Santa Cruz Real Estate Market Update: December 2021
I cannot believe it’s already the end of 2021. Where did the time go? And to wrap it up, let’s talk about the national and local Santa Cruz Real Estate market. The most common question I get asked is, “How is the real estate market doing?” And with so much information and uncertainty out there, it can be hard to cut through the noise and actually see what’s really happening and what’s really going on in the Santa Cruz real estate market.
I’ve seen so many different markets over the last 17 years that I have been in the real estate industry. It feels like I’ve seen it all, and then boom, let’s insert 2021, nobody saw that coming. Hi, I’m Shemeika Fox, your Santa Cruz Real Estate expert. Let me help you cut through the noise and let’s hear from industry experts to see what is actually going on and for more information.
Looking toward 2022, let’s talk about one of the real estate hot topics; mortgage rates. Doug Dunkin at Fannie Mae says, and I quote, “Right now we forecast mortgage rates to average 3.3% in 2022, which though slightly higher than 2020 and 2021, by historical standards remains extremely low and supportive of mortgage demand and affordability.” So yes, mortgage rates are on the rise. We had even seen rates consistently up above 3% in the last few weeks. This means that it will be more expensive to purchase a home, so you want to get in on the action now! But mortgage rates aren’t the only thing on the rise. Home prices are projected to rise as well. Though not as quickly as they have been recently. The last year brought us appreciation rates of up to 23% in the first quarter in Santa Cruz County. 2022 is projected to bring us appreciation rates of around 5% according to real estate industry experts.
So what does this mean for you if you’re considering selling your Santa Cruz home? That’s a great question. Demand is still higher than supply. Meaning buyers are still willing to pay top dollar for your home. This seller’s market isn’t promised forever. So let’s take advantage while it’s here.
Another question that I’m asked on a regular basis is, “Are we headed into the next housing market crash?” And just from looking exclusively at the headlines, it’s easy to think that a crash is coming soon. But let’s look deeper than the headlines to see what’s really going on in the real estate market.
Foreclosure rates have been a hot topic recently in regards to a market crash or a possible market crash. With moratoriums starting to lift, the foreclosure rate is rising as we all expected, however rates will not be close to what we saw in 2019, which is a more normal market. Now let’s take a look at a piece written by CNBC that stated, and I quote, “Mortgage originations will drop 33% in 2022 as interest rates rise according to the industry forecast.” But in order to see what they really mean by the statement, we have to look a little deeper. This piece goes on to talk about how, “Refinance rates will drop 62%, but that mortgage originations for the purpose of buying a new home are forecasted to rise 9% to a record 1.73 trillion next year.”
According to the University Of Michigan consumer sentiment in September of 2021, only one of three people thought it was a good time to buy a home, but with interest rates rising and appreciation rates still high, there is a whole different story that headlines aren’t actually telling us. Make sure you look deeper than just what the headlines read when you are deciding If now is the right time for you to buy a Santa Cruz home or sell your Santa Cruz home.
Now let’s look at global numbers for our region and specifically the Santa Cruz real estate market. As 2021 draws to a close we’re seeing year-over-year increases in both median sale price and percent of list price received in November. Four of five MLS listing counties saw year-over-year price gains with San Mateo at 27% leading the way followed by San Benito at 24%, Santa Cruz at 22% and Santa Clara at 21%. Monterey saw a modest 1% year-over-year decrease.
In another indication of buyer demand premiums; i.e. percent paid over asking price, were up in four out of five counties year-over-year ranging from 101% of listing price paid in Monterrey county to 110% paid in San Mateo and Santa Clara counties. Half of the homes in Santa Clara County spent eight days or less on the market, the same as last November. In San Mateo county, the median days on market was nine days, which is three days less than last year indicating continued strong demand. Median days on market was 12 days in Monterrey, 11 days in San Benito and 10 days in Santa Cruz County. All counties except San Benito saw a year-over-year inventory drops ranging from 26% to 52% San Benito County rose 16% in inventory compared to November of 2020. Finally, the number of closed sale transactions dropped in all counties except for San Mateo, which saw 7% gain versus last year, San Benito fell 9% in year-over-year sales, Monterey dropped 7% and Santa Cruz decreased 2%. Santa Clara County came in with the exact same number of closed sales as November, 2020.
In Santa Cruz County, the median single family home cost $1,262,500 and sold in 10 days for 104% of the list price based on 162 sales in November, 2021. Inventory decreased by 22% from October and down 34% from November, 2020 without 187 homes available compared to 282 homes, last year. Average days on market decreased by seven days from 26 to 19 or down 27%. Median days on market dropped by two days from the month before. The number of new listings for the month of November decreased 24% over October, but is down 18% from November of last year. Closed sales decreased by 1% from October from 164 to 162 homes sold. This is down by 2% from November, 2020.
In Santa Cruz County, the median residential common interest home costs $797,000 and sold in eight days for 104% of the list price based on 40 sales in November, 2021. Inventory increased 3% from October, but is down 57% from November, 2020 with 40 homes available compared to 94 homes last year. Average days on market decreased by 13 days from 26 to 13 or 50% median days on market, decreased by four days from the month before. The number of new listings for the month of November increased 10% over October and is down 11% from November of last year. Close sales decreased 7% from October from 43 to 40 and is down 18% from November, 2020.
Well, folks there, you have it, the Santa Cruz real estate wrap-up of 2021. I hope you have a wonderful holiday season.
If you have any questions or need anything at all, please feel free to reach out for a complimentary confidential consultation. I’m Shemeika Fox, Santa Cruz Real Estate expert, and as always, I’m here to help. Happy holidays!
