Quick Take
The Santa Cruz County housing market stayed hot in May, as expected as summer rolls around. However, insurance concerns remain at the forefront of buyers’ minds, and both real estate agents and mortgage lenders have begun discussing insurance options right away, rather than leaving it as a secondary matter.
The Santa Cruz County housing market followed up a busy April with another equally hot month in May, continuing the trend of a more active market since March. Sales stayed about the same and homes were on the market for less time on average than they were a year ago. Local real estate agents and mortgage lenders say that while the mountain communities have remained hot spots for buyers, higher prices and insurance turmoil are becoming more pressing topics of discussion.
Countywide, home sales in May were nearly identical to April — 110 sales in May to 111 in April, according to data from the Santa Cruz County Association of Realtors. However, that is lower than the market activity from May 2023, when the county saw 123 sales — about a 10% decrease. As usual, Aptos, Santa Cruz and Watsonville saw the most activity last month.
The countywide median sales price in May was very comparable to May of last year. It was $1,352,500 compared to $1,362,875 in May 2023, which comes out to just a .76% decrease. Properties spent slightly less time on the market in May than in April, dropping from 30 days to 26. That’s also lower than in May 2023, when homes stayed on the market for an average of 36 days.
It’s well-known among those experienced in the real estate market that late spring and summer usher in the busy season for the housing markets across the country, specifically due to warmer, clearer weather. In Santa Cruz, though, weather doesn’t make much of a difference, said Anderson Christie Real Estate co-owner and president Marvin Christie. Instead, the Santa Cruz County busy season coincides with the end of the academic year.
Christie added that the mountain markets tend to get more activity in the summer months. Boulder Creek, for example, saw its number of sales double in May, jumping to 12 from six in April.
“Winter means something up there, and it’s not just the storms, it’s also the light,” he said. “Unless you’re at the top of a ridge, a lot of those people want to only sell in the summer.”
Christie also said that buyers don’t often look for different types of homes or features in different seasons. He recalls that during the acute phase of the pandemic, buyers wanted outdoor features like pools and chicken coops to have something to do at home or to begin a new project. That trend has waned considerably over the past few years.
“I feel like we’re kind of back to the grind in a lot of ways,” he said. “Lifestyle is always important, but I think people move to Santa Cruz for the lifestyle and the rest of the stuff is gravy.”
Another big change in business is how buyers have to deal with the major shift in the home insurance landscape. An estimated 15,000 Santa Cruz County residents have either been dropped or non-renewed by their insurance companies. Christie said conversations about insurance have become one of the chief concerns among buyers.
“Obtaining fire insurance has become one of the most important parts of the process, where it used to be lower on the list. Now, it’s like you don’t want to go into escrow until you’ve already tried to line up a policy,” he said. “We’re literally lining up insurance policies while we’re putting together the offer.”
Monterey Bay Mortgage advisor Scott Goodrich said he has seen the same thing. He said that, not only is it difficult to find insurance, but if a homeowner needs to turn to the California FAIR Plan — the state’s last option for homeowners shopping for fire insurance — they could find themselves under serious financial stress.
“The FAIR Plan can cost three to four times more than what a standard homeowner’s insurance policy was,” he said. “Maybe a standard policy is about $200 a month, and now you might be looking at $800 or more.”
Goodrich said he hasn’t seen a lot of buyers shying away from mountain properties yet, but that could change. He added that he recently spoke to a Felton resident who he said was “somehow able” to get a general policy — but he had to connect with a Southern California agent to finally secure one. And Goodrich thinks that policy very well could get canceled down the road, just like with the other some 15,000 in the county.
“There are enough buyers out there that are able to financially qualify and afford these increased premiums,” he said. “But no one’s happy about it. It’s a conversation that I have right up front because those dollars and cents can be big dollars and cents.”
Have something to say? Lookout welcomes letters to the editor, within our policies, from readers. Guidelines here.