Your Home: An Even More Valuable Asset
By Jondi Gumz
Home prices in Santa Cruz County skyrocketed in March to a new record median price – $1.6 million, up 46% from a year ago – as sales dropped by 7%. The median, the midpoint of what sold, was $1.1 million in March 2021.
While these prices are stratospheric, they look reasonable compared to neighboring Santa Clara County, home to high-paying jobs in Silicon Valley, where the median is $1.95 million, up from $1.6 million a year ago. To the north, in San Mateo County, the median price is $2.28 million, the highest in the state, up from $1.985 million a year ago.
The figures come from the California Association of Realtors, which reports the trends are the same statewide: Prices up, sales down. The median price statewide for single-family homes is $849,080, an all-time high and up from $758,990 a year ago; sales are down 4%.
At the county level, prices increased across the state, with 25 counties setting new record highs in March. Out of 51 counties tracked by California Association of Realtors, 46 saw increases in their median price in March. The next largest increase after Santa Cruz County was Tehama, 34%, and Tuolumne, 31%. For condos and townhomes, the median price statewide is $661,000, up from $552,500 a year ago and sales are down 11%.
Homes sold over asking price – 103.9% statewide, up from 102.2% a year ago. The average price per foot for a single-family home topped $400 for the first time, according to the California Association of Realtors, $418, up from $357 a year ago. Median time on the market is eight days statewide for single-family homes, seven days for condos and townhomes.
In Santa Cruz County, homes are selling in nine days, down from 11 days a year ago. Locally, homes have been in demand as Silicon Valley tech employees, working from home due to the pandemic, realized they could work at home anywhere, without concern for commutes. Some analysts had predicted this phenomenon would be a temporary but the trend is not abating. In fact, some tech workers have taken the opportunity to cash in stock – as stock prices have risen – giving them cash to speed up closing for the seller and outbid competitors.
The California Association of Realtors finds demand for homes remained strong in March “as the effects of rising interest rates have yet to be borne out.” The interest rate for a 30-year fixed-mortgage averaged 4.17% in March, up from 3.08 percent a year ago, according to Freddie Mac. For a five-year adjustable mortgage, the interest rate averaged 3.19%, up from 2.78% a year ago.
March marked the ninth consecutive month that the number of sales has declined compared to a year ago, but it was the smallest decline in eight months. Statewide, active listings in March climbed to the highest level in five months and posted the first year-over-year gain since June 2019.
Newly added listings in March increased for the first time in nine months, with the increase of 37.7% from February the highest since May 2020. “With homes still selling at a rapid clip and more homes selling above asking price than last summer when prices were at record highs, California’s housing market continues to perform remarkably well as buyers enter the market to get ahead of rising mortgage interest rates,” said Otto Catrina, of Castro Valley, president of the California Association of Realtors. He added, “An increase in active listings for the first time since prior to the pandemic should give consumers more options and alleviate some of the upward pressure on home prices, which bodes well for prospective buyers.”
California’s previous record median home price of $827,940 was set in August 2021. The reason for the new record: A surge in high-end sales. The share of million-dollar home sales grew in March to 32.9%, the highest level on record, according to the California Association of Realtors. That was due in large part to the San Francisco Bay Area – where 70 percent of sales were over $1 million.
The San Francisco Bay Area includes nine counties such as Santa Clara, San Mateo and Marin but not Santa Cruz. “The effects of higher mortgage interest rates won’t be realized for a few more months,” said Jordan Levine, California Association of Realtors vice president and chief economist. “With the Federal Reserve expected to announce two back-to-back half-point interest rate hikes in May and June to combat inflation, interest rates will be elevated for the foreseeable future, adversely affecting housing demand and lowering housing affordability in the coming months, but the effects may not be visible until the second half of the year as many of the homes that are, or will be, closing were negotiated before the sharp increase in rates.”
