Today represents the opportunity of a lifetime for real estate investment. One only needs to study the wealthiest people in the world to know how to capitalize on timing. Warren Buffet recently pointed out that when everyone else is selling is the time to buy.
In Santa Cruz County home prices and interest rates are at historic lows. Never has the affordability index been greater in our adult lifetime. Affordability translates to the ability to purchase a home and this is represented by the percentage of a median family's income consumed by the median mortgage. Nationally in 1981 a mortgage represented 36% of a family's income, today the national percentage is 15% of the family's income. This affordability combined with low prices and low interest rates is known as a "Buyer's Market" and a buyer's market is defined as the time to buy. It is not the time to kick the tires or to wait hoping the market will go lower. The waiting is over.
Now is the time to capitalize on the low prices and low interest rates which make Santa Cruz homes more affordable than ever. In August 2010 inventory of single family homes for sale in Santa Cruz County was 1102, in August of 2011 it was 1014 which represents an 8% decline. In August of 2010 we sold 150 homes countywide and in August 2011 sales of single family residences increased to 164 which represented a 9% increase in sales. So our inventory has decreased and our sales have increased. The average price of a Santa Cruz County home decreased from $578,159. to $557,810. and the median price decreased from $522,500. To $490,000 when comparing to August 2011 to August 2010.
For years I have advised my home buying clients to wait to buy unless they planned to hold their home for 10+ years. I also previously advised my home selling clients to sell quickly if they had to sell since the market showed all indications of decreasing in value for years. Agents used to say that we need a crystal ball to know what the market will do in the future but the years from 2005 until now have had such obvious economic indicators that only a person living under a rock would not have seen the signs leading to the continual decline we have experienced as a result of stalled sales and ballooned inventory through these years of lending issues, short sales, REOs, phantom inventory, high unemployment and numerous other blows to the real estate market and to the economy.
While the national economy has a ways to go, the Silicon Valley economy is on the upswing and historically our market follows the Silicon Valley market due to the nature of our bedroom community. In other good news we now have 6.18 months of inventory of single family homes currently on the market and 6 months represents a balanced market.
