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?

  • May 2021:  As of the first week of May, there were 311 listings, an all-time low for any May. Over the past 25 years, there has been an average of 792 listings the first week of May. Only 186 of the 311 current listings are active, as the other 125 are under contract with a buyer. Compare 186 active listings to 205 closed sales in April, and the intense supply and demand relationship is clear. Much of the nation is experiencing record low numbers of houses on the market this spring.

    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- 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) Some sellers are still 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.

     

  • May 2021:  There were 57 listings as of the first week of May, down by more than half from 121 listings the first week of May 2020. Additionally, 27 of the listings are under contract with a buyer, leaving just 30 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.

  • May 2021: Even with limited inventory, there were 205 closed sales in April. A year ago, in April 2020, there were only 90 closed sales, as the pandemic lockdown had just begun.

    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 in 2020, as the Fed heavily purchased mortgage bonds.  Rates have increased in 2021, but are still about 3%. (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.

  • May 2021: There were 56 sales of condominiums and townhouses in April, up sharply from 25 sales in April 2020.  Compare 30 active listings to 56 closed sales in April, and the intense supply and demand relationship is clear.

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

    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.

     

  • May 2021: The April Unsold Inventory Index was 1.5 months. Seven of the last eight 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.

     

     

  • May 2021:  The Unsold Inventory Index in April was 1.0 months, equaling the all-time record low, which has only happened three other times: October 2000, July 2004, and March 2021.  A year ago, in April 2020, it was 4.8 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.

     

     

  • May 2021:  The median sales price for single family homes in April set a new record high at $1,281,000, as overbidding numbers again reached the highest percentages ever. The previous record median of $1,125,000 was set just the month before.

    60% of the homes sold for more than $50,000 over the asking price.
    43% of the homes sold for more than $100,000 over the asking price.
    17% 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 temporary influences of the pandemic (see comments under “Number of Listings”). One year ago, in April 2020, the median price was $957,500.

    143 sales, or 70%, sold for more than $1 Million. The more affordable areas of San Lorenzo Valley and Watsonville had 49 sales, or 24% of the total.

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

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

    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)
    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)

    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.

     

  • May 2021:  The median sales price for condominiums and townhouses in April was $717,000. A year ago, in April 2020, it was $615,000. 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.

     

  • May 2021:  The average sales price for single family homes in April was $1,389,693, a record high. It reached $1.2M for the first time in July 2020, and exceeded $1.3M for the first time in April.  A year ago, in April 2020, it was $1,118,709.

    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.

     

  • May 2021:  The average sales price for condominiums and townhouses in April was $752,473. A year ago, in April 2020, it was $782,500. 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.