If you like to follow the local Real Estate Market, you’re likely abreast of the latest, which is: “Low Inventory, Multiple Competitive Offers, it’s a bubble”, and new to my ears …”we’re heading for a crash”.
What’s up with the Economy?
It’s not actually surprising, considering that nationally, inflation is up to 8.5%… For reference, that’s doubling the rate in the last year, and is the highest since the early 1980’s.
It seems to be increasing rather robustly, along with interest rates and they’re both outpacing gains in income, which translates to most buyers having less purchase power.
In fact, some stats show that the median earnings in the second quarter of 2021 went down 1.2% year over year.
Is the Market still going up?
The growth seen in the real estate market has been national, not just a CA phenomena, but it would be prudent to recognize that CA represents 1/5th the national market… The CA market did not outpace the rest, though, with 20% growth in 2021.
As of July 2021, CA census showed that about 1% of the population had left. Some speculate that this is a sign of more to come. Since CA is such a massive state, how to accurately factor it into our market in Humboldt County is interesting to consider.
What about Humboldt County?
Locally, here in Humboldt, most would agree that our market is finally seeing the effects of our CA Zip code. At this point, it seems like everyone agrees, and most people understand that Covid brought with it a wave of migration out of cities and into more rural areas. Factors such as losing jobs, having jobs move online and lockdowns created an interesting opportunity for people to make changes in housing, especially when combined with dramatically low interest rates.
People did look to Humboldt as an option to relocate to, and with a few intense fire seasons pushing people out of the hills, the effect was compounded here.
Now, Cal Poly Humboldt is upon us, and changes are afoot. Many local residents are concerned that the plan to bring more students and faculty to the campus will further impact a housing crisis already in process. Cal Poly Humboldt does plan to mitigate the problem by building housing, enrolling online-only students who do not live in the area and accepting more local students.
Furthermore, Arcata has the Gateway Plan, which could bring upwards of 1500 housing units to the city, and offering mixed use growth opportunities for the area as well.
One thing is for certain, Arcata is changing fast, and it there’s no doubt it will ripple through the housing market.
More affordable housing projects are also in the works for other areas of the county, including the Eureka Waterfront. The overall goal is to mitigate an existing housing shortage, while also preventing more of a crisis in the near future.
It is my personal opinion that our housing developments rely too much on the concept of “affordable housing” which typically translates into multi-family rental units. While there is a need for this type of housing, and it should be built, the local owner-occupied housing market is also in dramatic need of inventory in the lower price point. Entry into the local real estate market is becoming more and more difficult and developments that include owner occupied units, such as senior living complexes, condos and small homes on small lots would also greatly benefit our local market by freeing up some properties and making housing an investment for people who make a local living wage.
Market Stats for our Area
The market stats for Humboldt County continue to indicate a VERY low inventory for the Humboldt Coast. A quick search shows 244 residential properties currently listed Active in Hum Co. 103 of those are in the area between Trinidad to Fortuna and as far inland as Blue Lake and West Carlotta. Finally, about half of those are listed at $500k or higher.
This actually represents an improvement in the quantity of homes for sale compared to the stats from the winter market report. Additionally, the March sale-to-list price ratio shot up a full 2%, matching the peaks of the Summer 2021 market in May and September respectively. And finally, the volume of new listings reached 2021 highs last month – all indicators of a very robust Spring market so far. Of course, the weather in March was pretty glorious, and April showers are doing their thing now…
So, the market is active, but what about that price point? Well, last year, the average Sold price did dip below 400K during the middle of the summer, which may have indicated the glut of properties that often get listed in late spring/early summer. Historically people prefer to list/sell in summer in Humboldt County.
A slight dip last year could be explained away, but it looks like the higher price point is here to stay for the foreseeable future. Being on the receiving end of of some of the national migration trends, coupled with the Cal Poly infusion of people and combined with an overall lack of housing being built… all adds up to price stability here.
But can it keep rising? Is it a good investment still? As usual, buying real estate to live in is almost always a good idea financially. If you’re looking to time the market for maximum ROI, then buying now in Humboldt may or may not be a good idea depending on individual property factors as well as your personal financial profile. It’s definitely something that is still worth looking into.
It should also be mentioned that the culture and experience of the Real Estate Market should begin to mellow a bit here locally. While prices are expected to remain stable and at worst, plateau, the rising interest and inflation is knocking some people out of their opportunity to buy. It’s anticipated that buyers are being more careful with their purchase and many have given up or backed off from buying temporarily. We would begin to see this manifesting as less multiple-offer situations or fewer multiple offers. Properties might also stay on the market a little bit longer, and buyers may have more opportunities to negotiate purchase price on some properties.
We’ll know a lot more about the national/local trajectory in the next few months. For now, with these spring storms we’re seeing, we can hope the fire season will hold off for awhile, or even better, be more mild this year, both of which would benefit our local market as well.
Thank you for considering this Realtor’s thoughts on our Humboldt County Real Estate Market. To receive these newsletters directly in your inbox each quarter, sign up using this link.
If you’ve enjoyed the photos throughout this market report, head over to Plaza Grill, on the Arcata Plaza where you can see them up on display and for sale, by local photographer (and lender..!) Martin Swett. For the next few months, his photos will be available to see along with another great North Coast artist, silk painter Amanita Mollier.
If you’re curious about buying/selling/investing in real estate, please don’t hesitate to be in touch about our services.
Stay Green, Humboldt!