Why market statistics?

The factors of supply and demand control prices
Real Options Realty is a recognized source for the interpretation of residential market statistics in Santa Cruz County. We are often quoted by the media.

Knowing market statistics can help you make informed decisions, because the factors of supply and demand control prices. Now you have access to this information anytime.

Residential Market Statistical Graphs and Explanations

Number of Listings

The Number of Listings shows the supply, or how many properties are for sale. Is the inventory of listings increasing or decreasing, and is it seasonal?

Single Family Home Listings

Condo/Townhouse Listings

Number of Sales

The Number of Sales shows the demand, or how many properties closed escrow. Is the number of sales increasing or decreasing?

Single Family Home Sales

Condo/Townhouse Sales

Unsold Inventory Index

The Unsold Inventory Index is the most important predictor of future price movement. It is the inventory of properties expressed in time, or the current relationship between supply and demand. For example, if there is a 6 – 8 month supply of houses on the market, prices are stable. If there is only a 4 month supply, prices usually increase. If there is a 10 month supply, prices usually decrease.

Single Family Home Unsold Inventory Index

Condo/Townhouse Unsold Inventory Index

Median Price

The Median Price shows the price at which there were an equal number of sales higher than or lower than that price. Have prices been increasing, decreasing, and how fast?

Single Family Home Median Price

Condo/Townhouse Median Price

Average Price

The Average Price shows the sum of all sales prices divided by the number of sales. Have prices been increasing, decreasing, and how fast?

Single Family Home Average Price

Condo/Townhouses Average Price

February 2022: As of the first week of February, there were 169 listings, the fewest listings for any February by far. This is 27% fewer listings than February 2021, when there were 232 listings- the previous record low for any February. And, only 110 of the 169 current listings are active, as the other 59 are under contract with a buyer. One year ago at this time, there were 232 listings.

BACKGROUND: The number of properties for sale is seasonal. Each year, December and January have the fewest number of homes for sale, because people don't like to show their homes during the holiday season. And each year, the highest number of homes for sale is in the summer, because it is more convenient to sell your home in the summer. Note this repeating annual pattern in the above graph.

February 2022: There were 37 listings as of the first week of February, down dramatically from February 2021 when there were 78 listings. Additionally, 18 of the 37 listings are under contract with a buyer, leaving just 19 active listings for buyers to choose from. There have never been fewer listings in February of any year.

BACKGROUND: The number of properties for sale is seasonal. Each year, December and January have the fewest number of properties for sale, because people don't like to show their homes during the holiday season. And each year, the highest number of homes for sale is in the summer, because it is more convenient to sell your home in the summer. Note this repeating annual pattern in the above graph.

The condo/townhouse graphs do not show as smooth a transition from month to month as the house graphs. This is because there are far fewer condo and townhouse sales in Santa Cruz County than house sales. In the field of statistics, a larger quantity of numbers makes a better statistic.

February 2022: There were 81 closed sales in January, down 35% from 124 sales in January 2021, largely due to lack of inventory. However, there was a total of 2028 SFR sales for 2021, the most since 2005 when there were 2257 sale for that year. The highest number of sales in a year was in 2004, when there were 2820 sales. In fact, for the decade ending in 2005, there was an average of about 2400 sales each year.

Mortgage interest rates are rising, and that will initially motivate buyers to act before rates go higher, especially since rates are still historically low. But if rates continue to rise throughout 2022, that will eventually have a cooling effect on the number of sales. The Fed began to taper off the purchase of mortgage bonds in November, a policy that has been in place since the beginning of the pandemic to force mortgage rates down to record lows (the all-time record low mortgage rate was broken at least 17 times during the pandemic).

BACKGROUND: A sale, in this context, means a close of escrow. For example, July sales mean houses that closed escrow between July 1 and July 31, but probably went under contract in May or June. The number of sales is seasonal. Each year, January and February have the fewest number sales, because people are usually too busy to shop for homes during November and December. The highest number of sales is in June or July, because more buyers shop for homes in the summer. Note this repeating annual pattern in the above graph.

February 2022: There were 20 sales of condominiums and townhouses in January, down 40% from 33 sales in February 2021. Compare 19 active listings to 20 closed sales in January, and the intense supply and demand relationship is clear.

There were no bank-owned or short sales in January.

BACKGROUND: The number of sales is seasonal. Each year, January and February have the fewest number sales, because people are usually too busy to shop for homes during November and December. The highest number of sales is in June or July, because more buyers shop for homes in the summer. Note this repeating annual pattern in the above graph.

A >sale', in this context, means a close of escrow. July sales mean properties that closed escrow in July, but probably went under contract in May or June.

