Housing market takes a jump in October as it approaches winter lull

Last month, real estate agents and mortgage advisers were expecting an imminent jump in home sales due to the Federal Reserve’s long-awaited decision to cut its benchmark short-term rates in mid-September. It appears they were correct.

Home sales in Santa Cruz County took a jump in October as real estate agents prepare to enter the typically slow winter season. Agents are already looking forward to 2025, when the hope of lower mortgage rates will continue to bring new prospective buyers into the market.

Countywide, there were 135 home sales in October compared to 99 in September, according to the Santa Cruz County Association of Realtors, a 36% increase. The number of sales last month was also higher than the 112 home sales recorded in October 2023. 

As usual, Aptos, Santa Cruz and Watsonville had the busiest markets. In Watsonville alone, home sales jumped from six in September to 22 in October. Homes averaged the same amount of time on the market in September and October at 40 days each. However, properties spent far longer on the market in October than in the same month last year, when they were on the market for only 26 days.

While the number of home sales rose significantly, the median sale price of $1,315,000 in October was slightly lower than in the same month in 2023, down from $1,356,250. 

Santa Cruz County Association of Realtors agent Jennifer Watson said that the big jump in sales between September and October is likely due to both the Fed’s half-percent cut in short-term rates and simply seasonality. As families readjust to the school year, prospective buyers often enter the market at higher rates after a slight dip around the start of the academic year. Watson added that sales are taking longer to close, too, meaning that some of the numbers reflected in the October data had already been in the pipeline.

“That tells us more people are getting loans, because you wouldn’t necessarily have that delay with all cash,” she said. “And perhaps they’re hunkering down on questions that they want to make sure they’re protected and truly qualify.”

Watson added that the sales boom in Watsonville is a “a little bit of an anomaly,” but might also reflect creativity within the housing market as it pertains to splitting up properties. She recently spoke to an agent who sold a home that spanned two lots, but they broke it up into two separate units, which means it is two listings. She said that the phenomenon mirrors that of the increased popularity of accessory dwelling units (ADUs), both to rent out as a revenue stream or to house friends and relatives. Watson herself recently sold a duplex to a family that intends to house their college-age daughter in one unit and rent out the other. She said that the market could continue to evolve in this way.

“It’s not so common here, but in San Jose they’re starting to sell ADUs as condos, which makes it a totally different home ownership on your property,” she said. “I don’t know if we’re going to be going in that direction, but the county’s definitely watching to see if that’s something people are wanting to do, and figure out how to handle it.”

Watson said that as the winter lull draws closer, real estate agents are looking toward the spring, when the rumblings of big Silicon Valley money could spur a very active market, according to lenders, appraisers and economists Watson’s office is in contact with.

“I’m not sure if it’s venture capital or companies going public, but the tech market people expect to come into a lot of money pretty quickly,” she said. “That could let some people decide they want to live a bit further away from work or just in a better location.”

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