statsWhy 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?

Number of Sales

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

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.

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?

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?

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    September 2021:  As of the first week of September, there were 345 listings, essentially tying the all-time low for any September, September 2020, when there were 344 listings.  Over the past 26 years, there has been an average of 889 listings the first week of September. Only 213 of the 345 current listings are active, as the other 132 are under contract with a buyer. Compare 213 active listings to 216 closed sales in August, and the intense supply and demand relationship is clear. Much of the nation is experiencing record low numbers of houses on the market this year.

    Some would-be sellers are postponing listing their house for sale during the pandemic, either being afraid they won=t find something else to buy or fearful of letting the public into their home. At the same time, mortgage rates have fallen again, which is the primary cause of brisk sales that further reduce available inventory.

    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.

     

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    September 2021:  There were 75 listings as of the first week of September, down by 29% from 106 listings the first week of September 2020. Additionally, 34 of the listings are under contract with a buyer, leaving just 41 active listings for buyers to choose from.

    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.

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    September 2021: Even with limited inventory, there were 216 closed sales in August. Last year, in 2020, 554 single family homes sold in June, July and August; this year there have been 620.

    The Fed has continued (so far) to purchase billions in mortgage bonds, which elevates those bond values. Mortgage bonds move in inverse proportion to mortgage interest rates- an increase in one results in the decrease of the other. According to Freddie Mac’s website, the national average for a 30-year fixed rate mortgage in August was 2.84%, a slight decrease from 2.87% in July and 2.98% in June. The Fed has suggested that at some point, they will begin to taper off their mortgage bond purchases. Mortgage interest rates could begin to rise at that time. This situation is motivating many buyers to purchase a home, believing that these ultra low rates are available temporarily.

    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.

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    September 2021: There were 42 sales of condominiums and townhouses in August , compared to 51 sales in August 2020. Compare 41 active listings to 42 closed sales in August, and the intense supply and demand relationship is clear.

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

    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.

    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.

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

     

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    September 2021: The August Unsold Inventory Index was 1.6 months. 11 of the last 12 months had an Index below 2.0 (historical because there had never been even two consecutive months below 2.0 before). 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.

     

     

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    September 2021:  The Unsold Inventory Index in August was 1.8 months, the seventh consecutive month it has been below 2.0.  A year ago, in August 2020, it was 2.1 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.

     

     

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    September 2021:  The median sales price for single family homes in August was $1,250,000. Over the past five months (Apr-Aug), the median has averaged $1,235,200, and has varied by about 5% both higher and lower than that. The number of significant overbids has continued to gradually slow- e.g. 23% of the August sales were $100,000 more than the listing price, compared to 30% in July, 37% in June, and 43% in May- the highest it has been.

     

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    The high sales prices have been primarily caused by the extreme shortage of listings, coupled with extreme buyer demand that is primarily due to low interest rates. The median sales price for single family homes in Santa Cruz County exceeded $1,000,000 for the first time during the pandemic, in July 2020.

    Sales over $1 Million accounted for 147 sales, or 68% of the total.  The more affordable areas of San Lorenzo Valley and Watsonville had 55 sales, or 25%. There were no short sales or bank-owned sales in August.

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

    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)
    December: 57% of the sales (Overall median was $1,075,000)
    November: 53% of the sales (Overall median was $1,050,000)
    October: 55% of the sales (Overall median was $1,060,000)
    September: 53% of the sales (Overall median was $1,060,000)
    August: 56% of the sales (Overall median was $1,050,000)

    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.

     

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    September 2021:  The median sales price for condominiums and townhouses in August was $775,000. 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.

     

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    September 2021:  The average sales price for single family homes in August was $1,345,814. Since April, the average sales price has been higher than that twice, and lower twice.

    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 here.

    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.

     

  • NOTE: The graph image became blurry when uploaded. We’ll rectify when we find a solution.

    September 2021:  The average sales price for condominiums and townhouses in August was $817,463, just the third time it has exceeded $800,000 (which occurred in three of the last four months). 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.

    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.