A new record high for single family home prices in Santa Cruz County
Last month saw a new record high for the median price of single family homes in Santa Cruz County that was almost 30% higher than the previous February.
The average price of a home on the Coast rose well above $1,500,000 and condos/townhomes continued their torrid pace, selling in an average of six days for 107% of their list price!
Buyers, read ‘em and weep. If you’ve been hoping against hope and wondering whether prices would start to trend downward as we move further into 2022, the sales data for February offered up a pretty definitive statement: Don’t hold your breath!
It’s not going to happen anytime soon. Instead, you might want to resign yourself to jumping into the deep end of the multiple-offer moshpit NOW, before the relative notion of “affordable” vanishes once and for all.
A Look at the Data
While 2022 started out moderately strong in January by logging a median price of $1,250,000 for Single Family Residences (SFRs), February ended with the highest prices ever recorded for SFRs in Santa Cruz County by a wide margin as the median rose to $1,380,000, up $320k (or almost 30%) year-over-year from February 2021 and more than $80k higher than the previous all-time high in May of 2021.
The average price for SFRs also topped-out at an all-time high of $1,581,486 well above the previous high, also in May of 2021.
Yes, you can go ahead and say it out loud if you want...
An average home in Santa Cruz County now costs more than a million five!
In retrospect, the January median price was most likely held down by the significant lack of inventory (1 month’s available supply). The absence of quality listings kept quite a few interested buyers on the sidelines, waiting for better choices and that in turn limited the number of the multiple-offer situations that are largely responsible for fueling intensity and driving-up prices.
As more listings started hitting the market in February, more buyers hit the streets and the open houses and the growing competition ratcheted-up the intensity to a level well-beyond what the market experienced in 2021. Visualize the flush of new listings coming on as the release of chum that often precipitates a full-fledged, feeding frenzy.
Perhaps the most impressive February stat was that the average SFR sold for a whopping 106% of its original list price (OLP) which means that homes sold exceedingly fast (an average of 24 days) and the overall market saw very few price reductions.
The inventory did rise in February to 1.6 month’s supply but that was still slightly less than the 1.7 month’s supply Santa Cruz County had in February of 2021. In the condo/townhome sales category February’s median price of $840,000 kept reasonable pace with the all-time high median of $860,000 that the Santa Cruz market achieved in January. Note that the sample size was extremely small with only 18 condo/townhome transactions taking place during the month compared to 40 in February of 2021.
The average days on market for February sales was 6 compared to 57 days in February 2021. And the average % of list price that those condos/townhomes sold for was 107%! The inventory rose from 0.7 month’s supply in January to 1.3 month’s supply last month.
It’s important to note that: When more buyers are priced out of the SFR market they turn to less expensive condos and townhomes and that category tends to see a faster rise in appreciation as a result.
When more buyers are priced out of the SFR market they turn to less expensive condos and townhomes and that category tends to see a faster rise in appreciation as a result.
So, if you’ve been waiting for the market to slow down, it looks like your patience will continue to be sorely tested. Even though the world is rife with the kind of fearful scenarios that could pause a runaway real estate market: an unresolved covid future, high inflation, higher gas prices, increasing stock market volatility, rising interest rates, a return to in person work environments and a God-awful ugly war in Ukraine, so far the combination doesn’t seem to have slowed the pace of the market.
Why not? Consider this: What’s the natural human impulse during a global pandemic? To shelter-in-place at home. What’s a great hedge against inflation? Real estate. What’s a great strategy for diversifying during times of volatility? Brick and mortar investment in homes! Gas prices shooting up? All the more reason to stay closer to home. Interest rates on the rise? All the more reason to try to lock in before they go too much higher. What is clear from all those images CNN is sending back from Ukraine? Home is worth fighting for.
There’s a perfect storm of factors - all pointing towards the value, the importance and the desirability of “home”.