Is there any end in sight?
Picking up the thread… getting a read on the real estate market, while answering a few of the most common questions people out there are asking. Here’s a recap:
Question # 1: “The market is slowing down isn’t it?” Answer: Yes and No. The market certainly “feels” slower in almost every respect, except for the prices homes are selling for. A downshift in intensity is normal for this time of year. Seasonal patterns in 2020 were casualties of an unprecedented post-shelter-in-place surge. This year they’re back.
Question # 2: “The market can’t keep going up forever can it?” Answer: That’s conventional wisdom but the market has now been going “up” for nine straight years without a break. Perhaps a better question is: “How long can a market go up before it goes down?” Answer: Stay tuned, we’ll find out… eventually.
Question #3: “Is there any end in sight?” Answer: Read on…
Recently, I held open houses at a modest Live Oak home listed for $1,395,000. Fifty groups of prospective buyers came through the first day and another 42 groups the second day. There were five offers on the property, the price was bid up $100k and ultimately out of the 92 groups that came through, only one ended up with the house. The other 91 are still out there looking.
That same story has been repeated ad infinitum, ad nauseum thousands of times on different homes across the County, with only slight variations, for nine straight years. Since 2013, the median price has more than doubled, going from $500k to well over $1.1m. The common thread throughout? Historic low inventory juxtaposed with high buyer demand. Or to put it in layman’s terms: The ideal Sellers’ market.
Is there anything on the horizon to suggest that the number of listings will significantly increase or that the number of buyers will dramatically decrease any time soon? Or that the lopsided relationship between supply and demand will skew differently in the days and weeks ahead? The answer is a resounding no.
There’s nothing apparent waiting in the wings to disrupt the current Status Quo of a Sellers’ market. As I write this, there are 125 active single family homes on the market in Santa Cruz County. That is an incredibly low number and hardly enough to sustain any market. The number of new listings coming on each week has slowed to a trickle as we approach the holidays and there’s very little likelihood that supply will pick up until the spring of 2022.
NEXT WEEK: The factors that are keeping demand high