Real Estate: Housing Market Update

By M.C. Dwyer

Unable to sleep the other night, I wandered outside to enjoy the crickets. A mesmerizing mist drifted through the redwoods and across the sky, intermittently floating across the moon. A bright circle with hints of rainbows shimmered around the moon, and I remembered that, as a child, I’d heard farmers predict a change in weather after a circle around the moon. The mists became drizzle the next evening and into the following day. By press date, it will already be fall… 

Housing Market Update 

All eyes were on the Federal Reserve meeting on September 18^th, when the central bank lowered its key lending rate for the first time since 2020. The Fed acted aggressively by implementing a ½% drop in the rates they charge banks. This was twice many economists’ expectations of ¼%. As the inflation rate approaches their goal of 2%, the Feds want to stimulate the economy now out of concern for rising unemployment (4.2%). During August, consumer prices rose just 2.7% Across the SF Bay, after reaching 9% just a few years ago, largely due to COVID supply chain dynamics. Days before the Fed met, the 30 year average mortgage fixed rate had already fallen to 6.1%, down from 6.6% six weeks ago. This decline was because the bond market had already priced in a rate cut, and that directly affects the cost of mortgages. The reason mortgage rates may fall further is due to the Fed’s announcement of their outlook for the rest of the year-a majority of the Fed’s board anticipates 2 further rate drops in November and December-perhaps by ¼% each. The 30 year fixed rate hovered around 7.75% last fall, so these lower rates will provide more relief to the housing market.

Home buyers recently have enjoyed the luxury of spending more time house-shopping, as homes sit on the market longer before selling. There are more homes for sale than buyers across the US. Realtor.com reports that, during August, homes took 53 days to sell, the longest in five years.    Also the highest in five years, nearly 20% of homes for sale had reduced their prices.    

Home sellers really need to focus on making their location/condition/appeal/price equation, or they won’t measure up to the competition. Experts say the housing market may pick up soon, as affordability improves due to lower rates. Yet historically, buyers and sellers turn their attention toward family, friends and festivities in November.     

Wage growth isn’t keeping up with home appreciation: although nationwide, inflation-adjusted income is higher for the first time since 2019, wages are still lower than before Covid. The Census Bureau says last year, median income rose 4% to $80,610, versus $81,200 four years ago. Here’s a zinger I found buried in economic research — full-time working women’s earnings grew at just half the pace of men’s, the first statistically significant drop in two decades according to Bloomberg’s journalist Alex Tanzi.

Meanwhile, home prices have steadily appreciated since 2020, even if at a slower pace lately. Nationally, home sales in August were the slowest in 5 years, and were 1.3% lower than last August. Compared to 2020, US home prices are +/-35% higher.

Unlike high wage earners, the entry level seller or buyer is quite sensitive to prices and mortgage rates. Over 85% of current homeowners’ mortgages are below 6% according to Realtor.com. Anyone whose finances are crimped needs to make the numbers work before they can firmly decide to buy or sell a home, so lower rates could open up new opportunities for both.

Redfin just released a fascinating update on housing market affordability across the US. Most of California requires home buyers to earn nearly double the median income of their city to buy a starter home. Their #1 ranked San Jose metro has the strongest real estate market in the nation according to Redfin: first time home buyers need to have a household income of $300,000, while the median income there is $170,000. The SJ metro’s hot market firmly eclipsed #2 San Francisco & #7 Los Angeles, while New York City has fallen to #10. Having gotten my undergraduate degree from Sacramento State a few decades ago, enduring oven hot summers, I never ever would have believed Sacramento would rise to #11!    

Local median household income isn’t enough to purchase an entry level home until you get down to #18 Washington DC. I visited family there this year — the weather is miserable. Median income to buy a home doesn’t drop below six figures until #33, Dallas TX, where $98,370 income qualifies to buy a median priced home of $275,000. Median home price doesn’t fall below $200,000 until #39, Milwaukee WI. #50 Detroit, MI is the first metro in the US to have median home prices below six figures at just $70,000 — and the median income is $64,000!

Local Housing Market Insights

Single family home sales across Santa Cruz County turned in solid performance for August, with a 13% improvement in the number of sales and prices appreciating around 15% over last year. About 25% of sales were priced over $2 million, 50% sold for between $1-$2 million, and 25% under $1 million. The highest priced sale was $8.7 million, for a newly built, ocean front home. In contrast, San Lorenzo Valley results were challenging for home sellers. With just 20 home sales for the month — a 20% year over year decline — prices were about 7% lower than last year. In part these results reflect a change in the mix, with more higher value homes selling Countywide while only 5 homes sold at above $1 million in SLV. Scotts Valley was more resilient, with 20 sales, but none under $1 million while seven were in the $2 million range.

Listing Spotlight

Timeless Brookdale riverfront retreat, steeped in history from the 1800s. See below for listing description.

Here’s an amazing Brookdale property listed for sale by our friends and colleagues Chris Clayton and Dani Scott. Need a buyers’ agent? I’d love to help. 

Welcome to this timeless riverfront retreat, steeped in history from the 1800s when the Santa Cruz Mountains was the heart of California’s logging industry. In 1907, it became a peaceful summer escape, and in 1928, a visitor purchased and transformed it into a private hunting lodge, adding unique features like individual sinks in lodge rooms which remain today. Over time, the property has tastefully evolved, blending modern elegance with historic charm. The previous owner believes the home was designed by Bernard Maybeck, one of the 20th century’s most notable architects. Most recently a 2024 restoration introduced numerous enhancements and upgrades. This heirloom estate includes 3 parcels and two legal homes on separate parcels, meters and water. The main lodge spans nearly 3000 sq. ft. plus an adorable cottage. Outdoor living is the highlight of this property with expansive decks, a river beach, boat slip, a grand stone fireplace and walkways.  With 300 feet of riverfront and historic damming rights, it offers an unparalleled outdoor living experience, a privilege that offers the extraordinary benefit of swimming, canoeing, and riverfront recreation right in your own backyard with sunny beachfront and patio, and lush gardens. This legacy property offers a unique blend of history, comfort, and natural beauty.

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Photos by Mavenx photography 

Send your questions & topic requests to “M.C.” (MaryCatherine) Dwyer, MBA, REALTOR®
(831) 419-9759    E-mail: mcd@mcdwyer.com   Website: https://mcdwyer.exprealty.com
CA DRE License 01468388   EXP Realty of California, Inc.                                                                                           

Sources: Bank Rate, Bloomberg, California Association of REALTORs, CNBC, CNN, MLS Mercury News, Mortgage News Daily, National Association of REALTORs, Redfin, Reuters, Wall Street Journal and Zillow, all as of 9/18/2024,

The statements and opinions contained in this article are solely those of the individual author and her sources, and do not necessarily reflect the positions or opinions of eXp Realty, LLC, or its subsidiaries or affiliates (the “Company”). The Company does not assume any responsibility for, nor does it warrant the accuracy, completeness or quality of the information provided.    

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