This Town is on Fire
The Scotts Valley real estate market continued it’s torrid pace of real estate appreciation and prices as the first half of 2015 showed a 9.5% increase of average sales price over the same time in 2014, and a 6.9% increase in condos and townhouses.
Single Family Homes
Normally and typically when there is an introduction of more inventory into the market, you see a slow-down of appreciation rates, yet this year’s market remained the exception to the rule as we saw an increase of 35% in homes coming on the market this year versus last year, yet we saw the days on market plummet from an average of 64 in 2014 to only 28 in 2015. The market as thirsting for more inventory and like a dry sponge taking on water, the new inventory was being snatched up as it as introduced.
Another telling stat was the average sales price to list price ratio of 99% last year to 101.1% this year. In other words SF homes were selling at about $6,422 under the asking price last year, and ended up selling for $5,113 over asking price on average, a swing of $11,535 upwards of what buyers are willing to pay this year for homes versus the asking price. This is a telling stat because it shows the sense of urgency that many homebuyers have to get into the market this year.
There were a total of 104 new listings in the first half and 70 closings with an average sales price of $833,719.
Condos and Townhouses
While condos and townhouses were red hot in 2014, this year showed a slight slowdown of activity. But not too much. While there were less condo-townhouses introduced to the market this year (20 vs. 22) versus last year, the lower inventory had an average days on market of 43 which was more than double of what it was last year when the average days on market was 20. In 2014, condo-townhouses sold for an average of 102.6% of the asking price versus 100.1% this year.
However, I am seeing a trend of higher sales price to list price ratio in the second quarter versus the first quarter of this year so they have been coming on strong lately.
Bottom line, condo-townhouses are still a very desirable commodity, there was just less of a rush to go out and wait in line to see and make an offer on them. Putting it in perspective however will show you that they are still selling for over-asking price on average. The 2014 condo-townhouse market was just exceptional, to say the least.
Where Are We Today
As of this writing, there are 46 single-family homes on the market and 25 of those homes are still in active status, not yet sold. This means that 54% of SF homes have not yet had an offer accepted which is about 20% more than the average of the first quarter of 2015 when I was seeing about 32-35% of SF homes in active status and 2 out of 3 homes on the market already having accepted offers and were in escrow. 20% is a difference worth noting, homes are lasting longer on the market. People are out on vacation and are taking their time a little more on certain homes and price ranges. But some homes and neighborhoods remain very strong in terms of demand.
Right now there are 5 condo-townhouses on the market with only 2 being in active status, with 3 pending sales.
What’s To Come
Overall, I believe you will see a lower sales price to list price ratio in the 3rd quarter once we see homes that are being sold today close escrow in the next 45-60 days. I do not see it being too much of a difference, but we should see a decline in this stat. I think we will be in the 98-100% range in the third quarter.
In regards to condo-townhouses, I expect more of the same as we are seeing now, a slightly above sales price to asking price average.
Take a breather and don’t be afraid to negotiate, there are some nice deals out there right now. There are a few homes on the market right now that would have been gone within 3 days on the market in the first quarter of the year that are lasting a little longer on the market, some with price reductions.
There are also some new listings that have recently came up with excellent pricing, meant of course to attract more buyers and multiple offers which eventually drives up sales prices.
If you are a home seller, price it right and work with a local agent that knows and understands the Scotts Valley market. Our market is not like other markets, make sure you compare apples with apples.
Home Values and Online Valuations
One of the latest crazes are online market valuations. It is a craze and it is crazy. I have talked to many home sellers who were wanting to sell their homes and think that their home is worth a certain amount because they got an online evaluation, only to have me come in and sell their home for $100,000 or more than what the “valuation” told them it was worth. And then there is the other side of the spectrum where the automated valuation, online valuation, whatever they are called at the moment is telling a home seller that there home is worth a lot more than what it really is.
Case in point: If you were to go to one of the more popular online valuations like Zillow, you will see a valuation for 141 Navigator Drive in Scotts Valley of $771,472 today, July 10, 2015.
Recently, the seller of this home contacted me to sell their home and if I would have given them that value I would have been lead to the door and asked to leave. Instead, I listed and sold this home and it closed on July 7th, 2015 for $849,950.
The thing is that online valuations for the most part just are not accurate. I have yet to use one that was indicative of what a home is truly worth. The algorithms that are used to determine a home value just does not work for a home. The most important thing is location, then location, then location. Followed by condition, schools, upgrades and more. Homes in the same neighborhood have different features and upgrades and many times are in more desirable schools then a home 2 blocks away.
Have you ever went to a medical website to determine what you may be suffering from when you are not feeling good? If so, you could have a stomach ache and you will either be diagnosed with a nasty stomach virus or deadly disease when in fact you ate a bad burrito.
My advice is to STOP using online valuations when wanting to find out what your home is worth. Talk to a good local agent who is knowledgeable with values in your neighborhood. A good agent sees the current and past inventory and knows what other homes looked like and can compare them to your home as well as understand current market conditions and certain factors that may make your home more valuable.
Robert Aldana is a 29+ year licensed real estate veteran with American Dream Realty in Scotts Valley, and also a long-term resident and homeowner here in town. He is the founder of MyScottsValley.com and the popular local news and events page at Facebook.com/MyScottsValley.
He was voted as the “Rave” winner in the category of “Favorite Real Estate Agent” in the Scotts Valley Press Banner’s contest for 2014, and also awarded the Scotts Valley Man of the Year in 2014 for his contributions to the community.
Robert was also a nationally syndicated real estate journalist and was a highly sought after interviewee on the topic of real estate by local, national and even international media, in addition to appearing on HGTV and local NBC’s “Best of the Bay”. He was an appointed state director and vice-chair for the California Association of REALTORS®..