Quick Take
Homes in Santa Cruz County took twice as long to sell in August compared to July as plenty of properties hit the market. But prices keep rising, up 15% over the past year to a median of $1.5 million, new industry figures show.
Homes in Santa Cruz County took twice as long to sell in August as in July as buyers continue to have plenty of properties to choose from, a trend that has persisted over the past several months and signifies a notable shift in the housing market.
Homes took longer to sell in August than they did in July, averaging 56 days on the market compared to just 29 days in July, according to the latest figures from the Santa Cruz County Association of Realtors. That trend has been largely broad-based across the county. The number of available homes for sale hit 506 in August, down from the previous month but 43% higher than the 354 homes on the market last August. It was the highest level of unsold inventory for the month of August since 2019, when there were 589 homes for sale. That’s a trend that has been consistent every month since May. Home sales also dropped nearly 4% in August compared to a year ago — from 132 to 127.
Buyers, however, haven’t found relief from high prices despite the slower market. The median sale price rose about 15% last month compared to August 2024, to $1,505,000 from $1,302,500.
Coldwell Banker agent Jessica Wallace told Lookout that the jump in days on market is fairly large for a one-month change, but said that August typically sees a slowdown in home sales driven by a number of factors. Those include kids going back to school, families settling back into their academic-year routine and people taking vacations as summer comes to a close.
Wallace also pointed to the large number of listings that came on the market over the past few months as a possible reason for longer times on the market. More than 500 homes on the market is a reasonably high level for the area. While that makes it easier for buyers to get a foothold, it also gives them more time to explore their options before committing to a home purchase.
The rising number of listings is in part because of buyers and sellers adjusting to mortgage rates of 6% to 7%, which is more in line with historical norms, but far higher than the pandemic era’s extremely low 2% to 3% rates. That has brought more buyers into the market, which also encourages more sellers to list homes. However, with more properties to choose from, buyers can take more time to explore their options.
“Homes aren’t selling at the same clip,” said Wallace, comparing today’s market to the peak pandemic era. Now with rates stabilizing, sellers are increasingly making the jump in order to get their property off their hands. “You have more stuff hanging around for a while, and people are going to have to move eventually.”
September, Wallace said, often sees more business than August, or at least maintains a similar level. The reason for that is fairly simple: The summer’s beautiful weather almost always extends through the early fall.
“People here look year-round,” she said. “It’s not like buyers just completely stop looking and huddle down for the winter, it’s not like Michigan.”
Wallace added that while prices haven’t come down much, if the trend of higher inventory and longer times on the market continues, it’s possible that prices could begin to dip in the coming months.
“I’m interested to see what our average and median prices are going to be at the end of the year, once some of that unsold inventory does get sold,” she said. “It may be at lower prices, and I want to see if that brings down the overall prices.”
A Federal Reserve rate cut could also spur more market activity. On Wednesday, the Fed made its first cut since 2024, slashing its benchmark interest rate by a quarter-percent. Monterey Bay Mortgage advisor Scott Goodrich said that was not entirely unexpected, and mortgage rates often follow interest rates, though the recent cut might not affect mortgage rates right away. He pointed out that mortgage rates have already fallen to their lowest levels in about a year, which has led more homeowners to refinance, especially as many look to tighten their belts amid a weaker job market.
“Anybody that’s bought a home within the past couple of years and got financing in the 7% or 8% range can now refinance down into the sixes,” Goodrich said.
Goodrich added that buyers will be most likely to respond to lower mortgage rates and jump into a purchase. If mortgage rates continue to drop, it could bring even more buyers and sellers into the market, he said. That includes owners who could be looking to sell, despite being locked into low pandemic-era rates.
“They’ve been sitting on these lower mortgage rates — even if they’re considering selling, they are not excited about jumping into 6.5% to 7% mortgage rates,” he said. “But as that number compresses, and they can get a 30-year fixed rate near the 5s or better, I think you’ll see more sellers press the ‘go’ switch and put homes on the market.”
Generally speaking, the continued trend of high inventory and homes taking longer times to sell means that the county’s market continues to be shifting away from sellers more than it has in years: “It’s significantly more balanced,” said Wallace.
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