By M.C. Dwyer
Santa Cruz County attracts home buyers from the greater San Francisco Bay Area, as our prices are relatively lower while our lifestyle is arguably better. The premium paid over asking price dropped overall from about 5.5% to about 2.75% in Santa Cruz County, but remains at about 7% in Santa Clara County. The time it took for a home to go into escrow with a buyer ranged from 3 weeks in the San Lorenzo Valley, to about 25 days in Scotts Valley or Santa Cruz County.
|Local Home Prices||Average Home Sales Price 4th Quarter 2021 *||Average Home Sales Price 3rd Quarter 2021 *||Average Home Sales Price 4th Quarter 2020|
|San Lorenzo Valley||$826,454||$885,976||$814,319|
|Santa Cruz County||$1,341,463||$1,355,142||$1,200,846|
|Santa Clara County||$2,040,269||$2,022,547||$1,716,541|
Recently inflation has been at the highest rates in 40 years, as the global economy struggles to find stable footing as a result of pandemic related supply chain issues. Last week the Bank of England was among the first governments to respond to inflation by raising their interest rates. Since runaway inflation can bring an economy to its knees, financial markets expect the US Federal Reserve will begin to raise the interest rates they charge US banks for the first time since the pandemic, perhaps as many as 3 times in 2022, (each increase is expected to be about 0.25%). The Fed also influences interest rates through buying bonds and mortgage backed securities, but they’ve been tapering back for a while and are expected to slow even more. While home mortgage rates are set independently of the Fed by each lender, the 30 year fixed mortgage rate moved from around 3% during the 3rd quarter to 3.25% during the 4th quarter.
Since mortgage rates directly impact the price of home that buyers can afford, many experts anticipate the 2022 housing market may be quieter than 2021, with a slower pace of sales and appreciation. Fannie Mae (a US Government sponsored entity that buys and guarantees mortgages), estimates home prices will rise about 7.4% in 2022.
CoreLogic.com tracks how many people have fallen behind on their mortgage payments. Delinquencies have nearly recovered to pre-pandemic levels. Since the average US home appreciated about 18% in 2021, and many homes are leveraged with mortgages, average homeowner equity grew by about 30% over 2021. Together, these factors imply there won’t be a large wave of pandemic-related foreclosures.
Now that the Census is complete, California Association of Realtors wrote that CA added over 3 times more people than housing over the last 10 years. Now, there are almost 3 Californians for every dwelling, while the average of all other states is 2.5 people per dwelling. Meanwhile, the large millennial demographic group is at its peak household formation age. About half of millennials who don’t yet own a home are saving toward a down payment. Still, over half of them can’t afford to buy, since the median CA price is almost $800,000. As the housing shortage continues, I’ve not seen any experts predicting home prices to fall dramatically.
My husband had to hire a crew to cut down about a dozen very large dead Douglas Fir trees, all of which were dangerous. (That cost was not covered by insurance.) It took the crew six days of work including chipping and putting the logs in various piles. I was surprised to hear from the crew and the contractor that neither thought the wood was valuable enough to mill. I’d like to put the logs to use for something, but that project will be mine to envision and coordinate since everyone else is busy. We spent a few evenings reviewing the lighting and electrical plan. We also had to re-stake the house location to reduce excavation, avoid water lines, and avoid the septic system after a team was hired to locate the leach fields. The engineer & design team is still working on the plans; we still don’t have permits yet. PG&E is hooked up, the water system finally has no more leaks, a new propane tank is on order, and the RV site will hopefully be ready for temporary housing by the time of publication.
“M.C.” (MaryCatherine) Dwyer, MBA, REALTOR®
CA DRE License 01468388
EXP Realty of California, Inc.
Featured photo by Lili Kovac