Real Estate Market Update and Ben Lomond’s Valley Oak
By M.C. Dwyer
Remember the gorgeous valley oak that graced downtown Ben Lomond for over a century, in front of Scarborough Hardware store? A few years ago, the giant tree fell over as it succumbed to rot. Fortunately, there’s another heritage oak still standing in front of Henflings. Few people knew it would fall, because the tree still looked strong and vibrant. But those of us who know a bit about California’s oak trees understand that the soil under the drip line (the perimeter of the tree’s branches) should remain undisturbed and unplanted: that means no parking, leach fields, lawns, plants needing summer water, or pavement. The roots need to breathe oxygen, and they’re acclimated to our Mediterranean climate with no summer rain (so no watering). If you are lucky enough to have one of these on your property, and want to preserve its beauty, you may also want to select an arborist carefully; unfortunately a friend who’s oak suddenly lost two major branches was given a hack job, after which another large branch fell.
Peter Shaw documented this particular oak as a fabulous specimen in his blog back in 2014. treesofsantacruzcounty.blogspot.com/2014/01/quercus-lobata-valley-oak.html
Sometime in 2017, after my double mastectomy, I noticed the tree had two large, nearly parallel scars where large branches had been, long healed over. This particular tree became an inspiration for me – a powerful example of how a body can not only recover from loss, but stand tall and radiant. Ever since it fell a few years ago, I’ve missed its presence. I’d love to hear if anyone else has a story about what this tree meant to them.
Housing market update
Last month we looked at the growing imbalance between the number of homes listed for sale and the number of homes sold. We call this “inventory.” Typically inventory over 4-6 months indicates a buyers’ market. The last month or two, we’ve been in the first buyers’ market here since early in the Great Recession. Sometimes, buyers find they may have the upper hand in negotiations with sellers. Less so in a multiple offer scenario.
Here’s the inventory chart for San Lorenzo Valley homes (as of 6/17/24):
The appearance of these charts changes over time, due to the chart documenting the previous month end versus current month-to-date.
To rebalance the recent surge in homes for sale requires either more buyers, or some sellers taking their homes off the market. As the US S&P 500 posts its 30th record so far this year, more wealth is available to many home buyers. But persistently high mortgage rates are keeping a damper on buying homes with loans. The 30 year fixed mortgage hovered around 7.05% over the last month, after peaking at around 7.3% at the end of May. The few days mortgage rates dropped under 7%, mortgage applications surged 15%, indicating just how rate-sensitive home purchases are. Who’s buying now? Over 37% of new home mortgages in the Bay Area were taken out by millennials aged 35-44.
Insurance is the other hurdle local buyers face: many if not most San Lorenzo Valley homeowners have been dropped by their insurance and forced onto the Cal Fair Plan. Designed to be the insurance of last resort, the plan has ballooned up to cover 377,000 homes. Cal Fair Plan is much more expensive than the rates we paid a few years ago with companies like State Farm, USAA, Farmers, etc. This is burdening fixed income folks, and adding additional home ownership costs for new buyers. A ray of hope? State insurance commissioner Ricardo Lara said he’s working to bring companies back into the state by approving more of their rate increase requests, which the insurance companies claim are key to survival in this fire-prone state. 10 out of 20 insurance companies got their rate increase requests approved in the last six months; those quoted ranged from 20% as in the case of State Farm, to 27%.
The Federal Reserve kept rates flat at their June meeting, stable since July 2023. Inflation per the Fed’s key measurements was running at 2.7% in April; they want it around 2%. Once they’re confident inflation is controlled, market experts now expect one, maybe two, rate cuts this year. Last month this was anticipated in September, now some are predicting November.
California’s homeownership rate is back up to 56%, a number last reached in about 2010, but actually about average over the past 40 years. Back in 2005-6, before the great recession, the rate peaked at about 60%. No surprise, California has the second lowest homeownership rate in the nation, followed only by New York. The national average is over 65%, while some states go as high as 75% or higher: West Virginia leads, followed by Delaware, Maine and Mississippi.
Send your questions & topic requests to “M.C.” (MaryCatherine) Dwyer, MBA, REALTOR®
(831) 419-9759 mcd@mcdwyer.com mcdwyer.exprealty.com
CA DRE License 01468388 EXP Realty of California, Inc.
Serving San Lorenzo Valley and Scotts Valley since 2005
Sources: California Association of REALTORs, CNBC, CNN, Forbes, MLS as of 6/17/2024, Mercury News, Mortgage News Daily, National Association of REALTORs, Redfin, Reuters and Zillow. 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.
Featured photo: The Valley Oak in front of Scarborough Home Center in June 2017. Photo by MC Dwyer
M.C. Dwyer
M.C. Dwyer is a Realtor based in Boulder Creek, California. She writes a monthly column for the San Lorenzo Valley Post featuring real estate market updates and news about listings in the area.
