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?

  • August 2021:  As of the first week of August, there were 359 listings, an all-time low for any August. Over the past 26 years, there has been an average of 899 listings the first week of August. Only 232 of the 359 current listings are active, as the other 127 are under contract with a buyer. Compare 232 active listings to 185 closed sales in July, 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.

    There is a convergence of extraordinary pandemic influences affecting this extreme shortage of listings, some of which will start to wane as vaccine distributions are increasing:

    (1) Numerous factors causing high sales volume‑ see comments under Number of Sales.  (2) People who want to sell and buy another are afraid they will not find a home to buy.  (3) People who would move out of state choosing not to move during the pandemic.  (4) With Covid-19 cases increasing in all 50 states as the delta variant spreads, some sellers are again fearful of allowing the public into their home.

    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.

     

  • August 2021:  There were 75 listings as of the first week of August, down by 44% from 135 listings the first week of August 2020. Additionally, 22 of the listings are under contract with a buyer, leaving just 53 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.

  • August 2021: Even with limited inventory, there were 185 closed sales in July. A year ago, in July 2020, there were 220 closed sales..

    There is a convergence of extraordinary influences affecting the intense buyer demand:

    (1) The record low mortgage rate was broken 17 times in 2020, as the Fed heavily purchased mortgage bonds. Rates increased in the first quarter of 2021, but then fell and are under 3% again. (2) Santa Cruz, Monterey and Contra Costa counties have had an influx of work‑at‑home tech workers exiting San Francisco and Silicon Valley. (3) National news of sharply rising prices is 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.

  • August 2021: There were 47 sales of condominiums and townhouses in July, compared to 60 sales in July 2020. Compare 53 active listings to 47 closed sales in July, and the intense supply and demand relationship is clear.

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

    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.

     

  • August 2021: The July Unsold Inventory Index was 1.9 months. Ten of the last eleven 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.

     

     

  • August 2021:  The Unsold Inventory Index in July was 1.6 months, the sixth consecutive month it has been below 2.0.  A year ago, in July 2020, it was 2.3 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.

     

     

  • August 2021:  The median sales price for single family homes in July was $1,180,000, about the same as $1,165,000 the previous month. The overbidding numbers for July decreased for the second month as the market slowly starts to cool:

    55% of the homes sold for more than $50,000 over the asking price..
    30% of the homes sold for more than $100,000 over the asking price.
    8% of the homes sold for more than $200,000 over the asking price.

    The high sales prices have been primarily caused by the extreme shortage of listings, which in turn has been caused by the enormous influences of the pandemic (see comments under Number of Listings). The median sales price for single family homes in Santa Cruz County exceeded $1,000,000 for the first time in July 2020.

    Sales over $1 Million accounted for 128 sales, or 69% of the total. The more affordable areas of San Lorenzo Valley and Watsonville had 65 sales, or 35%.

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

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

    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)
    July: 51% of the sales (Overall median was $1,010,500)

    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.

     

  • August 2021:  The median sales price for condominiums and townhouses in July was $700,000. 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.

     

  • August 2021:  The average sales price for single family homes in July was $1,342,794.  It reached $1.2M for the first time in July 2020, and exceeded $1.3M for the first time in April.

    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.

     

  • August 2021:  The average sales price for condominiums and townhouses in July was $832,484, just the second time it has exceeded $800,000. 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.