Drone image from UCSC looking out over the pacificSanta Cruz is a sought-after coastal city in California, known for its beautiful Santa Cruz beaches, redwood forests, and vibrant culture. The city has seen a recent shift in market dynamics from a seller’s frenzy to a more balanced market, but it's still a good time to sell.

There are only 218 homes for sale in the county right now, that's practically nothing. And so when you're selling a home you're really looking at what is the competition out there? And when you see the field of competition or non-existent competition, it is very good for you and your ultimate home sale price especially with interest rates going down a bit that really could open up the fire pole as well.

In this article, we will explore the current market conditions for sellers in the Santa Cruz area in 2024, including opportunities and challenges.

Overview of the Santa Cruz Real Estate Market

In the dynamic and competitive landscape of the Santa Cruz housing market, the median home price experienced a 20.8% decrease to $1.2 million in November 2023. Despite this decline, the median sale price per square foot impressively rose by 6.0% to reach $846. Homes in Santa Cruz attract multiple offers, selling on average approximately 1% below the list price and reaching pending status in around 34 days. Hot homes, characterized by quicker sales, can command a premium of about 3% above the list price, going pending in approximately 21 days.

Understanding the relocation dynamics is also crucial in gauging the market. A significant 77% of homebuyers express a desire to stay within the Santa Cruz metropolitan area. However, the current market dynamics indicate a balanced scenario catering to both buyers and sellers. Despite the decrease in median home prices, the competitiveness and multiple offers on certain properties suggest a market that remains vibrant. While it might be considered a favorable time for buyers due to the decline in median prices and the competitive nature of the market, individual preferences and financial considerations play a crucial role in determining the right time for property investment.

The forecast for the Santa Cruz Metropolitan Statistical Area (MSA) anticipates a decline of -0.5% by the end of 2023, followed by a further decrease of -1.7% by February 29, 2024, and a cumulative decrease of -3.2% by November 30, 2024.

Inventory Levels

The number of homes for sale is extremely low in Santa Cruz but that is also the case nationwide. In 2023, there were only about 1,200 homes sold in the county, which is the lowest number of sales since 1992. Despite the low number of sales, Santa Cruz had a 2.1% increase in new listings of single-family homes while other small towns near Santa Cruz CA experienced a general decline due to house inventory lows. When there is a supply and demand of that dynamic even with high interest rates your values are going to remain pretty stable last year in Santa Cruz and 2023. The average home price sale was $1.4 million, which is not too shabby considering a vacation home in Santa Cruz is 15 minutes from the Santa Cruz beachfront and the redwoods.

Days on Market (DOM)

Homes in Santa Cruz typically spend between 25 - 50 days on the market, mirroring the duration from the previous year. However, the number of homes sold in November 2023 saw a significant increase, with 28 homes changing hands, compared to 19 homes in the same period last year. The notable increase in homes for sale sold in November compared to the previous year could indicate heightened buyer activity. For sellers, maintaining awareness of DOM trends is crucial for setting realistic expectations and pricing strategies. A lower DOM may indicate high demand, while a rising trend might prompt you to adjust your approach for a quicker sale. Additionally, several factors can influence how long it takes for your specific property to sell, including:

  • Property Type: Beachfront Santa Cruz properties, for example, may attract faster interest and sell quicker than fixer-uppers located further inland.
  • Condition: A well-maintained home with modern amenities will likely find buyers sooner than one requiring significant renovations.
  • Pricing: An accurate and competitive price attracts serious buyers and reduces the wait time while overpricing can lead to a stagnant listing.
  • Marketing and Presentation: High-quality photos, engaging descriptions, or focusing on the city itself like things to do in Capitola, hiking in Santa Cruz, winery in Santa Cruz, etc are effective advertising that all play a role in capturing buyer attention and speeding up the selling process.

Interest Rates and Financing

Two years ago, the idea that interest rates would ever hit 8% would sound unbelievable but some would consider the serious effects it would have on their home prices. However, the fact that home prices in Santa Cruz only went down by 5% when there was such a dramatic increase in interest rates really says a lot about the area's market. Most people were thinking these interest rates would cause the housing market to crash and they would get much better deals on houses. But that just did not happen and the reason is inventory.

Towards the end of 2023, the industry saw some relief on interest rates and they started to go down. They got back into the 6% range, which is fantastic considering where they had been and that really helps buyers qualify for homes, or qualify for a little bit better of a higher purchase price. As the year settles on, you'll probably still see interest rates remaining between 6% - 7% which could lead to some price increases.

The current national context offers a mixed bag. While interest rates have risen compared to the historically low levels of recent years, they still remain below pre-pandemic averages. This creates a more balanced environment where both buyers and sellers need to be adaptable and strategic.

Popular Neighborhoods and Areas

Santa Cruz isn't just a city; it's a collection of diverse neighborhoods, each offering its unique charm and appeal to potential buyers. Deciding where to sell your property hinges on understanding these varied landscapes and identifying the one that best complements your home's strengths and attracts the right audience.

Analyze the neighborhood's demographics and identify the buyer profile most likely to be interested in your property. Tailor your marketing and presentation accordingly. Highlight unique selling points: Each neighborhood has its own story. Capture the essence of your location and showcase the lifestyle elements your property offers that resonate with the neighborhood's specific buyer pool. Here are some popular neighborhoods to consider:

  • Silicon Valley: The allure of proximity to tech giants makes West Santa Cruz a haven for investors seeking second homes or rentals.
  • Village Charm in Capitola: The idyllic Capitola Village California, with its colorful houses and quaint shops, draws in families and beach lovers. If your property boasts character and walkability, accentuate its proximity to the Capitola Wharf and charming ambiance.
  • Small Town Tranquillity: For buyers seeking a quieter escape, Scotts Valley and San Lorenzo Valley offer lush vineyards, rolling hills, and a peaceful atmosphere. Showcase your property's proximity to nature trails for hiking in Santa Cruz, wineries, and a slower pace of life.
  • Beachfront Bliss: The oceanfront paradise attracts sun worshippers and surfers. If your property boasts stunning ocean views or direct beach access, make it the centerpiece of your marketing, highlighting its unparalleled connection to the Pacific. This makes it ideal for buyers looking for a vacation home in Santa Cruz. 
  • Family-Friendly Delights: Aptos, Soquel, and Felton offer a blend of suburban comfort and proximity to Santa Cruz's attractions. Emphasize access to excellent schools, family-friendly activities, and a welcoming community atmosphere.

Conclusion

Navigating the ever-changing tides of the Santa Cruz real estate market requires knowledge, patience, and strategic adaptation. By embracing the new landscape, highlighting your property's value, and partnering with experienced professionals, you can successfully chart your course toward a rewarding selling experience in this captivating coastal haven.

Paul Burrowes, CRS, CCEC, SFR, NHCP, LHC, REALTOR® Licensed REALTOR® with over 15 years of experience and expertise. Commits to being on time and transparent. Acts as your consultant to ensure you make the best decisions to fit your transaction at every step in the process. Negotiates towards a low stress, win-win outcome. Handles all the details for you, ensuring the hundreds of steps in your real estate transaction go smoothly. Proudly serving Silicon Valley, Santa Cruz, Monterey, and Santa Clara Counties! | DRE# 01955563 | (831) 295-5130 | paul@burrowes.com |

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