February 2022: The January Unsold Inventory Index was 2.1 months, the first time it has been over 2 after a historic run of 10 consecutive months under 2 months. As the prime indicator of the current relationship between supply and demand, the Unsold Inventory Index is telling the story of the extreme difficulty would-be-buyers have been facing.

BACKGROUND: The Unsold Inventory Index is the most important statistic used to predict value increases or decreases. It is the current relationship of supply and demand for the housing market. The index is created by dividing the current supply (number of listings) by the current demand (number of sales). The result shows the time it would take to deplete the inventory of houses for sale at the current sales rate. It is expressed in months.

Years of statistical analysis have shown that a 6 ‑ 8 month unsold inventory index has been normal‑ meaning the market is balanced, and home prices are stable. Historically, when the Index has been less than 6 months, prices can increase, and when it is more than 8 months, prices can decrease. The further away from normal the index is, the stronger the influence on price movement.

February 2022: The Unsold Inventory Index in January was 1.9 months. A year ago, in January 2021, it was 2.4 months.

BACKGROUND: The Unsold Inventory Index is the most important statistic used to predict value increases or decreases. It is the current relationship of supply and demand for the housing market. The index is created by dividing the current supply (number of listings) by the current demand (number of sales). The result shows the time it would take to deplete the inventory of condos for sale at the current sales rate. It is expressed in months.

Years of statistical analysis have shown that a 6 ‑ 8 month inventory index is normal‑ meaning the market is balanced, and home prices are not increasing or decreasing. When there is less than a 6 month supply, prices can increase. The further away from normal the index is, the faster the price changes can occur.

February 2022: The median sales price for single family homes in January was $1,250.000. The median price first exceeded $1.2M back in April 2021. Even with all the overbidding since then, the median has averaged a little over $1.2M over the last ten months.

About a quarter of the January sales prices exceeded the asking price by $100,000 or more, about the same as the last few months. Note the data in this chart:

Sales over $1 Million accounted for 56 sales, or 69% of the total. The more affordable areas of San Lorenzo Valley and Watsonville had 25 sales, or 31%.

There were no short sales or bank-owned sales in January

Sales over $1,000,000 in the last 13 months:

January: 69% of the sales (Overall median was $1,250,000)
December: 62% of the sales (Overall median was $1,200,452)
November: 64% of the sales (Overall median was $1,260,000)
October: 58% of the sales (Overall median was $1,137,000)
September: 65% of the sales (Overall median was $1,218,000)
August: 68% of the sales (Overall median was $1,250,000)
July: 69% of the sales (Overall median was $1,180,000)
June: 61% of the sales (Overall median was $1,165,000)
May: 66% of the sales (Overall median was $1,300,000)
April: 70% of the sales (Overall median was $1,281,000)
March: 56% of the sales (Overall median was $1,125,000)
February: 55% of the sales (Overall median was $1,070,000)
January: 58% of the sales (Overall median was $1,110,000)

BACKGROUND: People who keep statistics argue whether the median price or the average price is a better indicator. The average price is calculated by totaling the sales prices and dividing by the number of sales. The median price is that price where an equal number of sales occurred at a higher price and a lower price than the median.

February 2022: The median sales price for condominiums and townhouses in January was $860,000. The median price for condominiums and townhouses is generally less consistent because of the relatively smaller number of sales.

BACKGROUND: The condo/townhouse graphs do not show as smooth a transition from month to month as the house graphs. This is because there are far fewer condo and townhouse sales in Santa Cruz County than house sales. In the field of statistics, a larger quantity of numbers makes a better statistic. Here, we are working with very few numbers (25 to 75 sales per month). Occasionally, a few very expensive condos sell in the same month, and the graph takes a jump that month.

People who keep statistics argue whether the median price or the average price is a better indicator. The average price is calculated by totaling the sales prices and dividing by the number of sales. The median price is that price where an equal number of sales occurred at a higher price and a lower price than the median.

February 2022: The average sales price for single family homes in January was $1,414,982. One year ago, in January 2021, it was $1,237,137. The average price first exceeded $1.3M in April 2021, when it was $1,389,693.

In Santa Cruz County, we have a few very expensive homes, such as those fronting Monterey Bay. Because of that, the average price tends to be a higher number than the median price.

February 2022: The average sales price for condominiums and townhouses in January was $920,905. The average price for condominiums and townhouses is generally less consistent because of the relatively smaller number of sales.

BACKGROUND: The condo/townhouse graphs do not show as smooth a transition from month to month as the house graphs. This is because there are far fewer condo and townhouse sales in Santa Cruz County than house sales. In the field of statistics, a larger quantity of numbers makes a better statistic. Here, we are working with very few numbers (25 to 75 sales per month). Occasionally, a few very expensive condominiums sell in the same month, and the graph takes a jump up in that month.