Mixed Messages

Tom Brezsny
- Tom Brezsny

Mixed Messages

Continuing the conversation…looking at the first five months of sales data for Santa Cruz County and trying to make sense out of the mixed messages the market is sending. If you’re interested in taking a deeper dive into local market trends, I recommend Dax’s Data, a blog that tracks and analyzes all things real estate-related in Santa Cruz. https://bit.ly/daxsdata

Now, on to those mixed messages: Isn’t the market making a surprisingly strong showing so far in 2023? Or, is it tanking like so many people who tap national stats seem to think? Is it still a sellers market? Or have buyers gained the upper hand by now?  Well sorta maybe yes and sorta maybe no. There’s a lot of confusion between the signals and the noise of the market right now. 

What is the measure of a “good market”?  Is it median and average prices? Or is it the overall number of sales transactions? Depending on who you talk to it can be one or the other or both. People tend to switch back and forth between price and # of transactions when it’s convenient to their argument.  And of course, agents have cultivated the habit of pushing one or the other depending on whether they are talking to buyers or sellers.  

Median and Average Prices. May’s median sale price for Single Family Homes (SFR) was $1,373,000 and the average sale price was $1,634,000. Those numbers are either significantly higher or right on pace with the all- time highs of the pandemic marketplace (with the exception of March 2022 when the median reached $1,600,000 but which in hindsight, was an outlier that hopeful sellers would do well to forget.) Incidentally, the median price for condos in April 2023 came in at an all-time high of $950,000!

# of Home Sales.  The other big story is the historic low in SFR sales for we’ve seen through the first five months of 2023. January registered only 62 sales. February had 59. March 98, April 76, May 104. Taken together we’re right in the range of the all-time record low numbers of SFR sales we had in 2008 when the economy was teetering on the brink of the Great Recession and the market was in full meltdown mode.  

So what’s the message here?  A lot fewer things are selling but the homes that are selling are selling on average at a pretty hefty historical price point?  Are we poised on the precipice like we were in 2008?  What about the incredible low levels of active listings we still have? Is supply going to shoot up and crash the prices?  

More next Week…

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