If you ask around, you’ll find very few people who are sad to see 2020 in the rearview mirror. In so many respects, it was an absolutely awful year, for our community and the country as a whole. At the time of this writing, the nation records its 400,000th death attributed to COVID – with 113 of those deaths occurring in Santa Cruz County. Ironically, despite all the turmoil and tumult of 2020, the Aptos real estate market turned in a remarkably good year.
Of course, real estate markets the world over have thrived during the pandemic. In the United States at least, this has been driven by large numbers of people now looking for better and larger accommodations, since they are spending so much more time at home. This, coupled with record-low interest rates, have created a market with a voracious appetite for real estate, across the state, across the country – and right here in Aptos, too.
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A Look Back at 2020
The numbers for 2020 bear this story out. All the numbers used in this article are for single-family home sales; multi-family, condominium, and mobile home sales are excluded. These numbers are striking.
To begin: the median single-family home price in Aptos in 2020 was $1,175,000 – a 17.5% jump over all of 2019, when the median Aptos home price was an even $1,000,000. The average price in 2020 was $1,409,351 and in 2019 $1,198,532 – up 17.5% in a year.
The median price however is influenced by the kinds of homes which are selling in any particular time period. It is perhaps more helpful to look at the price per square foot: in 2020, the median price per square foot in Aptos was $630 – compared to $555 in 2019, an increase of over 13% on a per-square-foot basis. Likewise the average price square foot in 2020 was $745, vs. $613 in 2019 – a jump of nearly 22%. The price-per-square-foot is often a better barometer of values than median or single family home price.
No matter how you slice it, home sale prices were up sharply in 2020 compared to 2019. But there are some other numbers which illustrate just how incredible 2020 was in Aptos. For example, 301 homes sold in Aptos in 2020 – vs. 237 in 2019, a jump of 27%. What’s even more telling than this though is the ratio of listings to sales. 337 homes were listed for sale in Aptos in 2020 – which means that 88% of listed homes were sold in 2020. In 2019, that ratio was markedly lower – with 323 listings and only 237 sales, that works out to just 64% of listed homes selling.
There’s one last set of numbers I’ll toss in: homes sold in Aptos in just 28 days on average in 2020, compared to an average of 52 days in 2019, a decrease of 46% in time on market. Not only did homes sell much more quickly in 2020, they also sold much closer to list price. In 2020, homes sold on average for 99.7% of asking price; in 2019, the average was 96.7%, a whopping 3% lower.
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What to Expect in 2021
Forecasting the future is a risky business, because anything could happen. At this point however it does seem clear that the Trump presidency has ended, and President Biden is seeking to inject extraordinary levels of stimulus into the economy, to ward off a long and deep recession, such as the Obama/Biden administration inherited in 2009 when they took office. This stimulus should help to achieve a high level of GDP growth in 2021; Goldman Sachs is predicting a 6.6% increase in GDP.
As mentioned in the beginning of this article, one factor driving consumer demand for real estate is the record-low mortgage interest rate. The California Association of REALTORS is forecasting that for all of 2021, the mortgage interest rate will average 3.1%, a historically very low number. 30 year fixed are mortgage rates today are around 2.5%, so it can be expected that rates will rise in the coming months, especially if the GDP does in fact grow at anything close to the 6.6% that Goldman Sachs is forecasting.
A rebounding economy and cheap money should be exactly the fuel that’s needed to keep buyers writing generous offers on homes for sale in Aptos. The demand for Aptos homes is therefore expected to remain strong; what’s more of a question is the supply of homes for buyers to choose from in 2021.
The short supply of homes has been a considerable factor driving the price increases in 2020. With so few homes available relative to the number of sales, buyers have engaged in merciless bidding wars for homes, driving prices higher. The question for 2021 is: will supply finally open up enough to tip the market balance in favor of buyers?
There are two prominent reasons this might happen. The first is that Biden may not be able to get enough stimulus through congress. GDP may not rise; it could in fact shrink. Likewise, unemployment – already up sharply due to the pandemic – could rise as well. So far, those who have lost their jobs are not primarily in the category of jobs which support home-buying, but if these higher paying jobs are lost, it would have the effect of both driving more homes onto the market while removing buyers from the market at the same time.
Another big wildcard is California Proposition 19, which was passed by voters 2020. This allows homeowners aged 55 or older to move their property tax basis to another county in the state. Many homeowners have been reluctant to sell their homes for fear of losing their low tax basis, trapping owners in homes which no longer meet their needs.
Proposition 19 will come into full effect on April 1, just in time for the spring market. The California Association of REALTORS is projecting that Prop 19 will lead to 10% more real estate sales. The question for the Aptos real estate market is: will Prop 19 mean more people will be leaving, or more will be coming? Or will there be a roughly equal number of those coming and going, resulting in negligible effect on supply, demand, and sale price?
The Bottom Line
One important thing to keep in mind about real estate markets is that they generally do not change overnight. People plan for months, or even years, to buy or sell a home. Markets maintain a certain momentum, and right now, there is considerable wind in the sails of the Aptos real estate market. Barring any major unforeseen events, the Aptos real estate market should be expected to perform well, at least for the first half of the year.
However, it’s quite likely that the market will remain strong throughout all of 2021. Indeed, Zillow is forecasting that the Aptos real estate market will see price increases of 11.4% in the coming year. If you’re thinking of selling your Aptos home in 2021, it looks as though you couldn’t have lucked upon a better year to do so.
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