Quick Take
The housing market is heating up once again in Santa Cruz County as prospective buyers and sellers begin entering the market after a winter lull. Real estate agents and lenders say that while people have become accustomed to higher mortgage rates, they are also seeing more financial support from relatives and friends to close deals.
Santa Cruz County’s housing market saw another jump in activity in April, picking up where it left off following a March surge. Sales and prices rose in April compared to March, and homes were on the market for less time than they were a year ago. Local real estate agents say this time of the year is when the market gets noticeably busier.
Countywide, there were 24% more home sales in April than in March — 111 versus 89, according to data from the Santa Cruz County Association of Realtors. That’s also higher than the market activity from April 2023, when the county saw 76 sales – about a 46% increase. As usual, Aptos, Santa Cruz and Watsonville saw the most activity last month.
The countywide median sale price rose substantially, by 22.8%, in April from a year earlier, largely due to a few expensive sales; it was over $1.563 million compared to just over $1.272 million in April 2023. Properties spent slightly less time on the market on average in April than March, dropping from 35 days to 30. That’s lower than in April 2023, when homes stayed on the market for an average of 40 days.
A spike right around the beginning of summer is no surprise to Santa Cruz County Association of Realtors agent Jennifer Watson, who said that mid-to-late spring is when the market activity picks up dramatically. She added that the time of year might also explain the high sales prices, despite the houses sold in April being smaller than in March on average. Homes right near the coast are in higher demand in the summer, and most of those are pricey even for Santa Cruz County.
“People want to buy a beach house when it’s warm, and not when it’s raining in the winter,” she said. “That’s the big difference there, and that can definitely skew the numbers.”
Watson also said that there are a lot of buyers looking for three-bedroom houses, possibly because they were initially looking for a four-bedroom property but ran into affordability concerns. With remote work still fairly common, and Silicon Valley transplants staying active in the housing market, many people look for homes in which they can work comfortably.
“People are also still really wanting an office at home, and if there’s some way to make that happen, I think that’s what they’re doing,” she said, explaining that people could be opting for houses with fewer rooms, and converting an unneeded bedroom to an office.
Watson added that many of the trends she saw in March have continued as summer draws closer: More people are showing up to open houses across the county, and both more buyers and sellers are entering the market. She also said that in her office, agents are still seeing that about 30% of clients are all-cash buyers.
Those taking out mortgages are also working with relatives and others to help their finances, Watson said.
“I am seeing people getting help with their down payments from friends, family, whoever it is,” she said. “Maybe they’re not buying solo anymore, and they’re now buying with someone that can help out.”
Scott Goodrich, an advisor with Monterey Bay Mortgage, agreed that he’s seen a lot of buyers getting financial help from relatives, and called buying a house an “all hands on deck kind of thing.”
“We see a lot of family members or parents helping with a gift, and sometimes they just help with the qualifying process,” he said. “So we are seeing that, whether it’s geared towards the down payment or just adding on additional income to help qualify.”
Goodrich said the market is still highly competitive: “Buyers are still having to scratch and claw to compete, and if you’ve got cash, that’s a huge advantage.”
Interest rates for 30-year mortgages sat around 7.5% as of Wednesday, and 15-year mortgages are around 6.7%. Last year, rates peaked at over 8%, which scared off many prospective buyers. Goodrich said he has some guarded optimism about those rates falling more toward the end of the year, but the bigger picture is still uncertain. However, he said, if the rates go below 6%, as the Federal National Mortgage Association predicted earlier this year, that could be big for the market.
“That will not only help buyers, but that will stimulate sellers, too,” he said, adding that homes will be more attractive for buyers across the board, allowing sellers to feel more confident putting their home on the market.
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