Sometimes it helps to re-state real estate ideas more than once. So they can sink in. I’ve noticed a few people out there who have an uncanny knack for reading Real Estate of Mind and reciting a version of it back to me that isn’t even close to what I was thinking when I wrote it.
I don’t begrudge anyone their personal filters. I know most people are going to manufacture conclusions based on their own well-honed and jealously-guarded realty tunnels. But as part of my ongoing mission to keep on keeping real estate as “real” as something with so many moving parts can be…let’s revisit last week’s column before moving on.
This is a bifurcated marketplace we are living, working, buying and selling in. Call it a house divided. Or lots of houses divided into a few camps. There’s the real estate market that exists below $800k. And then, there’s a very different market that’s playing itself out above $800k.
In way, way, (and I mean WAY) over-simplified terms – under $800k has been hot. Plenty of multiple offers. Overbids. Conspicuous lack of acceptable, decent, livable, attractive, soulful, inviting inventory to chose from. Upward price pressure. Plenty of Buyer frustration. Chances are that something that might have sold for $625,000 a year and a half ago could sell for $750,000 today.
Above $800k? Listen closely folks – cause here’s where things often wander off track and get lost in translation. Above $800k the market dynamic is different. I didn’t say dead – as in a doornail. I didn’t say non-existent. I didn’t say chock- full of pitiful Sellers who might as well resign themselves to racking up empty Days on Market in perpetuity.
It’s just different. It isn’t moving at the same pace or experiencing the same pulse rate as our “other” market. There aren’t the same pressure points. Or the same relationship between supply and demand. Multiple offers aren’t presenting themselves like low hanging fruit, ripe for the picking. There’s more inventory to choose from. Things listed at $995,000 last year wouldn’t sell for $1,200,000 this year. Nor would things listed for $1.5 necessarily sell for $1.75.
So it’s different. Not all or nothing. Not good or bad. Sellers don’t need to buy into a doom and gloom scenario but they do need to corral their upside expectations accordingly. A median price jump of $100k isn’t an engraved invitation to raise prices across the entire monopoly board. Baltic Avenue isn’t the same as Marvin Gardens. In the same sense – if $1.2 and $1.5 homes over in Los Gatos and Saratoga are flying off the market in two days with ten offers, it doesn’t mean similarly priced homes in Santa Cruz County are going to do the exact same thing.
Over there – $1.5 homes are our $750,000 homes. Just regular old ranch style places in standard neighborhoods. Nothing special. You have to make that adjustment in your head, if you are a seller in Santa Cruz listening to all those apocryphal success stories making their way over the hill.
Some Buyers in Santa Cruz should also consider making adjustments in their own thinking. As I said last week, the best values, can be found among homes listed in higher price ranges. Above the heat of the “other” market’s over-stimulated erogenous zone.
By the way, if it’s any comfort, the upper end of the price spectrum in Los Gatos slows down just like it does here too. It just tops out at a correspondingly higher price point. Things start to cool noticeably when they get above $2 million. But the pattern is the same. And the similarity in pattern is what we should really focus on. It’s telling us something important.
Next week – Maybe you’ll humor me and allow me to add a third tier to the Santa Cruz County market mix. We’ll call it a tri-furcated market and spend some time examining what’s been happening with that special subset of even higher-end high-end homes listed above $2 million on this side of the hill.