Feb. 21, 2012 - Low Inventory so far in 2012

If you ask me, the biggest issue in the Santa Cruz real estate world is the lack of inventory. It's really hard to find a great home for a buyer!  There simply isn't as much to choose from as we typically see, even when considering that we are in the winter months.  

The graph below shows the monthly inventory of properties for sale along with new listings and sales.  These numbers are for the entire county of Santa Cruz and only covers single family homes (not condos, etc.)  It illustrates the basic annual seasonality of the market as well as the relationship between these items. The number of new listings in January 2012 was 219, up 73.8% from 126 last month and up 2.8% from 213 in January of last year. 

However the biggest issue here is that there were only 546 homes on the market in January - the lowest number in the past three years!  

Know anyone who is thinking of selling?  This could be a good time to do so!

Dec. 8, 2011 - What will 2012 bring?

Do you believe the claims in this article? Check it out:

www.housingwire.com/2011/12/05/barclays-analyst-sees-housing-rebound-coming-in-2012

If the market does rebound in 2012, how does that affect your plans in the real estate world?  I also wonder how it translates to California, to the greater Bay Area, Santa Cruz or your local city and neighborhood?

I can tell you this much: in the past couple of years, the market has been driven so much by the buyers seeking a "deal."  If this article is correct - and it's hard to argue the fact that some of the numbers such as the unemployment rate have been improving - then it will shift the market dynamics.  I can't wait to see how it unfolds!

Jun. 25, 2011 - Santa Cruz County Loan Limits: Change is Almost Here!

CHANGE IS AFOOT! Loan limits are going to change soon.

Some background: if you want to get a home loan here in Santa Cruz County, your loan rate will be (in part) dictated by the amount of money you borrow.  There are three tiers of loans, and your rates will be affected accordingly.

The best rates (in general) can be found if your loan amount is "conforming" or "conventional."  

A good definition of what it means to be conforming can be found here.  Conforming loans are limited to an amount of $417,000.  Higher loans go into a middle tier, typically called "jumbo conforming" or something similar.  The highest tier is "jumbo."

So, what's changing?  The threshold between jumbo-conforming and jumbo loans in Santa Cruz County.  The middle tier has been $417,001 to $729,750 for a few years now, BUT - the upper limit is about to shift DOWNWARD to $625,500 on OCTOBER 1, 2011.  (This is only true in Santa Cruz County - so if you aren't buying or selling here you don't have to be concerned.)

Why is this change happening?  Because home prices here have fallen.  Fannie Mae sets these limits on a per county basis based on the typical price of a home. The government is interested in helping the average home buyer get a good rate, but not so interested in helping the "rich."  Kind of makes sense, right?

And what does this mean to you? Well:  if you are a home buyer, and you want to borrow between $625,500 and $729,750 - your rate will be higher if you close after October 1st. So, you may want to think about buying before then! 

If you are a home seller, and if the price of your home is $780,000 or higher, your buyer may have to pay more interest on their loan.  (Many borrowers put 20% cash down, so 80% of $780K brings you to $624K or just under the new limit.) This affects your buyer's ability to afford the house!  OK?

Want to talk more about this, just call me or email me.... 

Jun. 14, 2011 - Top 1000!

Wow - I just heard today that I was one of the top 1000 Coldwell Banker agents (out of about 55,000 or so) in terms of production for the first quarter of 2011!  I was working hard but I had no idea. What an honor!  Thank you to all the wonderful clients who trusted me enough to allow me to achieve this.  It's all because of you.  Here's a copy of the letter I received today:

Apr. 28, 2011 - To Save a Hummingbird

To Save a Hummingbird

Don't let any one tell you that the job of a Realtor is mundane.  If such a person exists they should have tailed me today.

This story begins on a lazy Thursday afternoon.  I was getting my car washed in preparation for several client outings in the coming days. A beautiful day - there I sit at the car wash minding my own business when my phone rings.  Someone wants to see one of my listings.  OK, I say, I can be there by 4pm. 

Off I go, arriving at the property about five minutes early.  The house is vacant, so this gives me a chance to air out the place for a few minutes before the prospective buyers show up.  All is good with the world.  Then, all of a sudden I hear a buzzing sound, and I look up: there he is.  A sweet little humming bird is frantically flying around the vaulted ceilings, looking for a way out.

Being a mature man of 52 with a lot of living behind him, you might expect that I would stay cool, calm and collected. Not. I freak. If there's one thing that unglues me, it's the possible suffering or demise of an innocent creature, especially if I had anything to do with it.  I start to frantically call people to ask what to do.  The house is completely vacant, no netting, nothing I can think of to use to try to get the silly bird outside. 

