The local Humboldt County Real Estate Market has been interesting, amid many projections and forecasted ideas about what will happen in the future. Since we are at the (hopefully) tail-end of a year-and-a-half long pandemic, it’s very easy to make declarations and national forecasts are definitely affecting what people are thinking about our local market.
We left off last Spring reeling from a couple of significant announcements that may affect our local market in the future – that of the Google cable coming to Eureka and the upcoming status of HSU as a polytechnic school. Both are anticipated to increase property values.
Spring also brought with it more properties listed, which was a welcomed change. Here are the stats for residential properties in Humboldt County:
10/1/2020 – 1/1/2021 – Fall Market
71 Properties sold, accounting for approx $29mil in sales, averaging 10 days on the market.
1/1/2021 – 4/1/2021 – Winter Market
106 Properties sold, accounting for approx $40mil in sales, averaging 6 days on the market.
4/1/2021 – 6/1/2021 – Spring Market
164 Properties sold, accounting for approx $76mil in sales, averaging 7 days on the market.
This is not an unusual trend for our local market, but during the 2020 real estate year, we heard crickets through most of the Summer and Fall while folks adjusted to the “new normal” and figured out what was happening.
While there are obviously more properties being listed and sold, that doesn’t mean that we have a quality inventory for buyers, or that we’ve bounced back to pre-pandemic norms. As of today, we have 184 residential properties on the market in Humboldt, which might sound like rich pickings for an eager buyer, but includes only 38 listings in Eureka, 12 in Fortuna, 13 in Mckinleyville and 2 in Arcata.
With all of this continuing to drive prices up, we’ve also seen an uptick in what we could classify as the category of luxury homes in Humboldt that are available for sale. Out of the 184 residential listings for sale today, 42 of those properties are listed above $800k. That’s 23% – or almost a full quarter of our existing inventory!
One other interesting local statistic to note is the sale-to-list price ratio – an indicator of how much properties are selling for relative to what they were listed for. There was an unprecedented climb in this number beginning in April, from 97% in March up to the peak of 102% in May. The number dropped a modest percentage point in June to 101%, but for reference, the previous numbers have always hovered in the middle to high 90s with the the typical spike in Winter due to low inventory.
In June of 2020, we were at 95% and peaked at 98.5% in January and then came back down (as expected) until April when things skyrocketed. This only indicates that the market is competitive, and that properties are almost always selling for more than they are listed for. I have been advising buyers to look a good 20-40K below their purchase power to buffer for the phenomena.
You may be asking yourself, what do all these numbers mean… like, really?
Well, here’s the short of it. If you’re a buyer, you’re going to need to be tough and aggressive. If you’re a seller, you have an opportunity to maximize your profit. But you all knew that already, right? I mean, if you hadn’t heard, the Wall Street Journal and Realtor.com both recently named Humboldt County in the top 20 real estate markets in the nation. Yes, you heard that right. We’ve made the list, the word is out. Sorry. I know a lot of Humboldt County purists that have been dreading this day, but you don’t make national news like that and go unnoticed.
It’s interesting to pair this situation with the forecasts for the national Real Estate Market. With eviction moratoriums ending soon, a lot of folks (buyers especially) have implemented an attitude of “wait for the foreclosures coming down the line” and “the bubble is about to burst”… seriously, if I had a dollar for every time someone told me that, I could buy my family dinner at Stars Burgers a few times over. But the truth is, the national market almost doesn’t apply to our little niche.
Everyone thinks that their real estate market is “different” or “unique” but very few of them sit just 4-5 hours outside of silicon valley, have one of the ONLY spots in California unlikely to catch on fire AND reasonable real estate prices – that’s saying nothing of just how plain awesome it is to live and play here. So, if you’re wondering if Humboldt County Real Estate will see the bottom drop, I am here to tell you that it’s highly unlikely.
Of course, we all know ANYTHING can happen and it DOES… hello Covid… but the likelihood that you will regret investing your money into Real Estate here right now is very low. In fact, the likelihood is that for investment purposes, you may even be able to realize quick returns on your money, something that is relatively unusual in Real Estate historically.
Another note about foreclosures. So, regarding the many people who are sitting back and waiting for the repeat of the 2008 financial crash in housing… um… well, the stats say… maybe. It definitely could happen. But let’s think critically about Humboldt’s niche market. We know that last year our market went up a WHOPPING 25%. (This is why the WSJ and Realtor.com took notice, by the way)
Now, for those of you falling asleep in the back row, that means that if you bought a house in 2019 for $200K (yeah right), you could have sold in 2020 for more like $250K. That’s no chump change for a 12 month turnaround, even factoring in costs and commission, and ESPECIALLY if you were living in it or renting it out.
What this means for the people who have been using the covid-related forbearance offer, AND who will not be able to pay back their debt to their bank is that they could easily sell their property, avoid foreclosure, and quite likely still turn a profit. When this is a reality, it’s unlikely that you’ll see people turning their house over to the bank when it comes time to pay up. So, my best guess is that a potential foreclosure glut will not reach Humboldt County, even if it does become a national trend.
I know this is a lot of info, but there’s actually more. With building materials costing so much, many people are putting off developing and building, which makes pre-existing housing more valuable and in the interim, if you’re a buyer looking for a new home, you will be impacted by this, even in Humboldt where new builds are a bit of a rarity.
So, if you’re a seller, should you sell?
Well, if money is the objective, then of course! However, if you still need a place to live in Humboldt county, you may want to think carefully. It is a great time to maximize your profit on a current investment property and move your money upward into a bigger investment if you can afford that. However, such a move isn’t for the faint of heart. Also, if you’re sitting on a large property or house and you’re ready to downsize, now may be an excellent time – but be prepared to use your profits to get competitive for the smaller homes.
If you’re a buyer, should you wait?
The tightest market locally is the standard 3 bed, 2 bath house because it’s so desirable. The 2 bed 1 bath smaller units are also getting swooped up quickly because they are more affordable. So, should you just rent? Or wait and buy later? Probably not. The rental market in Humboldt seems like closer to a rental crisis, especially if you’re on a budget. In the meantime, property prices are likely to continue to rise, and you’ll be paying someone else’s mortgage instead of you’re own. If you’re not sure yet about wether or not you should buy, contact one of our great local lenders (or two or three) and let them tell you your options. It’s worth the work to find out. Quite simply, buying a home to live in is a wealth building action.
If you’re an investor or are considering investing in real estate, the multi-family market is alive and well. I’ll save you the stats, but the property values on those units isn’t increasing quite as fast as in the residential market, but IS increasing still, and with rentals in such high demand, things still look good for making money in Real Estate.
I think I’ll wrap up now because for some reason this report is turning into something twice as long as usually write. Perhaps it’s because I actually do feel a sense of urgency. I actually am holding back, because there is MORE, believe it or not. So many factors point to our market continuing to rise, quickly and massively, that it makes me nervous with anticipation, and not the exciting kind – the nauseating kind. |I don’t like seeing HumCO families being priced out of their neighborhoods or unable to afford rising rents. The realization that I, myself could not afford to buy the house we just bought 4 years ago were it to be for sale today is very uncomfortable. It’s tough to say what will actually happen, we can only make our best guess, but for now, it’s full steam ahead in this local market and it’s up to you if want to get on that train or not.
If you’d like to talk over these things in even more detail, or if you’re looking for a Realtor to advocate for you in this market – reach out to me anytime!
Happy Summer Humboldt, and stay green!
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Ami Wruck, 707-834-8965, [email protected]