Santa Cruz, San Lorenzo Valley and Scotts Valley Housing Forecast 2020

Real Estate Agent with Melody Russell Team at eXp Realty of California, Inc. 01468388

Here is my 2020 real estate forecast for Santa Cruz County

including San Lorenzo Valley and Scotts Valley

The Washington Post published an article this week that surveyed over half a dozen real estate and financial economists: the National Association of Realtors,, Redfin, Zillow, the National Association of Home Builders, the Mortgage Bankers’ Association, and

Santa Cruz mountains treehouse photo by M.C. Dwyer copyright 2019-2020

30 year fixed mortgage rates are expected by most experts to stay below 4% this year.   In a rare move, the Federal Reserve actually came out and said they did not intend to move interest rates this year.   For perspective, early last year interest rates were projected to be increasing.    Currently the 30 year fixed mortgage rate is averaging 3.7% - it was 4.5% this time last year.    Looking back at 2000, rates were around 8%.     Low rates are an incentive for buyers, making property more affordable…but they also allow people who otherwise might consider selling to instead refinance and take money out for home improvements (or other goals).

Inventory is expected to remain low, challenging buyers.   People who in the past might have considered selling and moving up or down, are instead staying in their homes longer and improving them instead of moving.    Another constraint is the new tax laws only allow a maximum of $10,000 tax deduction for state and local taxes - including property taxes - otherwise known as the SALT cap.    Although the House voted to increase this to $20,000 at the end of 2019, it still needs to pass the Senate before it goes to the President.

In many markets across the country, new homes are being built, but in Santa Cruz County this is rare. The exception is Scotts Valley which has several new developments in process.   New home building is up nationally, but during the 2010 decade new construction was at the lowest level in 60 years.     That ten year low in building activity, combined with the millennial segment which, as they move in to their 30s, is transitioning from being renters to becoming first time homebuyers, puts the national housing shortage at around a million homes.

Prices, according to these half dozen real estate economists, are expected to range anywhere between less than 1%, to up between with 4% at the top end of predictions.   Another housing forecast I follow – CoreLogic – predicts prices up 5% during 2020.   Freddie Mac forecasts prices up 2.8% for the year.    But these are broad based, national predictions.

Locally, Santa Cruz County home prices are heavily influenced by the real estate market and economic conditions in the Silicon Valley and greater Bay Area.  The Silicon Valley continues to lead innovation and attracts some of the brightest minds in the world.   The California Association of REALTORs’ economist, Leslie Appleton Young, states that Santa Cruz unemployment is about 4.6% while South Bay and San Francisco are under 2.5%.    She notes about 850,000 new jobs have been added in the Bay Area between 2010 and 2018, but only 183,000 new home permits were issued, making the housing shortage here worse.

I expect the lower end of the market –entry level priced homes– to remain strong, while higher end properties may experience weaker prices.     Entry level homes are likely to have more buyers making offers, and go into escrow within two weeks to a month, if priced close to value and in reasonable location and condition.    I expect upscale properties to take longer - from several weeks to several months - before going into escrow with a buyer.    Properties that are priced too high will linger on the market longer...

To read the whole article, click

California Association of REALTORs’ economist, Leslie Appleton Young’s latest presentation


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Building A Bridge to Your Future

M.C. Dwyer, MBA, REALTOR    call/text (831) 419-9759

Century 21 Showcase REALTORS Cal BRE 01468388 copyright 2012-19


Comments (4)

Myrl Jeffcoat
Sacramento, CA
Greater Sacramento Realtor - Retired

This is important real estate data for home buyers and sellers in Santa Cruz.  I love the house pictured.  I could live there. . .No problem!

Jan 13, 2020 05:19 PM
M.C. Dwyer
Melody Russell Team at eXp Realty of California, Inc. - Felton, CA
MC Dwyer-Santa Cruz Mountains Property Specialist

Hi Myrl Jeffcoat Thanks for stopping by with a comment!    I couldn't resist taking a picture of that treehouse - it was part of the charming garden surrounding a lovely million dollar forest retreat...

Jan 14, 2020 08:08 AM
Sally Crane
WMS - Unity, WI
Woodland appraisal support.

Thanks for the update, all the best to you as you get many of these properties listed and sold.



Jan 16, 2020 08:42 AM
M.C. Dwyer
Melody Russell Team at eXp Realty of California, Inc. - Felton, CA
MC Dwyer-Santa Cruz Mountains Property Specialist

Hi Sally Crane Thanks for dropping by!    Since part of this is a national forecast, hopefully it is useful to you

Jan 16, 2020 09:50 AM