on the real estate market. As we move through Q2, we are still seeing the number of new listings remain low. The number of new listings in the first five months (January-May) of this year dropped 32.5% versus the same time period last year. While we have experienced a 30+% reduction in the number of available homes (year over year), we are not seeing a 30+% reduction in the number of people that want to purchase homes. This has resulted in overcrowded open houses, the return of multiple offers, and overall home pricing that has not experienced the huge drop that some anticipated. We are now finding that a lot of homeowners love their low-interest rate (and subsequent low mortgage payment) more than they love their actual house resulting in a lower number of homes for sale. Homeowners who are putting their home on the market are reaping the benefits of low inventory and still getting great value for their property.”
Greg Lukina concluded his comments, “As we move more into the summer months, we will be closely monitoring the homeowners' insurance marketplace and its impact on properties throughout the county and more specifically in the high fire zones. With the recent exit of State Farm and Allstate from the California insurance market, homeowners with properties in high fire zones are left with limited options for insurance outside of the FAIR Plan, which typically carries larger premiums. We will have to wait and see how this higher cost for insurance impacts property values for homes throughout the county.”
In summary, you can see that national data analysis collection can vary from a local perspective. The Motto here has been Think Global, Act Local. We have a shortage of housing inventory in Santa Cruz County. The Governor and State Legislature are putting pressure on local governments to produce more housing — at all income levels — especially at the very low, low and moderate levels. It will take time, patience and persistence to see the housing market grow.