The Santa Cruz County Housing Market Update

Not too much has changed in the last few months regarding our housing market. We have been experiencing a low inventory of single family homes for sale for over three years now. A small change is that fewer homes are selling from year to year. Over 2,000 in 2012 and fewer than 1,900 in 2014.

The median price has climbed, but that is relative to which price range homes are selling in. If you take a look at the graph below you can see that homes in the $200k- $600k price range dominated in 2012, while by 2014 the $600k- $800k homes are the major players. The over $1Mil homes sales has almost doubled in the last 2 years. Either there are no more homes to sell in the lower price ranges, OR those lower priced homes have experienced a push in their prices due to the lack of inventory.  I strongly believe it is the later of these two scenarios.

Santa Cruz County SFR sales

We have been experiencing multiple offer situations for a long time now. It’s almost common place, especially if a home is priced right and prepared well for the market. The buyer pool has been strengthened by the lowering of interest rates and the building economic confidence. Being so close to Silicon Valley does affect our market. The prices and demand “over the hill” has increased to cause an overflow into the Santa Cruz area; this is for buyers looking for their primary residences as well as a second or vacation home.

The “seller’s market” has remained healthy. The most popular homes are those that are prepared well for sale. The single level homes are well loved especially by the aging group of baby boomers. Properties with a second unit are also attracting a lot of attention due to the versatility it offers; extra rental income or living space for family or friends.

All in all, I expect 2015 to be a busy year. It’s a good time to buy a home (lower interest rates and stronger salaries) – but it is also a good time to sell a home (see above.)  That being said we will see what I have to report come mid-summer.

Shhhh! - Secret Listings

Pocket Listings, Off market listings, Excluded from MLS – these are all different ways of saying “privately held listings” In other words, it’s a secret. You don’t know about these listings unless you belong to “the club” that keeps these listings held close to the chest.

I always ask myself when I hear of these listings “is this helping the client or the agent?” Will it be a more private experience for the seller? Yes. Will it expose the house to as many potential byers as possible? No. Will it bring the highest price? Maybe.

There are definitely two schools of thought in this issue. One is that some sellers do not want the exposure. Privacy concerns such as divorce, a death, many valuables, notoriety, etc. Some agents say that a buyer may be willing to pay more for the privilege of not having to compete. But isn’t it competition that drives the market? Without competition, how do you know what the true market price is? Will homes that never reach the marketplace be excluded from appraisals due to their lack of marketability and therefore not a true sense of value? Hmmm.  Some say it’s the agents that convince the seller it’s the better thing to do so that they can “double end” the deal and make more money for themselves. Ah ha! Here in lies the real issue, dual agency or the same agent representing both the buyer and the seller. 

“Dual Agency” actually means the same brokerage representing both the buyer and the seller, which may still provide fiduciary duties to each client without issue. But in many cases the same agent will represent both parties. Kind of like having the same lawyer represent the plaintiff and the defendant. I can never see how an agent could truly have the best interest of both parties at, but how would I know, I’ve never done this. 

As defined by Wikipedia; “A fiduciary is a legal or ethical relationship of trust between two or more parties. Typically, a fiduciary prudently takes care of money for another person.” An agent representing a seller markets their home in an attempt to sell their house for as much money and with the best terms as possible. An agent representing a buyer helps their client to buy a house for a little money and the best terms as possible. A mucky issue it is when representing both parties. 

I’m certain that as long as it is legal, there will be pocket listings and dual representation. Each real estate transaction is unique and different from the next. The longer I’m in real estate, the more I realize that there is no generalizing. People are unique, real estate is unique, and the combination is endless in providing unique experiences for each and every transaction. Use your best judgment but always consult a professional if you have questions – or two professionals. Doesn’t hurt to get more than one opinion.