It’s a seller’s delight in the South County real estate market, with insufficient inventory to meet buyers’ demands and prices slowly climbing back up to pre-recession levels, according to local real estate professionals.
As of Tuesday in Morgan Hill – where hundreds of new homes are either under construction or just recently approved by City Hall – there are only 41 actively listed homes for sale, “which is incredibly low,” according to Coldwell Banker Realtor Lianne Pinkston.
In Gilroy, there are only 46 homes listed for sale, Pinkston added.
These numbers are down by about 50 percent from the same time last year, Pinkston said.
Low interest rates are fueling what local real estate people see as a looming, lasting recovery from the 2008 housing and real estate crash – a recovery which in fact started in 2012. In fact, the market hasn’t been this seller-friendly since the boom times of 2006 and 2007, according to Intero Realtor Gretchen Merrick
“We think 2012 was the turning point – the bottom,” said Merrick, who runs the South County real estate market news blog, southcountyrealestatetoday.com.
Today and in 2012, sellers routinely receive multiple offers on their homes for sale, which often end up selling for higher than their listed price, Merrick said.
“Prices will probably continue to increase in South County (in 2013),” Merrick continued. “I’d love to see a balanced market out there, where we see more inventory.”
Median sales prices in 2012 remained lower than in 2008 – by 10 percent in Gilroy and by 16 percent in Morgan Hill, according to Merrick’s blog which includes data from a regional listing service. But the housing landscape is looking sunnier. Median prices have climbed steadily in both communities since 2009, when prices took a nosedive.
Local developers are trying to solve the current inventory problem, but some can’t even build new houses fast enough to keep up with the demand.
Chris Borello, developer of the 244-single-family-home San Sebastian gated community in the area of Peet and Cochrane roads in north Morgan Hill, said he has already pre-sold the first 13 unbuilt units, and his first phase – which he expects to start building by June – only consists of eight units.
Borello just gained approval from the Morgan Hill Planning Commission Tuesday for San Sebastian’s environmental study, zoning amendments and growth competition allocations.
“You can just drive around and look at what’s happening,” Borello said. “It’s pretty incredible. We haven’t seen this many homes built in town in years. Inventory is low, and there’s a lot of demand.”
San Sebastian is a unique development to Morgan Hill. The gated community consists entirely of single-family homes on quarter-acre to half-acre lots, incorporating communal bike paths, walkways and other amenities.
Pinkston also pointed out: it’s not just the “historically low” interest rates – which will likely remain low through this year – that are creating the demand. A lot of the new buyers are moving to South County from other places simply because they like the area.
“A lot of people want to come to the South County area. They’re finding they can get a lot for their money,” he said. “It’s a different lifestyle, a slower pace and it’s family-oriented.”
Some of the many new residential projects where construction has just started or was recently approved include the 37-home Connemara project off Watsonville Road; the 130-unit Diamond Creek project on Monterey Road in south Morgan Hill; the 54-home Oak Meadow Plaza on West Edmundson Avenue; a 108-unit subdivision by Signature Homes near Hale and Tilton avenues; and numerous smaller projects throughout town consisting of a mixture of single-family detached houses and townhomes.
In January, the City issued 22 building permits for new homes in Morgan Hill, according to the City’s website.
Orange County-based City Ventures is nearing completion of the first phase of its 43-unit project on the southeast corner of Dunne Avenue and Church streets, just south of Morgan Hill. The first phase of 14 townhomes and 4 single-family homes will be completed in the coming weeks, according to City Ventures Vice President of Development Phil Kerr.
The developer will place the first homes on the market in March, Kerr said, and they’ve already seen “a lot of interest.”
“I think it’s a strong local market. It’s a great town, with easy access to jobs while having a great local community,” Kerr said.
In Gilroy, a number of new residential projects are underway as well, with more expected in the next year, according to developer Tim Filice of the Glen Loma Group.
“The market for new homes appears to be very strong,” Filice said.
Projects under construction in Gilroy include two phases each in the Deer Park (off Sunrise Drive) and Eagle Ridge (off Santa Teresa Boulevard) subdivisions, plus numerous homes in the Mesa Ridge, Harvest Park and Rancho Hills developments, according to Gilroy Development Center Manager Lee Butler.
Merrick’s blog adds that the most popular price range for homes sold in Gilroy in 2012 was the $200,000 to $400,000 range. In Morgan Hill the most common price range was $400,000 to $600,000 range.
By the end of 2012, Pinkston added that short sales and bank-owned sales – both products of the now-subsiding wave of foreclosures produced by the 2008 crash – were almost non-existent.
“Property values are coming up, so (homeowners) are no longer upside down on their homes,” Pinkston said. “People have been able to get loan modifications that were once so difficult to get.”
Median home sales price
2012: $569,500
2011: $520,000
2010: $580,000
2009: $550,000
2008: $680,000
Number of sales
2012: 522
2011: 426
2010: 410
2009: 430
2008: 295
Source: southcountyrealestatetoday.com.
