February 2003 Real Estate Report
January Home Sales Plunge

After a spectacular December for home sales in Santa Cruz County, sales in January fell to their lowest number since February 2001. Home sales were off 18% compared to January 2002, while condo sales slumped 19%.

Prices, on the other hand, continued to rise. The median home price gained 8.4% with the average home price rising 6.6%. The median condo price rose a hefty 27.9% with the average condo price up 24.4%.

Will slowing sales bring down prices? No. State officials estimate California has 500,000 fewer places to live than its population requires, contributing to surging escalation in prices and one of the nation's lowest rates of home ownership.

Santa Cruz County Real Estate Statistics

The statistics we use to follow, and anticipate, the market continue to indicate a stable environment.

• The selling price to listing price ratio continues to decline: 96.1%

• Inventory rising entering the Spring selling season, up over last year: 16%

• Days of Inventory dropped slightly: 144.0

• Days on market continue to lengthen: 87

The following chart shows the Days of Inventory: how many days it would take to sell all the homes for sale at the current rate of sales. DOI is now at 144.0 for single-family homes and 144.8 for condos.

The sales chart below shows the historic inventory versus sales ratio since January 1997. Click on the chart to expand it, then click your browser's back button to return.

The chart below tracks the change in median and average prices since January 1998. Click on the chart to expand it.

Another important indicator of the Santa Cruz County real estate market is the sales price to listing price ratio. When the ratio is over 100%, homes are, on average, selling for more than the listing price. When that happens, you can be sure we're in a raging sellers' market. In January, the ratio fell again to 96.1% for single-family homes.

The following chart shows the SP/LP ratio for single-family homes since January 2000.

My advice? Good time to buy. Mortgage rates are the lowest they've been in almost two generations. The incipient Iraqi War will continue to depress mortgage rates. After either the war is over or has been averted, we expect mortgage rates to rise as investors start leaving bonds and going back to the stock market.

For sellers, pricing is the key. If you price your property in-line with the market, you'll sell your home faster.

If I can help you devise a strategy, call me at 831.588.1472 or email me at graham@santacruz-realestate.com.

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