The Silicon Valley Invasion: First Quarter of 2015 Scotts Valley Real Estate Market Report

If you were able to purchase a home this first quarter, you no doubt experienced a flurry of activity between home buyers as you tried to get your foot into the door of home-ownership in Scotts Valley.

Fueled by the coming of home buyers coming from Silicon Valley, many with cash, demand far outweighed supply once again resulting in an average sales price to list price ratio of 101%. On average, home buyers paid $6,607 over asking on single-family homes in the first quarter of 2015. At the same time last year, in the first quarter of 2014, home buyers paid 99% of list price on average for single-family homes.

On the flip-side, condos and townhouses averaged 99.7% of sales price to asking price versus last year averaging a whopping 104% of asking price in the first quarter.

The average sales price for single family homes in the first quarter was:

• January – $647,333
• February – $736,700
• March – $935,643

What the above stats mean is that more expensive homes sold in March versus January.

The first quarter of this year had a total of 22 single-family home closings versus last year at the same time which had 24. And again, there were more condo closings this first quarter, 8, than last year’s total of 7. Not much of a difference either way though.

Days on Market Down and Up

Another telling stat was the reduction of days on market (DOM) from 66 last year to 42 this year for single-family homes, a significant reduction of 24 days, close to a full month less that single-family homes were on the market before they sold.

Condos and townhouses went from 28 DOM in the first quarter of last year to 40 DOM in the first quarter of 2015.

Cooler But Still Hot

What this means is that while condos are indeed still a hot commodity in Scotts Valley, they cooled off just a bit and the new hotter item is the single-family home. Not to be confused with the falling of condo-townhouse prices because that is not where I am going with it, my point is that while they were the hot rage last year, they still are hot but did cool off a bit as many condo and townhouse owners jumped in to the market and we saw more supply to meet the demand. A well priced and well staged condo will still get asking or over asking price especially one with more square footage.

The total average sales price for condo – townhouses in the first quarter of 2015 was $454,875, an increase of $30,889 versus the figure of $423,986 in the same quarter of 2014.

What Does This All Mean and Where Are We Headed in 2015?

For starters, the obvious is that there still is not enough supply to meet the demand. To add to the dilemma, more and more home buyers are making the move from Silicon Valley in search of a better “quality of life” as well as better schools, and many are coming with cash from the sale of their high priced homes in Silicon Valley or from “Google” money. There really has been a steady flow of these types of buyers who are used to the multiple offer game and making offers of $50,000 or more over asking price is the norm for many home buyers.

This has put rapid upward movement in prices in Scotts Valley in a way that I have not seen in a long time. Factor our good schools, lowest crime rate in the county, it’s close proximity to Silicon Valley, state parks, the beaches and our own amenities and you have what in my opinion is a market about to come into it’s own probably sooner than later.

If you will recall, in January of 2014 I wrote my prediction for last year as follows:

“2014 should be another good year for the real estate market with many experts stating it will be a banner year for home prices and market activity, while others think it will be a solid and steady year. I tend to agree with the latter and think that it will be a solid and strong market with appreciation being anywhere between 5 and 7% in 2014. If I were to put a number on it, I would go with 6% appreciation for 2014.“

Guess what? Depending on what stats you use and who you talk to, the appreciation rate came in right around 6%. I have read some figures coming in at 5.5% and others at 6.5%, but you get the picture.

This year? I have to say that with what I have seen this first quarter, with the frenzy that I am experiencing as I represent a lot of home sellers in Scotts Valley, while it is too early to tell I would bet that we could be closer to 8% appreciation rather than 6%. It is just a feeling I am getting not from taking a wild guess, but from the offers we are getting for almost all of my home sellers here in town and from the steady increase of buyers still coming to town. Don’t call me crazy yet. Wait until the end of the year and do the math and I think the market will do just that, around 8% appreciation between January 1st to December 31st, 2015.

There are just not enough homes in town to meet the demand. There really isn’t, and if you own a home in Scotts Valley, consider yourself lucky and wise and hold on to that investment as long as you can.

Interest Rates

I have pretty much given up on predicting where interest rates will go because although many experts predict and predict, year after year that rates will go up, here we are today looking at 30 year fixed rate loans as low as 3.5%. The length of time with rates in the 3-4% range is pretty amazing. One day, one year or decade down the road, we will all look back and shake out heads when we talk about the interest rates of today. Seriously.

In fact, if you did a report on what rates averaged over the past 30+ years, it was actually somewhere in the 9% range before rates took their dip and have stayed where they are today. That is how low they are and probably how low they will stay for the foreseeable future. They are almost giving money away. Well, maybe not quite, but you know what I mean.

What Does Your Money Buy You?

SINGLE-FAMILY HOMES

The Vineyards – Prices in the $1 million plus range are now the norm. A 4 bedroom, 3 bath home will fetch around $1,025,000-1,075,00 depending on the upgrades. You could even get close to $1.1 million for a completely updated home. A 5 bedroom will easily get you $1.1 million or more if upgraded. One on Zinfandel recently closed for over $1.1 million in March. The “smaller” 3 bedroom homes in the Vineyards can sell for $950,000 if not more, depending on upgrades and location. This is not a stretch.

