Santa Cruz Real Estate; Limited Supply and Strong Demand

posted in: Real Estate, Uncategorized | 1

Santa Cruz Real Estate Market Trends Over Last Two Years For over two years we have been in a period of limited amount of homes for sale and strong and steady demand from buyers.    Well, you don’t have to be an economist to know what the laws of supply and demand tells us what happens to prices with limited supply and high demand.  They go up. And they have been.    Many have been asking, “Have we reached the peak of this growth cycle?” Out in the market place it “feels” like there are pulses or waves of higher and lower demand from buyers.  Some weeks the market feels “hot”, while others seem quiet.  However, when we look at the stats they all seem to point toward a continued market of high demand and low inventory. Will inventory continued to drop off as we come into the holiday season?  Will buyer demand remain high?  If so, we may see a market at the beginning of 2015 with one of the tightest market in many years. Here are some stats to tell you where we are at now.  If you are a visual person, here are some graphs:  CLICK HERE FOR GRAPHS – SANTA CRUZ MARKET TRENDS 2012-2014

  1. MEDIAN PRICE: The median price is often use as a way to measure the market.   It really can jump around from month to month depending on if there were a lot of high dollar sales that sold that month or not.  So it is more important to look at the trend over time rather than just month to month   In Santa Cruz County (for single family homes and condos) the median sales price has gone up 35%!     That is a big jump.
  1. SUPPLY AND DEMAND: The amount of properties for sale has gone down 18% over the last two years.  The amount of homes that have sold has gone 10% over that time, but is largely due to the limited supply available.
  1. MONTH’S SUPPLY OF HOMES: This stat tell us how many months it would take to sell every property on the market , at the rate things are currently selling, if no more properties came on the market.   A normal market is often considered to be about 6 months of inventory.  Right now we are at about 1.8 months, which is very low.   Last year at this time it was 3.4 months.
  1. SALES ABSORBTION: This stat tell us of all the properties that are for sale, how many of them are currently in contract with accepted offers.    An equilibrium point is considered 25% by many.   At the end of August this number was 33% and has been above 25% for over 7 months in a row.


  1. Dick Crawford

    Thanks, Mike ~ I like accurate and concise! And the results you show are inline with what we have seen recently in many areas of southern California, though now we are fairly quiet with sales slowing and 10% of available homes getting price reductions each week. To the casual observer, this type of data can be deceiving because it repesents averages and trends rather than specific neighborood activity; but there are too many ways to slice and dice it, so these types of top-level stats are the best approach. Each client scenario calls for drilling down into the data to answer very specific questions ~ and most of those answers should be augmented with a couple of neighborhood tours! Somewhere between yours and mine is a great balanced market ~ I hope they both get a little closer to that before the new year!

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