Your SLV Homes Soundboard

Real estate market update 3rd Quarter 2018

SUMMARY: Our first article this
year focused on the housing shortage.
There are more than double
the number of homes for sale now
compared to this spring, so homes
are taking about a week longer
to sell across Santa Cruz County.
Home prices began to soften
in some communities over the
last quarter, but prices are higher
than this time last year across the
majority of areas. Still, there aren’t
enough homes for sale compared
to the number of buyers looking,
particularly in the affordable price
range.
Vote
Look for a proposition on the
November ballot where California
homeowners can move their
property tax basis across counties
within the state. This could make
it easier for people to sell and
move, improving conditions for
both buyers and sellers.
Inventory
These charts show the region’s
inventory is increasing as more
homes come on the market across
the region with fewer buyers pursuing
them. As an example, two
months of inventory means that if
no new homes were listed, all the
homes on the market would sell
within two months. The housing
shortage persists: inventory
ranges between a low of 2 months
in Santa Clara County to a high of
3.5 months in the San Lorenzo Valley:
we’re still in a sellers’ market.
A real estate market that’s balanced
between buyers and sellers
usually has around six months of
inventory. Although the housing
shortage keeps upward pressure
on prices, the rate of price increases
is slowing as the market transitions
into a more normal balance
between buyers and sellers. This
trend could continue as we move
into the fall and then the holiday
season.
San Lorenzo Valley has about 80
single family homes for sale (up
10 since last quarter and more
than double the number for sale at
the beginning of the year). Scotts
Valley has 32 homes (down from
37 last quarter), while Santa Cruz,
despite having four times the population
of Scotts Valley, has just 68
single family homes for sale,
(down from 80 last quarter).
Dayes on the Market
Santa Cruz County homes
are on the market about a month
before going into escrow (versus 3
weeks last quarter).
Economy
As widely expected, the cost to
borrow went up again last week
as the Federal Reserve steered
the economy by increasing Fed
rates to 2.25% due to consistent
economic growth (GDP rose
4.2% in the 2nd quarter of 2018),
and consumer price increases
around 2.9%. The unemployment
rate remains low at about 3.9%
nationwide. Wages still haven’t
increased as much as workers
hope, but are up around 4.5 – 5%
this year.
The average 30 year fixed mortgage
rate is 4.75%. The Fed is
widely expected to increase rates
once more in 2018, typically 0.25%
each time, unless there’s a global
economic disruption. Many experts
think mortgage interest rates
around 5% may soon be normal.
(Historically, this is still considered
low).
August CA statewide median
home price was $596,410 in August,
up 0.8% from July, and up
5.5% from August 2017.
San Lorenzo Valley August median
home price was $665,000,
down 0.2% from July, and up
7.25% over August 2017
As you look at the price chart,
remember some of these micro
markets (unincorporated areas
like Lompico and Brookdale) have
so few home sales, that percentage
changes aren’t statistically significant.