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?

  • February 2021:  As of the first week of February, there were 232 listings, an all-time low for any February. Over the past 25 years, there has been an average of 588 listings the first week of February. Only 139 of the 232 current listings are active, as the other 93 are under contract with a buyer. Compare 139 active listings to 124 closed sales in January (the most for any January since 2005), and the intense supply and demand relationship is clear.

    There is a convergence of extraordinary influences affecting the extreme shortage of listings, all of which are temporary conditions:

    (1) Numerous factors causing high sales volume, thus, inventory depletion- see comments under “Number of Sales”;  (2) Some sellers are fearful of allowing the public into their home; (3) People who will sell and buy locally are afraid they won’t find a home to buy; and (4) People who would move out of state are choosing to “stay put” during the pandemic.

    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 2021:  There were 78 listings as of the first week of February, 17% fewer than 94 listings the first week of February 2020. Additionally, 36 of the 78 listings are under contract, leaving just 42 active listings.

    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 2021: Even with limited inventory, there were 124 sales in January, the most January sales since 2005. A year ago, in January 2020, there were 93 sales.

    There is a convergence of extraordinary influences affecting the intense buyer demand, most of which are temporary conditions:

    (1) The record low mortgage rate was broken 17 times during the pandemic, as the Fed heavily purchased mortgage bonds. Rates have increased in January;  (2) Santa Cruz, Monterey and Contra Costa counties have had an influx of work-at-home tech employees exiting San Francisco and Silicon Valley; and (3) National news of sharply rising prices are motivating buyers to action.

    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 2021: There were 3 sales of condominiums and townhouses in January, up from 25 sales in January 2020.

    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.

    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.

     

  • February 2021: The January Unsold Inventory Index was 1.9 months, historical because it is the fifth consecutive month it has been below 2.0 months. There have 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.

     

     

  • February 2021:  The Unsold Inventory Index in January was 2.4 months. A year ago, in January 2020, it was 3.8 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 2021:  The median sales price for single family homes in January was $1,110,000, the seventh consecutive month it has been over one million dollars. One year ago, in January 2020, the median price was $880,000.

    The pandemic has had a strong influence on prices (see comments under “Number of Listings” and “Number of Sales”), in that slightly over half of the sales in the last six months have been bid up over their asking prices. It has become common to see 15-20 or more offers on listings. 118 of the 918 total sales during that period have sold for more than $100,000 over the asking price- some more than a quarter of a million more. As real estate joined the list of essential businesses (it originally was not), we saw the median price leap up from $911,000 in June to $1,010,500 in July. With all the overbidding, the median has basically stayed between 1 and 1.1 Million, and the average price has basically stayed around 1.2 Million.

    As always, Buyers would be well advised to purchase a home for the long term, rather than for a shorter term investment.  There are far more important considerations than just investment value when owning a primary residence.

    72 of the 124 sales, or 58%, sold for more than 1 Million. The more affordable areas of San Lorenzo Valley and Watsonville had 33 sales, or 27% of the total. These numbers show how the mix of sales influences the overall median price (midpoint of sales prices) each month.

    There was one bank-owned sale, and no short sales in January.

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

    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)
    July: 51% of the sales (Overall median was $1,010,500)
    June: 41% of the sales (Overall median was $911,000)
    May: 39% of the sales (Overall median was $855,000)
    April: 42% of the sales (Overall median was $957,500)
    March: 38% of the sales (Overall median was $925,000)
    February: 33% of the sales (Overall median was $900,000)
    January 2020: 40% of the sales (Overall median was $880,000)

    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 2021:  The median sales price for condominiums and townhouses in January was $643,000. A year ago, in January 2020, it was $620,000. The median price for condominiums and townhouses is generally less consistent because of the relatively small 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 2021:  The average sales price for single family homes in January was $1,237,137. It has remained about the same for the last seven consecutive months (the average of the last seven months is $1,211,536).  A year ago, in January 2020, it was $951,957.

    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.

     

  • February 2021:  The average sales price for condominiums and townhouses in January was $695,459. A year ago, in January 2020, it was $674,430. The average price for condominiums and townhouses is generally less consistent because of the relatively small 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.