Skypark – Prices in Skypark vary as do the floorplans and square footage, as well as whether there are upgrades. In general, a 3 bedroom, 2.5 bath home in the 1,500sf range could sell for about $725,000 for an original home and close to $740,000 or even more for one that is updated. The bigger floorplan can fetch up to $775,000 if upgraded and in a good location. It would not surprise me to see them sell for even more, I am more just making a general statement about what I am seeing. I would say that depending on what is on the market, you could see some homes maybe selling for another $15,000 more than what I quoted depending on if there is competition in the development.

Scotts Valley Heights – Prices in this neighborhood are depending on the size of the home. A 4 bedroom, 2 bath home with 2,200-2,400sf could sell in the $950,000 range if in good condition and some upgrades. Less if it needs repairs or is outdated. If it is immaculate, that home could fetch as high as $1,025,000-1,050,000. Depending on the upgrades and location. The larger homes in that area could go as high as $1.2 million and maybe even close to $1.3 million for a much larger home in that development that has a lot of upgrades, on a nice lot. Again, it will all depend on what has been done and where it is situated. Can you buy a home in the $900k range in that area? Of course you can. It may be your entry level home in the area. But you can also spend a lot more if you want bigger and newer.

Green Hills Estates – An entry level 3 bedroom home with about 1,300+ sf in this development will sell for about $715-725,000 right now depending on upgrades. I could see one selling for close to $740,000 if upgraded and with very little competition. The bigger homes could sell for close to $800,000 if in good condition and in a good location. An immaculate one with more square footage will fetch over $800,000 today. In fact, one closed for well over $800,000 a few months ago that was so amazing, it was actually jaw-dropping how nice the home was and it was worth every penny.

Hacienda Area – You can buy a “starter” nice older home in the Hacienda and Grace area, close to Casa Way and Glenwood in the high $700,000 range. I have seen some homes that are 3 bedrooms with about 1,500sf sell in the low $700k range. It all depends on the upgrades and the location. An upgraded home in the area, 4 bedrooms with over 2,000sf should today sell in the high $800k range, some could be well over $900k with nice upgrades and a good lot. Homes on Casa Way are now in the $1,300-1,600,000 depending on size, amenities and upgrades. And of course, location. Some could fetch more. Believe it.

Granite Creek / Navarra Area – A 4 bedroom that has been updated with a nice lot can sell for $900,000 or even more. You definitely CAN find a home in the mid to high $700k range and into the low $800k range, but it may not be as updated. In fact, a 3 bedroom home with just over 1,400sf sold and closed escrow in January on Navarra for $705k.

Mañana Woods – This is a neighborhood that usually sells in the same price range of the homes that are in the Granite Creek / Navarra area and to some extent, the homes in the Hacienda, Grace and Glenwood areas before the high school. You can buy a starter home in the mid $700k range, and sometimes even a little lower. A nicely updated home with 4 bedrooms and 1800sf + could command a price in the mid to high $800k range, with some even in the mid $900k + range. It all depends on the upgrades and location.

CONDOS & TOWNHOUSES

Hidden Oaks on Bean Creek – These condos are now selling for about $425k for a 2 bedroom 2 bath home. One recently sold and closed for $460k in February which was nicely updated with granite counters and lots of nice amenities. But the norm I think is the $425k range with some a little higher and some a little lower.

268 Bluebonnet Condos – These are now about $500k for a 2 bedroom 2 bath condo in good condition. The more desirable ones are the top level units with the vaulted ceilings.

Scottsborough Condos – These are now in the high $490-510,000 range for a 2 bedroom unit and $535-550,000 range for the 3 bedroom unit. In March, a 3 bedroom unit closed for $560k.

Town Center Townhomes – These townhomes are newer and have had very few of them sell as a resale. The last one that sold as a resale was back in early 2014 for just under $600k. They have over 1,800sf and open and spacious floorplans with beautiful kitchens with high end fixtures. Most are 4 bedrooms with 3.5 baths. Because non have come on the market in some time, it is hard to gauge an actual value. However, my estimation is that they would sell today  for $700 to as high as $725k. Maybe a little higher, maybe a little lower, depending on location and condition. But I think that would be a pretty solid prediction.

Remember, These Are Estimates

The above estimates are just that, estimates. They are based on what I have seen in Scotts Valley in regards to inventory, homes that have sold, homes that have not sold and the supply and demand situation that exists today. As a REALTOR® for almost 30 years, I study the local market and also list a lot of homes in Scotts Valley so I see and experience market conditions daily. Take my opinion as a well informed opinion of general values. Also know that there are some homes that will sell for more and some for less, depending on the condition, the location and the competition at the time that the home is for sale.

Also, this is not meant to solicit or challenge any other broker’s listings. This is meant as general opinion of property values in the various locations of Scotts Valley.

Your Home Value

It is difficult to cover all areas of Scotts Valley, I covered the more popular ones and know that there are some that I have missed. If your particular area was not covered and you would like to know what the value of your home or neighborhood is, feel free to contact me and I will be happy to provide you with a more detailed and personal opinion of your property value, always at no cost.