The 2019 Scotts Valley real estate market delivered as many predicted including yours truly.
Single family homes saw an increase of $45,431 in average sales price which was pretty much in line with what the value of homes did last year, with an average sales price of $1,247,095. This represents a 3.8% increase in average sales price. The downward changes that were noticeable were the days on market that went up to 44 days which was 10 days more than the previous year. Also notable, probably more notable was the average sales price to list price ratio as homes sold for 97.9% of asking price on average which was 2% less than the previous year.
Why that is notable is because last year buyers finally put their foot down and showed that they are not over-paying for homes anymore and came to the table to negotiate rather than the way things were in previous years where multiple offers and above asking price offers were the norm. 2018 saw 99.9% and 2017 saw 99.7% averages, respectively.
Townhouses and condos also saw similar changes in average sales price increases as the average sales price was $22,602 higher than the previous year, coming in at $656,535 in 2019. This represents a 3.6% increase in average sales price versus the prior year.
The notable differences in that segment was the average sales price to list price ratio of 99.2% which was .9% less than the previous year. But even more notable was the days on market which skyrocketed from 14 days in 2018 to 41 days in 2019. That’s quite the jump.
What happened? A lot of townhouse and condo sellers made the move as more townhouse developments were being built and were now competing with the existing ones. It did make a difference and the days on market is proof. But when the dust all settled, pardon the pun, the townhouse and condo market did well and as expected.
What does this all mean?
Two words; Stabilization and Normalization.
Let me explain… When I research the Silicon Valley market which tends to be the precursor of what happens here in the Scotts Valley market, I am seeing much of the same. The market there is experiencing a stabilization and normalization where homes are still holding their value, but gone are the days of multiple offers on every property that comes on the market. More days on market are the norm. That is the same that is happening here.
And when you read market predictions from experts, you need to remember to read the entire article and not just the headline.
Case in point; Many of the headlines that are appearing about the 2020 real estate market forecasts for the Bay Area say that Northern California will be a cooler market than other areas, and some articles say that it will be one of the coolest markets in the nation. But when you actually take the time to read the article almost all go on to state that home price appreciation will continue, it just will not be the type of appreciation that we saw for many years this past decade. It also compares this market to other markets like Texas and other states where there is an influx of buyers in those areas that are driving prices skyward.
Bottom line, read the article and don’t just focus on the headlines. We will continue to see appreciation in Northern California and here in the Scotts Valley area in 2020. Not at the rate that many home sellers saw in the past, but home prices will continue to go up.
The fact that homes are taking 45 days is more of a normal time-frame. As stated in a previous article, in 2013 when the market was stable, had just bounced back from the previous housing market crash, the average days on market was 48 days in Scotts Valley. Pretty similar to 2019.
This is healthy. This type of market is much healthier for everyone as the rate of appreciation that we saw for so many years was just not sustainable. And we saw that when buyers fired back and said “enough is enough”. I call it “buyer fatigue”, and that is what it was.
One more thing that I feel is noteworthy is the decreased inventory as the recent tax reform has changed the tax benefits for some home sellers and instead has more homeowners not making a move due to their current tax base and the limits that the new tax reform has. I expect to see this trend continue which will in itself put a small squeeze on inventory. It could be noteworthy and noticeable, to what extent only time will tell.
So should you buy?
I have said this time and time again, if you are buying a home think long-term. If you are buying and will need to sell within 3 years or so, don’t buy. Think long-term. Think 10 years or more.
And only consider long-term fixed rate mortgages. Why wouldn’t you? Rates are so incredibly low it would be foolish to do otherwise.
Should you sell?
Think about this. When you sell your home, you will need a new home to purchase and when you combine a more normal and healthy market with low interest rates, making a move to upsize or downsize has never been better. You can now buy a home contingent upon your home selling because terms are more balanced.
But do the math. Make sure selling makes sense and weigh the pro’s and con’s of selling with today’s new tax implications.
In closing, I am looking forward to a balanced, stable and friendlier market. While there will be some homes that will sell with multiple offers and some over-asking because of their desirable location and/or condition, buyers and sellers will both benefit from this year’s market.
As always Happy Selling and Happy Buying!
REALTOR® since 1986
DRE # 00921165
Keller Williams Realty
831-252-3959 Direct Line
ABOUT ROB: Robert Aldana is a 34 year licensed real estate veteran with Keller Williams Realty, and also a long-term resident and homeowner here in town.
In 2015, 2016, 2017, 2018 and 2019 Robert has been the agent chosen by more Scotts Valley area home sellers and buyers than any agent or team, and Robert was awarded the Santa Cruz Sentinel Readers Choice Award as the Best REALTOR® in Scotts Valley for 2016, 2017, 2018 and again in 2019. Robert is also the ALL-TIME leading real estate agent in Scotts Valley sales.
Robert is the most recommended real estate agent in the neighborhood social media site NextDoor, and was also voted 2017 Favorite Neighborhood Real Estate Agent in Scotts Valley in the first NextDoor Fav Business Awards by local residents, and was a neighborhood favorite again in 2018.