A Market Constrained
By Datta Khalsa, Broker
Reports are coming out across the country that month-over month prices are starting to decline, yet for Santa Cruz County we are seeing a different picture. On the contrary, our June statistics show that while our housing market has slowed in velocity, it is not showing a downward trend in prices.
At $1,325,000 the Median is up 5.8% from last month, and up 12.8% from a year ago in June. The charts show inventory at the end of June at 304 homes, which is up 15.6% from last month. This rise in inventory is typical for our Summer cycle—in fact, the current number of listings is actually down 11.3% from last June, and it doesn’t stop there: Our number of new listings is down 24.9% from last month, and down 21.4% from last June.
This is perhaps the most telling statistic as it suggests that homeowners are discouraged at the dual prospect of relinquishing both their current tax base as well as their low mortgage payments due to the current rise in interest rates, which as of this writing are at 5.74% for a conforming loan. On the other hand, 5-year adjustable rate mortgages are at 4.25%, so many buyers are electing to move forward with a shorter term loan in order to maintain their purchasing power.
As of this writing a week into July, there are 318 Active listings, with a Median List Price of $1,495,000, and 13.8% of these are in the coming soon “Members Only” category, which is kept invisible from Zillow and the other consumer portals, where only agents and their clients can see them. There are 110 listings under contract, which represents a relatively robust 25.7% of the current inventory in escrow, and the Median price for these listings in escrow is holding firm at $1,350,000, which is actually a little higher than the Median for last month.
The Unsold Inventory Index, which is our leading indicator of the balance of power between buyers and sellers is up slightly at a 2.13 Month supply which still shows the advantage still firmly on the side of the sellers who are in a position to put their homes on the market, and average selling prices continued to exceed list prices in Santa Cruz County last month, so it doesn’t appear that we are likely to see any easing in prices locally at least until the end of Summer.
These conditions have also continued to put upward pressure on rents which have soared to record levels as discouraged buyers caught between rising interest rates and continued low inventory are driven to get a roof over their head while they wait out the market and see if we will get any cooling off of prices in the Fall.
It all points to a constrained marketplace in which the long range horizon remains uncertain, as the forces that dictate value continue to persuade buyers—who are able to afford to—move forward with their dreams of owning a home here.