On May 6th of this month I had the pleasure to be interviewed by local journalist Johanna Miller of El Pajaronian which is also part of several other local newspapers including the Press Banner in which they were seeking my guidance and opinion of what was happening with the real estate market this year. What a class act she is, really enjoyed sharing my insights with her. Click here to read the article in the Press Banner.
The article was just published a few days ago which is about 3 weeks after the interview and I wanted to expand on a few VERY KEY and important items on the story and interview along with some updates since the initial interview.
SCOTTS VALLEY EXPERIENCES MARKET CORRECTION
One of the questions I get asked a lot is, “what happened?!”
Aside from the fact that the pandemic allowed employees to work from home and forego daily highway 17 commutes, which had buyers coming from over the hill in droves to be close to the mountains, mountain biking, hiking, beaches, low crime rates and great schools at a more “affordable” price than Silicon Valley, I also believe that our city and area has experienced a market correction. Except that when you hear market correction, you tend to think the market corrects itself downwards.
Click here to read past article in May 2020 on topic of the effect the pandemic was expecting to have (and did) on local real estate
Our market correction that we had this past year is one where this area has been undervalued for decades and I believe that Scotts Valley has been discovered. As an agent that focused on Silicon Valley many years ago before committing myself to this area only, I can tell you that Scotts Valley was always considered a small bedroom community that people stopped by on their way to Santa Cruz. It was never really an area that attracted a lot of attention and honestly, that is not a bad thing.
But over this past year I have talked to a lot of agents in Silicon Valley that tell me their clients consider our area their primary destination that they want to live in. I am seeing it first hand and I am also talking to Silicon Valley agents that are collaborating what I am seeing. The price jumps we have seen in the past year are a correction of where prices should be today when compared to homes over the hill.
This Skypark home sold for $200,000 above asking price and closed for $1.4 million in January 2021
I believe the defining moment in the Scotts Valley real estate market was when I listed and sold a home in Skypark for $1.4 million earlier this year. When that happened, people woke up to the reality of what Scotts Valley was. I am not the only one saying this, in real estate circles I have heard the sentiment stated by many knowledgeable and professional local REALTORS. That was when the major tide turned.
HOT MARKETS CAN COOL, AND HEAT UP AGAIN
When I did the interview, I also stated that at some point we would see a cooling of the market because prices cannot sustain the rate of appreciation that they were doing for too long before buyers get what I like to call, “buyer fatigue”, which means buyers are tired of getting beat up in the real estate market with multiple offers and the amount over asking that people are paying. At some point, buyers will push back.
And sure enough, about a week later after the interview, that is exactly what happened as we have seen the market experience a slight cooling. However, it is nothing major or anything to worry about if you are a home seller. It is more buyers taking a small break, catching their breath and re-strategizing their efforts and home search.
Throw in the fact that the pandemic is closer to the end and people are able to travel and do other things, along with the yearly cooling right before graduation and a couple of weeks following as people take vacations etc., this is almost a yearly thing. I thought it would be a little closer to the end of May but it happened maybe 2-3 weeks sooner than normal.
Again, nothing to worry about if you are a home seller. I expect the cooling to end pretty quickly and the market to take on another hot pace as rates stay low and buyers jump back in while they see some decent deals. If I am a buyer, this is EXACTLY what I would have been waiting for and I would be jumping in before the herd of buyers comes back. Because they will sooner than you think. All it takes is a small surge and here we go again.
And if I may add, some price points and specific areas or homes will continue to do well and have done so. Especially those areas or type of homes that are rare. It just depends on the home, the price and exact location.
While talking to one strong local agent about the situation he said, “without a doubt, we have a slight cooling as instead of 20 offers on a home I am seeing 1-3 offers on some and maybe one on another.” And I concur with his sentiments as I am experiencing the same on some homes.
But remember, this is very temporary.
THE MISTAKE OF UNDER-PRICING YOUR HOME
In the interview, I had talked to Ms. Miller about the importance of pricing your home correctly and also the pitfalls of under-pricing your home. Let me expand on what I was saying:
While pricing a home just under the latest comparable or competition can sometimes be a great strategy, severely under-pricing your home may not be the best thing for you.
For example, if you have a home that is worth $1.2 million and you want to get a lot of activity, pricing it at $1 million or even $900,000 will get a lot of activity, but will will also have buyers that are maxed out at $1 million seeing your home not knowing that the home will indeed sell for $1.2 million or more. Buyers have been through enough already in this market and getting them and their agents to see homes that are priced at their highest qualified price point when you already know the home should be at $1.2 million will have a lot of buyers and their agents wasting their time and it will be even more discouraging to them when they lose out to buyers that know the home is worth $1.2 million.
Plus, think about this… Do you really want people coming through your home that are not qualified to buy your home? Well if you severely under-price your home, that is what will happen. It is not fair to the buyers, it is not fair to the agents, and it is not fair to you.
In addition, severely under-pricing your home will have buyers wondering what is wrong with the home.
Price your property right and work with a local agent that knows your market and will present you with a strong marketing and action plan. There are a lot of great local agents that will do a great job for you.
Yes, it is indeed sad to me to see many local buyers get priced out of the market. The correction that took place in the past year was inevitable and I really dislike seeing many people not being able to realize the American Dream.
I want to thank Ms. Miller for the interview and her professionalism, well done!
As always, Happy Selling and Happy Buying! 🙂
ABOUT ROB: Robert Aldana is a 35+ year licensed real estate veteran with Keller Williams Realty, and also a long-term resident and homeowner in Scotts Valley.
Robert is the agent chosen by more Scotts Valley area home sellers and buyers than any agent or team, and has been awarded the Santa Cruz Sentinel Readers Choice Award as the Best REALTOR® in Scotts Valley for four straight years. Robert is also the ALL-TIME leading real estate agent in Scotts Valley sales, and most recommended agent in the NextDoor online community.