Is it just me, or did June Gloom come early this year? Jeez, that was one of the coldest and darkest springs I can remember here in Aptos. Lately though the skies have become much sunnier. So how did the Aptos real estate market fare last month through all this funky weather? Read all about it in the Aptos Real Estate Update June 2015.

But before I get into the numbers…I wanted to tell you about a conversation I had the other day with a buyer client of mine. It’s similar to a lot of conversations I’ve been having lately with other clients, both buyers and sellers. She was concerned about what will happen to home prices when the supply of homes finally rises to meet, and then exceed, demand?

I answered that by saying that “it depends.” Of course, over time (and perhaps not much time!) prices should decline once supply exceeds demand. But a very important question to ask is, how long will it be before that happens? It seems I’ve been waiting a long time now.

As I understand it, economic principles suggest that when the price for something rises, the market will work to make more supply available. Strangely, that hasn’t happened yet – in Aptos, and pretty much everywhere else in California. Look at the chart below:

This chart shows the actual amount of inventory in Santa Cruz county (the red line), each month over the past four years – the supply. It doesn’t exactly show demand, but it shows consumption – that is, how many single family homes closed in the month (the green line). It’s interesting to see that since Spring of 2012 at least, inventory has been decreasing as prices have skyrocketed (the blue line). You’d expect prices to rise like they have – but why has the inventory drought been going on for so long?

The supply just has not materialized to meet demand for three whole years now. So when will more inventory eventually become available?

You’d think there would be all kinds of sellers coming out of the woodwork, to sell their homes at prices like these.  But it just ain’t so.   I think there are a lot of reasons for that, but chief among them has got to be that any replacement housing is likely to be more as much or even more expensive than what they’re paying right now. They may finally have some equity in their properties now, and could sell – but then what? For many people their cheapest housing option at this point is just to stay put. And if staying put means staying in Aptos or Santa Cruz, is that so bad?

So what’s my answer?  What will significantly increased inventory mean for home prices?

Once inventory picks up and exceeds demand, prices will drop, yes.  But that day may be some time in coming.  Who knows, prices might go up another 20% from here, and that prices will not drop below where they are today. Once prices do drop, what then?  Will you be screwed, like so many people who bought in say 2005-2007?

The answer is, you’ll be screwed – for a bit.  If you absolutely need to sell when the market dips, you may take it in the shorts.  But when prices drop significantly, as they did – demand will grow, prices will rise again, and we’ll be back for another loop around the cycle.  That’s just how it goes.

June 2015 Aptos Real Estate Update

The median price for single family homes in Aptos in May 2015 was $840,000 – which is down about 8.1% from a year ago (when the median price was $914,230). Although down significantly on a year-over-year basis, the median price was up 3.1% compared to the month prior.

There were 29 sales of single family homes in May 2015, which is 3.3% fewer than a year ago, as 30 homes sold in May 2014. The homes which sold did so in an average of 40 days – and that’s 43% faster than homes were selling this time last year.

Sellers must have been delighted to receive an average 101.9% of full asking price in May – an improvement over last year.  A year ago at this time, sellers received on average just 96.7% of asking price.

At the time of this report, there were 103 single family homes for sale in Aptos, and of those, 34 were under contract to be sold. That works out to be a 2.6 month supply of inventory – which is a 13% increase over last month, when there was a 2.3 month supply. However, a 2.6 month supply is still a very, very low relative level of inventory. But is it a sign of things to come?

Let’s turn out attention to the market for condos and townhomes. The median price for condos and townhomes was $570,000 in May 2015 – and that actually represents a 26.9% increase compared to a year ago, when the median condo price in May 2014 was $449,250. A total of 12 condos sold in Aptos in May 2015, which is a 7.7% decrease in sales compared to a year ago, when just 13 condos sold.

The condos which sold did so in an average of just 15 days on market – which is about 77% faster than a year ago at this time, when condos took an average of 65 days to sell. On average, condo sellers received 99.6% of full asking price for their homes, an improvement over the 98.6% sellers received this time a year ago

At the time of this report, there were 40 condos and townhouses for sale in Aptos, a jump of 11% in a single month. Of those 40, 21 are under contract – which works out to a 40 day – less than a month and a half! – supply of condos and townhouses.

What’s YOUR Aptos House Value?

Interested to know what your Aptos house is worth in today’s real estate market? Then head over to SellForSure.com for an instant, on-line evaluation of your Aptos home’s value.

What Your Money Buys You – Houses

While the median price for homes in Aptos in May 2015 was $840,000, the least expensive home went for $361,414 and the most expensive went for $2,731,150. Here’s what that kind of money buys you in Aptos today:

What Your Money Buys You – Condos

While the median price for condos in Aptos in May 2015 was $570,000, the least expensive unit sold for $445,000 and the most expensive went for $950,000. Here’s what that kind of money buys you for an Aptos condo/townhouse today: