Dax’s Data: 2021 Year in Review
2021 was the year of firsts. Not only did the real estate market survive a global pandemic, it thrived. To be fair, it thrived despite unprecedented times not because. Santa Cruz County Real Estate has seen a consistent and steady appreciation since the last housing crash and great recession.
To truly put into perspective just how crazy the 2021 Santa Cruz County real estate market really was, I dove into the last 11 years of real estate data. So, what records were broken in 2021? Let’s dive in and find out.
For the first time in the history of Santa Cruz real estate, the yearly average median home price for a single-family residence was over a million dollars. Not just a little or million dollars either. The median home price for 2021 was $1.2MM, up 23.08% percent from last year! The largest single jump year over year in the 11-year data set.
As for average home prices, the story is the same. In 2020, the average home price was $1.123MM. In 2021, the average home price was $1.324MM, 17.89% higher than the year prior!
This becomes particularly astonishing when you factor in that as home prices rise, the dollar amount must rise exponentially to maintain the same level of gain over the previous year. See 2014, an 18.53% increase over the previous year meant the average home price increased by $120k. Fast forward to 2021, a 17.89% increase meant the average home price increased by $200k!
We have seen a 144% gain in average home prices in the last 11 years!
How can that be?
it’s a supply AND demand issue.
First, let’s talk about supply. The numbers are shocking. In 2021, there were a total of 2363 listings. The lowest number of listings in the 11-year dataset. This is a 26.13% decrease from 2020 and 77.18% less than the 11-year high in 2011.
As for demand, the number of sales in 2021 was 2086, the highest number of sales in the 11-year dataset.
In Layman’s terms, we saw record lows in supply and record highs in demand in 2021.
Months of inventory is a calculation to determine how much supply is left based on the number of active listings and how quickly they sell.
Given the data presented so far, it should come as no shock that Days on Market also saw a record in the 11-year span. At 23 DOM, on average, 2021 saw homes seller 23.33% quicker than in 2020 and 76.2% less time than the 11-year high in 2011. All this means is that from the time the home is listed, homes are selling faster than they ever have.
The last major metric that we will discuss is the price per square foot. Given the trends shown above and the average price in Santa Cruz County, it should come as a surprise to no one that the Price per Sq Ft also hit a record high in 2021. At $760 per Sq Ft, not only was it a record for the 11-year data set but it also was 16.39% higher than the year previous and 136% higher than 2011.
Got number fatigue yet? Let’s wrap this in a nice little non-data bow.
If you look exclusively at 2021, you might be thinking that we are in a bubble that is bound to burst with records in every meaningful category. However, you zoom out and realize this has been a trend for 11+ years. You also realize that supply and demand are the major factors in price appreciation. There are no indicators of major supply or demand changes in the near future. Now, anyone that has been in real estate long enough knows that real estate is cyclical and the trends have to reverse at some point. All I am saying is that there are no indicators that the trend reversal is near. As you saw from the data above, supply has continued to decrease year of year. Real estate isn’t like monetary policy where we can just print more when we need it (at least not yet). Lack of land, years of overregulation & zoning restrictions, increasing labor costs, decreasing labor supply, and increasing material costs are all contributors to a lack of supply. From the demand side, new work from home norms, high salary jobs in Silicon Valley, and low-interest rates are major factors to demand. While interest rates are expected to increase in the near future, the amount of wealth from those buyers looking to claim a piece of this incredible coastal town has never been higher.
So, buyers, I know this market is daunting but as long as you maintain a long enough horizon, history shows that, over the long run, the prices of homes go up.
And sellers, the numbers show us that there has never been a better time to sell.
Thanks for reading. Please reach out for all your real estate needs: 831-227-5847.