Santa Cruz Real Estate: Extension of Silicon Valley or Still the Slow Coast?

The following market report is provided by Liz Kroft  & Lance Hulsey of Mainstream Real Estate Group.

The Santa Cruz area has long straddled the line between being considered an extended suburb of Silicon Valley and firmly staking its claim as part of the Monterey Bay Area and the Central Coast.

Those of us who live in this beautiful part of the world would strongly argue that, we are NOT part of Silicon Valley but are uniquely Central Coast. Santa Cruz anchors the southern stretch of the Slow Coast and not Silicon Valley. We will leave that honor to Gilroy. We are Brethren to Monterey, Salinas, and Carmel. Not San Jose, Cupertino, and Sunnyvale.

Or are we?

The lines are blurring, and Santa Cruz seems to be in the midst of an identity crisis.

Nowhere is this more evident than in the local real estate market.

As it relates to housing rents and sales, we are being sucked into the Silicon Valley market demographics. Santa Cruz County is gradually losing its Central Coast identity as it’s drug into the hot, hot markets of one of the country’s largest tech hubs.

A recent Housingwire article ranked the Santa Cruz-Watsonville market as the 7th hottest housing market in America,  just behind San Jose-Sunnyvale-Santa Clara in 3rd and San Francisco-Oakland-Hayward in 2nd.  

Rents are astronomical in Santa Cruz, housing prices continue to rise, inventory and interest rates remain low, and more people are discovering that the commute “over the hill” is worth it when you can still buy a home in the Santa Cruz area for significantly less than in the heart of Silicon Valley.

Have we lost or have we won?

That depends on where you sit. Are you a renter or an owner of real estate?

Let’s look at the numbers.

Before we get too deeply into the market analysis this month, we think it’s important to answer a question we get frequently that isn’t reflected in the graphic below:

What’s going on with rents and rental inventory?

Simply put, rents are going up, and fast. The rental market is tight, and getting tighter.  With the tourist season in full tilt and students starting to look for housing, the rental market is red hot. Unfortunately for locals who can’t afford to buy, there’s not a slowdown in sight. The truth of the matter is, it’s tough to find affordable rental housing in Santa Cruz and it’s not going to get better in the immediate future.

On the brighter side, if you can afford to invest in real estate, welcome to the good times. Did we mention the rental market is booming?

So what do the numbers say this month?

June finds us almost in reverse of May when it comes to single family homes versus townhomes/condos.  Where last month saw a rising condo/townhome market and a cooling single-family home market, the June numbers seem to have completely flipped.

• The Median Sales Price of a Single Family Home is up $30,000.
• The Condo and Townhouse market is down $25,000.

Are we starting to see a shift from the sizzling hot condo/townhome market back to single family homes?

Overall home sales have seen a big increase: We are up 22% over last year’s numbers and 12% over last month. This tells us that people are still grabbing homes in the Santa Cruz area at a quick pace.

• New listings are down slightly since May by 6.8%. This may be due to the summer vacation season hitting our shores. It also could be the first signs of a cooling market. We’ll have to keep track of that number in the next few months.

We have a potpourri of local happenings this month. The biggest news may be the purchase of American Dream Realty by David Lyng. We also have news on broadband, cool apps for your mobile devices, a look at affordable housing and a renewal of water conservation credits. Here are the highlights:

American Dream Realty acquired by David Lyng

Is consolidation in the real estate brokerage market a good thing for consumers? Read about the acquisition here.

Lack of affordable rentals in Santa Cruz County under scrutiny

Santa Cruz County has become too expensive for renters and now some government officials are taking notice.

Broadband Initiative

County of Santa Cruz recognized for “Policy-Driven Broadband Initiative.” High-speed internet that will compete with speeds found in Silicon Valley will soon be available to private citizens and local businesses in Santa Cruz. Read more about this over at Santa Cruz Tech Beat. 

San Lorenzo Valley Water District renews water conservation credit program

With a new budget this popular program is back. Once the budget money is expended, the program is closed so don’t wait if you think you qualify. You can find more information here.

Cruz511 Know Before You Go new traffic/travel app

With the growth Santa Cruz County has experienced so too comes traffic.  This app aims to alleviate some of the stress and frustration of navigating around town.

Last month we made mention of a new program from the Consumer Financial Protection Bureau (CFPB). This program is called “Know Before You Owe” and helps consumers use the new forms, improve consumer understanding, aid comparison shopping, and help prevent surprises at closing.

The (CFPB) also established new rules for lenders called TILA-RESPA Integrated Disclosure (TRID). These new rules will provide buyers with more protections and make it easier for them to understand their closing documents and loan details. This will cause the closing process and its timelines to change dramatically. After a two month delay due to an administrative error, the rules should be in place by October 1st.  Stay tuned.

If you have any thoughts on real estate or would like to contribute to our monthly updates, email us or use the “Ask Liz and Lance” area below. We would love to hear from you!