The statistics on Santa Cruz County home sales for November showed the Median holding strong at $1,280,000 leading into the holidays, indicating that overall values in our local real estate market countywide are up 5% month-over-month from October, and up 3.2% from November of last year.
During this period, inventory at the end of November showed 244 homes, down by 48 from October and down by 5 from last November, while sales slowed dramatically to 69 homes for the month, down by 38.4% from October and down by 20.7% from last November.
The combined effect of these metrics puts the Unsold Inventory Index at a 3.5-month supply which traditionally points to prices staying relatively stable in the immediate future, but the rapid deceleration in the rate of home sales could be indicative of a deeper underlying trend that many are starting to see in real time, where homes simply aren’t selling like they were before and people are being forced to re-evaluate things.
It also bears considering that if you run a check of listings on the MLS that have been canceled, withdrawn or expired, it shows 69 homes representing over 28% of the inventory have been taken off the market in the past 30 days.
Granted, the holiday season is a time when it’s common for many sellers to take a break, but it’s a notable change when you compare this trend to the same 30-day period last year, when the number of homes taken off the market was less than half the current number, with 31 listings representing just over 12% of the inventory.
The trend becomes more evident when you compare the rate at which homes are being taken off the market to how many are selling, which shows that an equal number of would-be sellers are at least temporarily putting their plans on hold this month compared to the number of people who were able to successfully sell their homes last month. That’s a lot of households spending their holiday still owning a home that they had previously decided to move on from, which is a dramatic contrast from last year when just over one-third of the listings were coming off market instead of selling.
With inventory remaining low, and the loans on many of these homes at low interest rates, many households are weighing their options at the moment. Some will stay where they are, while others may consider the possibility of renting out their current home at break-even or better and pursuing a lease or even a lease with option to purchase their next home in anticipation of rates coming down in the Spring, as is being widely signaled with inflation slowing.
The upshot is that it appears likely we will continue to see more homes offered for rent in the short term which tends to soften rental values, as well as price reductions on homes offered for sale by motivated sellers who decide to double down and put their place back on the market as we cross into 2024.