The inventory in July was the second most inventory in the last 3 years (behind only May 2021)! While on the surface that’s good news for buyers, looking holistically gives a bit of a different picture of the market as a whole. Days on market was only 15 days which is the 3rd lowest number of days in a 3-year period. Months of inventory, which tells us how quickly we would run out of inventory if no more supply came on the market, is at 1.4 months. That is very low, especially compared to pre-pandemic when months of inventory hovered around 2.8 months, on average. In layman’s terms, homes are being swooped up at a record pace.
An increase in inventory has not led to a decrease in prices or percentage over asking. While more homes are coming on, that number is dwarfed by the number of eligible buyers eager to purchase in Santa Cruz. Santa Cruz County has now had 12 consecutive months where homes went over asking price, on average. In July, homes went 5.3% over asking. Only to be outdone by the three months previous (7.8%, 7.4%, & 7.5%).
This is both a supply AND demand issue. An increase in supply does not mean there is now too much supply. We have a long way to go to reach a balance point between supply and demand. There is a 10-year national shortage on homes. Lack of new construction and barriers to future builds pushes more potential buyers into already constructed residential homes. Low interest rates, record highs in savings as a percentage of disposable income, and work from home trends have all contributed to the increase in demand in Santa Cruz County. A huge percentage of buyers are deciding to call Santa Cruz home for the first time.
The average home price in July was $1,363,687, up from $1,183,772 in July of 2020. Median Home price is also up, $1,200,000 compared to $980,000. Since 2018, the average price of a home sold has increased 30+%!
The market determines price and at some point, we may see the buyer push back and say “that’s just too much to pay”, but so far, we haven’t reached that point. From a buyer’s perspective, you may think that it’s best to just ride it out and wait for the “crash”. I can say with high confidence that 2008 is not coming, and if the last 10 years are any indication, it’s safe to assume the prices are going to continue to rise. I can tell you, no buyers are coming to us with regret that they bought two years ago or even two months ago. From a seller’s perspective, you may wait to see just how high prices can go or you take the win and say “there has never been a better time to sell.”