A low housing inventory, mixed with an increase of potential buyers looking to take advantage of currently low interest rates and buy homes in Santa Cruz County, has created a competitive environment in the local real estate industry.
In September 2018, the real estate market in Santa Cruz County consisted of a total of 240 houses for sale. That number slightly dropped to 230 houses by the following year, and was down to 103 houses in September of this year, according to data provided by the Santa Cruz County Board of Realtors.
“We do have buyers that are qualifying, but there’s no inventory to buy… It’s a bidding war,” said Yvette Palmer, a local realtor and president of the SCCBR. “What’s happening is we’re getting multiple offers right now, to the tune of maybe five to seven on average.”
While there are no definitive factors to attribute the lack of homes on the market and the increase in interested buyers, a few local real estate agents said that the coronavirus pandemic could have indirectly influenced both sellers and buyers in their decisions to either stay put or move into a new home.
Those who don’t want to sell, Palmer said, may be more reluctant to host an open house at their current homes in light of social distancing recommendations.
Local realtor Nanci Pottinger said that homeowners may have also preferred to steered away from making such a big move during the uncertain times brought on by the pandemic.
“It’s the uncertainty of moving to somewhere else. They feel more secure being home, so they want to stay put,” she said.
She added that the select few who have decided to put their houses on the market have been able to sell their homes at prices more favorable to them.
The limited amount of options has also meant that houses aren’t staying on the market for very long.
During September 2019, for example, houses lasted an average of 89 days on the market before homeowners were able to close the sales. This year, homes lasted an average of 54 days on the market, according to SCCBR data.
“The main reason they’re selling so quickly is there’s not a lot to choose from,” Pottinger said.
Pottinger added that most of the interested buyers she has worked with in recent months have been individuals from out of town who are attracted to the more affordable prices, the open spaces, and the warmer climate with blue skies.
Gary Brasher, whose real estate agency is based in Tubac, said he encountered a similar type of buyer for the Tubac area and Eastern Santa Cruz County.
He added that while a few of his buyers specifically cited coronavirus as their reason for wanting to leave more heavily populated communities, he believed that the pandemic was much lower on other people’s priorities while searching for a new community.
“In other cases, it might be tax issues, it might be natural disasters like fires and things they’ve experienced in California,” he said.
But the main factor bringing in more homebuyers to the market, both Brasher and Pottinger said, are the low mortgage rates that were brought on as a result of the pandemic.
As part of the economic stimulus package that was passed by Congress in response to temporarily shutting down parts of the economy earlier this year, Brasher said, the Federal Reserve also lowered interest rates as an economic stimulus tool.
“Certainly, that seemed to bring a new wave of people to the table,” he said. “In one respect, you could say low interest rates were tied to the pandemic and that created a much more favorable environment for people.”
Last September alone, there were a total of 47 closed real estate sales in the county, an increase from last year’s 34 sales during the same month.
Looking forward, Palmer noted that there aren’t any major contracting firms in Santa Cruz County but the current market could open possibilities for smaller, local contractors.
“We definitely need new constructions to accommodate these buyers,” she said. “So that’s just an opportunity for our local contractors to start looking into buying more land and start projecting new builds.”