Anyone who has ever participated in the Santa Cruz homes for sale market will tell you that navigating can be difficult. And this is not limited to the Santa Cruz real estate market. Most projections for the real estate market in this country have proven to be wrong, and questions such as "Will house prices go down?" continue to bother even experts in this sector.
Inside this Article:
When the waves of uncertainty remain high and the winds of economic change blow, it is difficult to determine when it is safe to sell or buy a property. But, as your dedicated guide, I'm here to provide so you can make informed decisions.
The Dawn of a Housing Recovery: Will Home Prices Go Down Soon?
As 2024 draws to a close, the real estate industry is beginning to show signs of promise for the near future. Experts in real estate and economics have recently expressed optimism about the housing market's prospects in this country, suggesting that a recovery is imminent.
The Fed has been primarily focused on containing runaway inflation for almost two years. To do that, they have been hiking interest rates, severely harming the creation of new jobs. However, they have started concentrating on supporting jobs lately. Borrowing became exceedingly expensive when interest rates were high. This raised mortgage rates to as high as 8% in October 2023. It was the highest rate in more than 20 years. The rates have been slowly declining, hovering around 7%, with 6.44% as of August 2024, even as the country grappled with the possibility of experiencing a recession.
On September 18, the Federal Reserve reduced its benchmark interest rate by half a percentage point, representing the first decrease of this magnitude in over four years. Economists view this action as a substantial measure intended to maintain low inflation and foster full employment. This decision has sparked optimism regarding a potential recovery in the housing market. Real estate professionals, along with buyers and sellers, are enthusiastic about the possibilities, particularly given the current shortage of available homes in relation to high demand. This disparity was already present prior to the COVID-19 pandemic, which intensified housing demand, rendering the market nearly inaccessible as mortgage rates escalated from historic lows in 2020 to their highest levels in a generation last year.
With population and job growth rising and cooling inflation, the Santa Cruz homes for sale market is poised for a considerable rebound. This is not just good news for potential buyers harboring questions such as "Will house prices ever go down?"—it's a chance for real change and fresh beginnings for everyone. But how soon will we start to reap the benefits?
The Affordability Challenge in Santa Cruz: When Will House Prices Go Down?
First, it's excellent news that the nation has avoided entering the long-awaited recession. The economy has proven remarkably resilient despite extended periods of historically high interest rates. .
Some experts believe the economy's resilience is more long-term than a single economic cycle phase. Although it is unclear how much the Fed will continue to lower interest rates. The fight against inflation isn't over yet, and some experts believe rates will still have to be maintained high. And it is anticipated that this will continue to pose many difficulties, such as:
- Santa Cruz properties are still priced high, posing a problem of affordability (relative to mortgage rates and income levels) that was more severe at the height of, for example, the 2006 housing bubble. This follows the recent skyrocketing of prices during the COVID-19 pandemic when prices increased by up to 40%.
- The sector is stagnant, and it does not provide good incentives for prices to fall. Increasing mortgage rates have lowered consumer demand, yet significant under-building in the 2010s, in contrast to the rise in population, has further constrained supply.
- Sales of existing homes are meager, as bad as during the global financial crisis.
- While potential buyers are waiting, wondering, "When will the real estate market crash?" and "Are house prices going down?" those owning Santa Cruz houses for sale are not selling them either. Sellers are unwilling to give up the cheap mortgage rates they obtained before the recent quick and dramatic rate increases.
We're in a problematic scenario right now: high mortgage rates, skyrocketing prices, and low inventory. These factors contribute to today's affordability dilemma.
Santa Cruz Real Estate: Local Economic Trends Fueling the Market
Even if the economy hasn't created enough job opportunities, there appears to be some hope. The economy added 142,000 new jobs in August 2024, a respectable number but somewhat less than the 160,000 analysts had predicted. The unemployment rate decreased to 4.2%, as expected. The highest level since October 2021 was reached in July, when it increased to 4.3%.
This job surge means a robust market of potential buyers for someone looking to invest in Santa Cruz or many of the small towns near Santa Cruz. As jobs become accessible to many in and around Santa Cruz, this translates to an increase in the demand for homes. Such market conditions are particularly relevant in this region, as the perfect blend of economic opportunities and natural beauty makes it an ideal place to work and live.
Moreover, as the Federal Reserve continues its efforts to lower inflation, the anticipation of a significant drop in mortgage rates is on the horizon. This is promising news for millennials, first-time home buyers, and anyone looking to refinance their mortgage. For many, this shift means that those Aptos homes for sale, homes for sale in Watsonville, CA, Scotts Valley, or any great small town near Santa Cruz, will no longer be just listings to admire but may soon become attainable opportunities. The most encouraging thing is that the real estate sector is generally navigating towards the anticipated balanced and accessible phase.
Future Outlook of Real Estate in Santa Cruz
There is no denying that the Santa Cruz real estate market is ridiculously pricey right now. There has yet to be an agreement on a solution, though. Fortunately, there's good news: the current AI revolution points to Silicon Valley as a tech hub that might propel real estate expansion across all of Northern California, including Santa Cruz County.
One solution could be to change zoning laws to accommodate affordable housing efforts or to allow the building of high-density homes. However, such prospective remedies may have to wait longer, as many Santa Cruz residents oppose them.
Looking for Santa Cruz Real Estate?
Real estate is a tried-and-true method of making money. When you invest in the right market, rental income provides a consistent return, property appreciation, and tax benefits. It is also one of the most outstanding buffers against downturns.
Santa Cruz is well-known worldwide for its excellent weather, beautiful beaches, magnificent outdoor activities, and inviting communities. The real estate in this region lives up to this reputation, and here are some ideal places and reasons why Santa Cruz should be your next real estate investment destination.
City of Capitola, CA:
Capitola is only a short drive from Santa Cruz. It is a gorgeous seaside village well known for its charming beachside cottages and is home to the renowned Capitola Village, California. The region's robust tourism industry is the primary driving force behind the real estate market. For years, it has attracted not just locals but also investors worldwide, guaranteeing long-term value in the region's real estate market.
Aptos:
Aptos is a small, unincorporated town on the Monterey Bay coast south of Santa Cruz. The allure of Aptos homes for sale (and real estate in general) is derived from its stunning parks and beaches and laid-back ambiance, which contrasts with the bustling metropolis of Santa Cruz.
It also provides access to the redwoods, making it an even more tranquil haven. The town's unique coastline and natural beauty make it an extremely desirable place to call home.
San Lorenzo Valley:
The San Lorenzo River, which runs 25 miles, passes through the picturesque mountain villages of Ben Lomond, Boulder Creek, Brookdale, and Felton. Previously affected by the logging industry, these places were tenderly restored by early conservationists who recognized the need to protect nature. Today, the mountains have returned to their natural splendor, with peaceful streams, waterfalls, and a mix of ancient redwoods and new-growth trees. The valley's lush hills and charming towns highlight the area's timeless beauty and make it an ideal location for real estate investment, providing a distinct blend of natural splendor and community appeal.
Other top properties that we strongly encourage you to consider seriously include:
- Los Gatos houses for sale
- Scotts Valley homes for sale
- Capitola homes for sale
- Santa Cruz homes for sale
Please don't hesitate to contact us with any inquiries or require specific guidance on navigating the Santa Cruz and nearby area property market. Together, we can make these promising trends a reality and assist you in reaching your real estate objectives.
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 | Towns near Santa Cruz County California
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