Quick Take
The Santa Cruz County housing market looked similar in July to what it has for most of the summer, despite sales temporarily dipping as prospective buyers leave for vacation and school gets back into session.
Santa Cruz County’s housing market hit an unexpected wall in early July — then just as quickly snapped back, with one agent reporting a sudden surge of showings on listings that had been sitting for months.
“It was a sudden stall-out actually in this past month,” said Sereno Group agent Jennifer Watson. “But this week, I’ve seen a huge increase in showings in stuff that I’ve had on the market for months.”
The number of available homes was nearly identical to the number in June, with 444 available in July compared to 442 in June, according to the latest data from the Santa Cruz County Association of Realtors. Properties took slightly longer to sell in July than in June, averaging 46 days on the market compared to 40 in June. Regardless, the two figures are around the same as they have been since April.
In July, 137 sales closed, lower than the 155 that closed in June. The countywide median sale prices fell by about 10%, falling from $1,307,272 to $1,175,000. However, a $10.5 million sale of a 10,720-square-foot La Selva Beach property in June likely skewed that number higher last month. The average home square footage of properties sold in July was also noticeably smaller.
Watson said that a midsummer slowdown isn’t all that unusual, given that prospective buyers and agents both typically leave town for vacation in the summer, slowing down business considerably. However, because many students go back to school in the early part of August rather than later, the slowdown happens a bit earlier now and activity picks up again as the fall approaches.
“My window-washers and photographers are all saying they’re so busy right now, so they’re thinking that more inventory may be coming,” she said.
Watson added that properties have been taking a bit longer to sell across the board — a trend that’s held steady since mortgage rates climbed off their pandemic-period lows and home prices rebounded. Tariffs introduced in recent years, combined with rising inflation, have also made buyers more cautious. As a result, they’re increasingly gravitating toward “turnkey” homes — properties that need little to no work upon move-in.
It’s common for the Santa Cruz County housing market to follow trends in the Silicon Valley area by a few months. Watson said that in a recent meeting, the topic of artificial intelligence companies going public came up — and that could bring more out-of-town buyers into the county.
“There’s going to be a lot of cash flow, so we expect [them to buy] beach houses and homes where they’ve got a little better lifestyle,” she said, adding that she anticipates these would be largely second homes.
Monterey Bay Mortgage advisor Scott Goodrich said while the AI sector is undoubtedly booming, other tech fields are seeing layoffs and much less growth.
“I don’t think you’re going to see a huge, dramatic effect just because of that net effect,” he said. “There are certainly people that are becoming millionaires as we speak – how dramatic it’s going to be remains to be seen.”
Even though this could bring in buyers flush with cash, meaning all-cash offers could jump even more, Watson doesn’t think this will cut far into what local buyers are looking for: “[Out-of-town buyers] will be looking at beachfront properties and things like that. It’s a different housing stock.”
Goodrich added that there will likely be additional pressure for “standard Santa Cruz buyers,” but demand is still quite strong, and the market does not favor buyers, despite it being more balanced than in recent years. He added that he’s working with buyers on a home on the Westside — with 35 interested parties.
“If it’s still a nice home in a nice neighborhood and has all the special bells and whistles, you’re still seeing multiple offers,” he said.
Moving forward, Goodrich is keeping an eye on Federal Reserve action, particularly if it will raise rates, and what that will look like in the marketplace: “What the Fed does doesn’t really affect long-term mortgage rates, but it certainly can send some signals.”
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