Low Inventory: Sign of the Times?

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Part Two in a Multi-Part Series on Our Shrinking Inventory

Low Inventory.  What else is there to talk about?  Even the most casual observer of the real estate scene can see and feel how many fewer homes there are on the market than in past years.  Whatever happened to those flash mobs of open house signs that used to overrun our busy street corners on the weekends?

No one misses the visual blight of course, but Buyers are sure missing not having more homes on the market to choose from.  Thus our questions du jour:  Where did all those listings go? Why aren’t more Sellers putting their houses on the market?  How come there’s been such a radical disconnect between the levels of supply and demand, over the last four years)?

It wasn’t always this way. Back In the early 90s, the real estate market often started out the new year with 1600-1800 active listings. To provide a little perspective on just how low our current low inventory is,  there were only 170 single family homes on the market last Saturday in Santa Cruz County.  A  record new low that’s not going to change much in the  months to come.

Before digging deeper into the discussion about the “whys” behind our historic low inventory there’s one big factor that we should remind ourselves of:

In other parts of the country, the number of homes for sale routinely jumps regularly when new subdivisions come on line. And we all know that the odds that any new giant subdivision will pop up in Santa Cruz in the foreseeable future are somewhere between zero and none.

Most of Santa Cruz’ biggest development tracts, like Santa Cruz Gardens or University Terrace on the Upper Westside were built close to 50 years ago. Even Kaufman and Broad’s Skypark Project is more than 20 years old.  Suffice to say, there’s no magic bullet out there on the inventory horizon primed to inflate the supply of available homes.

I’m not griping about local slow growth policies here, merely remarking that a different kind of status quo has evolved in our community. One that harbors its own special brand of cognitive dissonance that goes something like this:  Santa Cruz is a desirable place to live.  But one of the things that makes it so desirable is that it isn’t overrun by urban sprawl.

We’ve preserved lots of open space around most of our older established neighborhoods. In part, so they couldn’t be built out anymore. The urban service line drops off quickly on the non-ocean side of Hwy 1 and there can’t be more than a handful of infill lots that are still available on the ocean side of it.

So it boils down to this: Lots of people want to live here, but once you live here, you really don’t want a lot of other new people to live here. 

And yet almost everyone who lives here also bemoans the high cost of housing (buying and renting).  And worries about whether their kids will be able to afford to live here. And also worries about how Santa Cruz is changing as more people come from other places.  And oh yeah, also worries that they won’t be able to afford to retire without selling their home and moving elsewhere.

And these are the things we’ll take up in next week’s column: Honey,  We shrunk the Inventory!

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