The numbers are out for February and the figures show the Scotts Valley real estate market continues it’s unprecedented roll of strong demand with very little supply causing closed sales for the month to come in at 99.7% of the asking price on average for single family homes. Condo-townhouses, which were in very short supply, closed at 105% of list price on average for the month.
- Click here to download ALL Active and Pending homes in SV
- Click here to download ALL SOLD & CLOSED sales for February in SV
*Active status is a home on the market that has not accepted an offer.
*Pending status means they have accepted an offer and are in escrow, the process of discovery, inspections, disclosures, financing and closing of an escrow.
*Closed status means it is a closed sale as reported to MLS.
Where is the market today?
Currently there are 34 active single-family homes on the market and 13 pending sales. This means that at this moment, 28% of single family homes are pending, just over 1 in 4 homes. This is actually lower than the past few months where we have seen 33-34% of homes on the market in Scotts Valley being in pending status, which could cause some to raise eyebrows thinking that there may be a change in the market. So is there a change in the market?
Yes and no. Yes, there is a drop in percentage of homes being pending, but a lot of it is due to a few new recent listings, which many will be in pending status soon, as well as the fact that more homes are coming on the market. The fact is there WILL be more homes coming in the market as we head into spring and home sellers will see a little more competition. But there will continue to be more buyers looking for homes so the supply will still not meet the demand at any time in the near future.
At this time there are a total of 6 active and pending condo-townhouses in Scotts Valley with 4 of the 6 being in a pending status and averaging just 10 days on the market before they go pending.
The average list price for single family homes that are in active status is $969,565 and the average list price for home that are pending sales is $873,269. The average sales price for closed sales in February is $723,233 which means we will see a big jump in average sales price in Scotts Valley over the next month or two when the pending sales become closed sales.
Where are we headed?
The real estate market will go where interest rates go and right now rates continue to be low and are averaging under 4.5% for a 30 year fixed rate loan. In fact, at this time they are averaging 4.32%, which is lower than last week’s 4.35% average. Expect rates in the near future to move up and down a bit, but not by much.
However, many economists are predicting a stronger job market and lower unemployment rates over the next 12 months, according to Bankrate, which surveyed 12 economists recently. In January 2014 the unemployment rate was sitting at around 6.6%. Economists are expecting the unemployment rate to be around 6.2% over the next 12 months, which would be the lowest levels we have seen since before the crisis.
What this all means is that at some point the low unemployment rate and improvement of the economy will eventually cause an increase in interest rates as rates usually follow what the economy does. Better economy = higher rates. Tough economy = lower rates.
But right now expect more of the same as we are seeing today.
The urge to price too high
One of the things that I am seeing a lot more recently are homes being put on the market at ridiculously high prices. This is one of the worst things a home seller can do as over-priced homes stay on the market longer, end up selling for less and actually help your competition sell their homes because their homes suddenly look like a deal when they compare them to overpriced listings.
Don’t do it. Price your home accordingly and let the market dictate what it is worth.
Home seller fears stalling the market
There are a lot of homeowners wanting to take advantage of the low interest rates and the equity that they have now built in their homes and want to make a move, but they are afraid to do so because they fear not being able to find another home. It is a very legitimate fear.
However, one of the ways to combat those fears and create a “safety net” would be to put their homes on the market and sell their home subject to the sellers being able to find a replacement property within 15-30 days. This is a clause that has been around forever, but yet so few people know about or use. Sure, it does cause some anxiety among home buyers who want to know if they are buying your home and may not know for another 30 days while sellers are looking for another home. But buyers are not as picky today and are willing to wait and be patient if they want your home.
Don’t be afraid to use this clause. There are many things you can do to ease buyer’s fears about allowing a clause like this such as:
- Fill out and make available all necessary disclosures immediately
- Have inspections done on the home by a reputable inspection company
By having the disclosures and inspections done before you accept an offer, you could eliminate one of the main reasons why transactions fall through and that is conditions that buyers discover while in escrow. Once a buyer sees the disclosures and inspections and they are comfortable with the findings, they know they want the home and all you need to do is go find another home.
Work with an agent that is not afraid to work
One more suggestion would be to work with an agent who is not afraid to knock on doors in the neighborhoods that you are looking for and who can reach out to other agents and offices to inquire about homes that may be coming on the market. This is crucial to your success as it creates energy, activity and opens doors for you that may not be opened for others by working with an agent who is not afraid to make things happen for you.
All in all, things appear to be going according to plan and according to the reports that I have been writing for several months. The biggest home buying season is right around the corner, even though for many it has already been here for quite some time.
- Click here to download my 2014 Home Seller MegaPack, reports & tips to get you top dollar on your home
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”. Many of his articles and interviews can still be read at RobertAldana.com, DeadlineNews.com, RealtyTimes.com, Forbes.com, among many other real estate and finance news sites and publications.