Stay where you are. Don’t get up. Ride the mellow wave of that Turkey-induced, tryptophan high for a couple more days. In the meantime…relax and raise the footrest on the ol’ Barcalounger. Let’s look at the big picture – as real estate rounds into the homestretch of 2012.
Reclining is much better than declining. And real estate has earned a few days off for good behavior while racking up some very positive stats the past few months.
Spoiler Alert: Anyone looking for proof that the market is speeding back towards the heyday of 2005-07 is setting themselves up for disappointment. Take things for what they are – better. Let go of that other dream.
Median Price: We’ve been consistently in the $500,000 range most of this year – after hovering closer to $450,000 last year. The median peaked out well above $750,000 between 2005-2007.
Average Price: Running in the high $500,000s to low $600s recently. Compared to the low to mid $500s last year. Still a far cry from the lofty $800 to mid $900s range Santa Cruz County averaged at the peak.
Number Sold: Sales in 2012 are up over last year – close to 25% more. Not shabby. We may reach 1800 + single family sales this year – not far off from the combined average annual sales between 2005-07.
Surprise Stats: The average and median price of condos has risen dramatically in the last few months – close to $410,000 in both categories in October. Both up more than $100,000 from October of 2011. Go condos.
Corresponding Data: The percentage of short sales and REOs was down significantly in the condo/townhome sector which has absorbed more than it’s share of distress since the downturn. Continued improvement in the condo market will be a sign of better things to come – first time buyers, more organic listings, upward price pressure in at least the lower price ranges of the market. Go condos.
Translation – Organic Sales: Regular people selling regular houses under relatively normal conditions. Not bank-controlled short sales or REOs because banks aren’t people too. Getting back to a more normal market dynamic in the future is predicated on having more organic listings. The catch? We still have huge vaults of unsold distress properties casting their long shadow.
Rental Market Irony: Bubble bursts. Prices go down. People lose their homes. Fewer people can qualify to buy. There are suddenly lots more renters competing for fewer rentals. Demand exceeds supply. Rents rise significantly.
Buyers’ Irony: The perfect buyers market? Historically low interest rates. Prices down 30- 40% from the peak. Distress sales on every block. The catch? Nothing to buy. Short sales take too long. REOs are almost always awful. Lack of choices means competing offers on the few good listings that do come on. And – it’s still not easy to get through the loan qualifying process to access those great rates.
Sellers’ Irony: If you have a decent home listed in the sweet spot – $550,000 – $750,000 – chances are you’ll see multiple offers in the first week. Eager buyers who may drive the price up and cooperate on inspection issues. What’s wrong with this picture? That same sweet zone would have been 40% higher in 2005-07.
Dead Zone: Check it out. How many listings are there on the market between $800,000 and $1,000,000? Very few. How many are selling? Fewer. Call it the market’s designated no man’s land.
Elephant in the Marketplace: Lack of Inventory. There are only 400 listings available in the County. The fewest I’ve ever seen. Until mo’ better homes come on the market – the number of sales and the prices can’t/won’t increase dramatically beyond current levels. But prices have to rise to convince more Sellers to list.
Question: If you were a Seller – wouldn’t you want to be on the market when there was the least amount of competition? Supply and demand? Remember? Perhaps it’s time to make that New Year’s Resolution.