Market Update June 2015

June 2015 Market Update

Here is your market update for June 2015.For all you data nerds out there, here is plenty of information to keep you entertained. For the others, if you want it boiled down to one sentence, here you go: There are still not enough homes on the market to meet the demand from buyers, which is keeping upward pressure on prices on single family homes. As affordability and inventory remains an issue, we have seen a rapid increase in condo and townhouse pricing.

Since the Santa Cruz market is so affected by the Silicon Valley, we also follow the Santa Clara and San Mateo County stats. The stats are a good way to follow the trends, however each neighborhood and property in Santa Cruz is unique unto itself. So, if you want an updated value for your home please just let me know and I will be happy to provide an estimate for you. Feel free to forward this information. As always, if you know anyone else who appreciate how I work, just forward me their contact information and I would be happy to follow up with them.

Moving quickly through the spring 2015 selling season it has become more and more clear that persistently low inventory is here to stay with us for the rest of the year, and price increases should continue as long as inventory levels stay this low and buyer demand continues to stay strong. With positive jobs statistics as well as the overall positive economic news, demand should continue to stay strong throughout the remainder of the year. We have witnessed a slowing in the pace of price increases from the previous year as housing in the area continues to reach affordability limits for many.

We are continuing to monitor all data points to provide you the most current real estate data available. Here are a few items to pay particular attention to in the respective County Market reports through May of 2015:

Santa Cruz County:

MEDIAN PRICE:
1. The SFH Sold median prices for May 2015 dipped down to $679,000 from the previous month of $755,000. This should likely be chalked up to a lot of smaller homes getting snapped up at reasonable prices, and should likely recover next month. The price per square foot is near the highs at $448 per square foot.
2. Townhome and Condos have hit a peak price of $470,000 in May 2015, as there is additional reach into these types of properties as buyers search for affordability and quality.

SUPPLY & DEMAND UNITS:
1. The SFH supply is down from the previous month and the two year trend of homes for sale on the last day of the month has decreased by 48%
2. Condo & Townhome supply has increased the last couple months, and are actually higher than this time the previous year.

MONTHS SUPPLY OF INVENTORY:
1. The MSI for SFH’s dropped in May 2015 down to a low of 1.5 months as more inventory was absorbed. At these MSI levels, expect to see appreciation ramping up further throughout the busy summer selling season.
2. The MSI for Condos & Townhomes is still hovering around 2.5 months supply.

SALES ABSORPTION:
1. Sales Absorption Rates for SFH’s shot up in May 2015 to 37%, which is a huge jump from the previous month. This is a signal that SFH prices are set to rise assuming steady state inventory arriving to the market. This is something to watch throughout the summer months.
2. Sales Absorption is still hovering around 27% for Condos and Townhomes, which is one of the key thresholds we monitor.

San Mateo County:

MEDIAN PRICE:
1. The SFH Median Sold Price hit an all-time high of $1,330,000 in May 2015 driven by low inventory and high demand and reduced overall unit volume of sales. While Santa Clara County has seen a bit of a slowing in price growth over the last year, San Mateo County has shown no signs of slowing down.
2. The Townhome Median price has seen some of the strongest growth with two year prices rising about 44%. The median price in May 2015 was $1,060,000, which was near a high hit in February.
3. Condos are also performing very well, but price growth has been a bit flatter. Expect to see condo prices increase with the increases in townhomes and SFH properties to record levels.

SUPPLY & DEMAND UNITS:
1. The number of for sale properties at the end of May was lower across all classes, with levels reaching the levels seen in February of this year. This does not bode well for buyers as the market remains a strong seller’s market.
2. The two year trend is showing inventory levels down about 65% over the period.

MONTHS SUPPLY OF INVENTORY:
1. Like Santa Clara County, the MSI is hovering right around 1 month at .9 Months for Single family homes, and hovers down to 0.4 month and 0.5 month’s supply for townhomes and condos respectively. It is not possible to go much lower in these markets
2. SFH homes are selling on average in three weeks, while condos and townhome are flying off the market in less than 2 weeks in most cases.

SALES ABSORPTION:
1. The sales absorption rate has been hovering around 50% for single family homes, but has been over 65% for condos and townhomes, once again reinforcing the search for affordability on the peninsula
Santa Clara County:

MEDIAN PRICE:
1. The Sold Median Prices for Single Family Homes reached $994,000 in the County, which is an all-time high.
2. The Sold Median Prices for Townhomes reached $750,000 in the County, which is also an all-time high, and the pace of change is seeming to accelerate as townhomes are seen as a viable alternative to SFH properties.
3. The Sold Median Prices for Condos reached $525,000 in the County, which is an all-time high as well.

SUPPLY & DEMAND UNITS:
1. The two year trend for active inventory at the end of the month is down about 73% across all property types
2. For sale inventory at the end of May 2015 is below that of April 2015 across all property types. Is April/May the inflection point in the market for inventory, or will the summer bring additional homes to the market?

MONTHS SUPPLY OF INVENTORY:
1. Single Family MSI is sitting at 1 months’ supply. Days on Market has ticked up just slightly this last month, but is still hovering around the three week mark. Last year, DOM increased from May through December, and some inventory lingered on the market. We will see if this occurs this year as well
2. Townhomes have been the real star here with around 0.5 month’s supply of inventory across the County and an astonishing average two weeks on market. Condos are just a bit higher at 0.75 MSI, as the demand for these types of properties is being driven by affordability.

SALES ABSORPTION:
1. The SFH percent under contract for May 2015 has increased from the previous month, and is sitting near its previous high at 47%.
2. The Townhome market is sitting at the highest percent under contract levels in the last two years at close to 65% of the properties under contract for May 2015.
3. Condos are also selling briskly, and have nearly 55% of the units under contract in May 2015, which is down a bit from March.

Overall the outlook for the summer includes a strong market with likely continued price gains. We hope to have more detail on what next year holds as we see where we stand in Fall and have more clarity on impacts of Fed rate hikes, CFPB issues with closings, and if the trend of the economy.

SC SFH

SC SFH 1

SC Townhomes

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