Happy New Year!
January is getting off to a great start in the real estate market in Santa Cruz. I have been showing property to people from as far away as Humboldt County and North Carolina ( same travel time, only one is hours in a car and the other is hours in a plane and then a car.)
I have been writing offers on properties and noticing that it seems that if a property is priced where it makes sense, there are always at least three or four other offers. When there is a multiple offer, some of the offers are almost always all cash. Agents and sellers to have decided to use the stategy that I have recommended for years, which is to set the list price in the next increment lower than it seems the property will sell for so that the property is visible to more people who are looking in the area. That gets buyers in their cars or on the plane to come see the house. It results in more showings, which generate more offers. When there more offers, the quality of the offers is often better, as the Buyers step up with cleaner offers, and this gives sellers the opportunity to negotiate not only the best price, but the cleanest transaction. ( Since TRID came along on October 3, 2015, offers which involve loans can involve unpredictable time frames..... I will write about that more later, but it means that all cash offers which can close timely are very much more desirable than any offer in which bank financing is involved!)
People all over the world have the ability to search on Realtor. com, Zillow, Red Fin and the sites of their own agents or brokerages. This means that our market is indeed global. With so many baby boomers thinking of retiring in Santa Cruz, this global accessiblity means that there is an added population with unknown means that is tracking the inventory of available homes. Due to the ease of remote signing, and the technology of virtual viewing, people from any where and of any type of economic means are competing with our local buyers. This means that we can no longer count on the traditional demographics or affordability indices. Here is a quote on the appreciation rates in Santa Cruz from my office manager, Greg Mann. Next week I will post a chart to show appreciation since 1980.
"I want to share with you the Appreciation Chart updated with 2015's final tally. With an average sales price of $797,777 for SFR in Santa Cruz County, values appreciated 4.5% in 2015. In 2014 we experienced an appreciation rate of 17.5%, finishing 2014 with an average price of $763,767. "
Recently I have seen in a house in very rough condition on the West Side, which is walking distance to Westlake School and UCSC receive five offers. They ranged from FHA and $50,000 under the asking price with contingencies for an appraisal and inspections, even though the seller had provided all normal inspections, to $80,000 over asking where a loan was obtained but the buyer had waived all contingencies and agreed to pay cash if the loan wasn't approved. This home sold to that buyer. He valued the home differently than other buyers ( he understood the value of location!) and stepped up to get it in the first round.
If you are a buyer, it is of utmost importance in a market like this to be fully prepared. If you are going to need a loan, get pre-approved. Look deep into your pocket book and gauge the level of your desire to decide if you are willing to make an offer without an appraisal contingency. If you need to sell a house to buy, do it! If you have a house owned free and clear and are uneasy about selling before you have bought, do the refinance so you have cash in your pocket, which will advantage you enormously!
If you or anyone you know is thinking of selling or buying, please contact me so we can strategize on how to win in this market. I think that due to the desirability of Santa Cruz as a retirement community and the resources of baby boomers, it is unlikely that prices are going to go down in a dramatic way, so if you need to sell to buy, let's talk!