In the middle of my emotional episode, the prospective buyers arrive. "Keep it together" I keep telling myself.  So I let them in and of course tell them all about the poor little thing.  We wander away from the area where he is, and a few minutes later we go back and don't see him!  Is it possible that he found the open door I left for him?  Oh, wait... no, there he is: sitting on a window ledge, within reach.  What to do?!?! 

Suddenly an idea comes to my head: my shirt!  Take off my shirt and use it to try to gently trap him and get him outside!  But wait, I'm with these people I just met.. and oops, no undershirt.  Ok, so you think that's not a big deal, right?  Well let me just say that it's not the most professional thing to whip your shirt off in front of people like that... especially when you're 52 and shall we say, a little soft around the middle.  But screw it, I think - I'm going to save this damned bird if it's the last thing I do.  So I appologise for the visuals, whip my shirt off, and approach the sweet little thing.

By this time he has a crazed look in his face, I swear he thought I was going to eat him.  But he's tired, and he's backed into a corner. Fortunately for me, hummingbirds don't attack people because I would have screamed in a not very pretty way... yeah that would have been attractive... but back to reality. I gently use my shirt to make his space smaller and smaller... and then what?  Where did he go?  I don't see him anymore!!  It's right then that I realize he has grabbed hold of my shirt and is trying to hide inside.  Perfect!  I run for the door and go outside.  as soon as I open the shirt up a little - Bzzzzzzzzz - off he flies!!  The pure joy in my heart at that moment - to see him rise up towards the redwood trees on the property!

I laughed out loud with relief.  I probably would have started crying but then I realized that I'm standing there with no shirt on in front of these people... not good.  I collect myself and proceed to do my job... but it doesn't matter what happens for the rest of the day.  My day is complete and I am happy, because I saved a little hummingbird.

I love my job.

Mar. 24, 2011 - Santa Cruz County home prices

The Median home price in Santa Cruz County dipped a bit last month to about $450K.  That's down from $500K a year ago - but higher than the $380K of two years ago. 

Looking at the average price, it went up from last year.  So that means a few more high priced homes sold over last year.

Looks to me like we have a plethora of mixed messages - while we still are seeing a good number of foreclosures and short sales on the market, there are signs that there are fewer notices of default happening.  That means fewer people are delinquent on the payments, and perhaps that means fewer will end up in foreclosure.  That's a good thing.  Also the economy seems to be mildly improving too.  Now let's see what happens to interest rates....

Here's the article in the Sentinel with the details:

www.santacruzsentinel.com/newsletter/ci_17687795

Stay warm and dry!!

Oct. 29, 2010 - Do lenders prefer foreclosures to short sales?

As most of you probably realize, we aren't going to get back to a "normal" market until all the fallout from the lax lending standards in recent years and the ensuing economic downturn is finished.  In the mean time, here we are in the "new norm" which includes many people being underwater on their mortgage - i.e., more is owed to the bank then the market value of the home.  If underwater home owners can afford to keep making the payments, then there's no need to panic.  Eventually life will return to the "old norm" and equity will almost certainly return---- assuming you can wait at least a few years. Can you?

If you or someone you know answer "no" or "maybe not" then understanding what options there are to get out of the mess is important. I recommend that you start educating yourself!  (More on this in upcoming blog posts.)  This means understanding the world of foreclosures, short sales, deed in lieu of foreclosure.... and more.

In the mean time, there's a really interesting article that came out today, making the case that lenders actually prefer foreclosures to short sales.

firsttuesdayjournal.com/lenders-prefer-foreclosures-not-short-sales/

Take a look, and let me know what you think!

-Michael

santacruzrealestateagent.biz

Sep. 26, 2010 - Habitat for Humanity

Habitat for Humanity!

This past week I volunteered a day of my time to help build a house here in Santa Cruz for Habitat for Humanity.  What a great experience, and a good opportunity to learn a few things about building a house.  The first task I did was to help nail some support boards to the 2nd floor joists... and I discovered that trying to insert nails at very odd angles is much more difficult than it looks!  Then it was time for me to apply sealer to the concrete foundation (see photo to the left).  I spent more than 1/2 the day doing that - two coats, all the way around.  My back wasn't too happy about that!!  But still worth it.  

We were told that the family has already been chosen for this house, a nice young couple with two twin boys about 2 years old.  I'm just glad I could lend a hand to help them get a home.

Sep. 12, 2010 - Will Responsible Homeowners be Rewarded?

It seems like almost every day I run into someone who bought a house in the past few years and suspects (or knows!) it's now worth less than what they paid.  Many of them continue to pay on their mortgage even though they might not be able to repay the balance if they sold the house!  I have a lot of respect for people like this and when I saw this article I became hopeful.  Perhaps the next "government incentive" for the housing market might help people like this!!  I like it!

Check it out here:

money.cnn.com/2010/09/03/real_estate/mortgage_help_gumbinger.fortune/index.htm 

Sep. 5, 2010 - West Santa Cruz Market Update Aug-Sept 2010

West Side Santa Cruz Real Estate Update August-September 2010 Hello! Happy September, and welcome to the new version of my monthly newsletter!  I hope you like it.  Since the number of subscribers has been growing each month, I've decided to migrate to a tool that will allow me to easily send the information to even more people.  Additionally, there are new features! For example, you can forward this on to your friends if you think they'd be interested, and they can easily add themselves to to my list.  To forward, just click the "forward to friend" link at the bottom of this email!  Thoughts or feedback about this new format?  Let me know, I'd love to hear from you! Regarding the statistics this month - it looks like prices are holding relatively steady: the median and average prices haven't changed much from last month.  However we only had about 13 houses close escrow in August - which is a little on the low side, especially for the summer.  There were 17 that sold one year ago.  My sense of things, based on what I'm seeing out there, is that things are still moving a bit slower than they did this spring.  The first time home buyer tax credit expired, and although there weren't too many people buying homes on the west side using that credit, it still took steam out of the market as a whole when it went away. The economy hasn't rebounded enough to make up for that so we're floundering a bit.  Will this cause prices to fall?  My guess is we are going to see a bit of a dip in the statistics that come out later this year.  Don't expect anything dramatic - those crazy people who think the sky is falling are just trying to stir things up! Barring any disaster, it looks to me like we're headed for a soft period and perhaps a drop in prices that won't be more than about 5-8%. Have you ever wondered how many homes for sale in Santa Cruz are short sales?  (Short sales are homes for sale, where the list price is not sufficient to cover the mortgage debt owed on the house.)  Have you ever wondered how many bank owned properties are currently for sale here? Well, my website (http://MMcDRealtor.com) provides this exact information! Check it out - there are links in the main navigation on the left side of the page to get you exactly this information. I hope to see you around at some open houses!  Come tell me hello and let me know what's new.  I love seeing you! Cheers, -Michael (831) 331-3183 DRE#01467997    Single Family Homes that Closed Escrow in August:   Single Family Homes that are Pending as of Today (August 3rd):

Aug. 20, 2010 - Where, when and by how much will housing prices change?

Housing prices will plummet in most cities but not in certain other ones - or so that claim is made in the article below.  So - where do you live and how will prices be affected there - check it out!  For those of you in the Santa Cruz area it seems that they are predicting that we will be flat to down a bit until next January, and then from January 2011 to January 2012 we will see a 6.7% rise !! 

money.cnn.com/galleries/2009/real_estate/0910/gallery.housing_price_forecast/index.html

I must say that I would agree with their short term predictions regarding the rest of this year.  I don't see any signs of the market turning upward any time on the immediate horizon.  In fact, some of the most recent things I've seen have suggested the opposite - inventory has grown a bit and the number of closed transactions have fallen.   Is that due to the "summer slow down" where everyone is on vacation, or is that a trend?  Hmmm, well I'd like to see how things play out in September.  If it's still slow by mid to late September then that could change things.  While it's possible things could go down a bit - by all means I don't expect any bottoms to fall out.  There are too many people interested in living (part time or full time) by the beach in our amazing and wonderful part of the world for that to happen! 

So, all you buyers out there - don't wait too long - if this article is right then you might have about four months left before the market turns! 

Jul. 28, 2010 - How much of the market is Short Sale vs. REO vs. Regular in Santa Cruz?

With all the talk about Short Sales and REOs (bank owned properties), have you ever wondered how many of these types of sales happen here in Santa Cruz county?  I have!  So let's take a look at some statistics. 

First let's look in the city of Santa Cruz.  I am not including unincorporated portions of the city - this is just the city proper.  For those familiar with the area designations in the MLS, that's areas 42 and 43.  There were only two REO properties that closed escrow in June:

	Street Address	Area	DOM	Original List Price	List Price	Sale Price	Beds	Baths	Sq Ft	Lot Size Edit
1	711 BROADWAY	42 East Santa Cruz	6	$292,900	$292,900	$300,000	1	1	520	1742.00 SF
2	216 SACRAMENTO AVE	43 West Santa Cruz	329	$2,355,000	$1,595,000	$1,350,000	4	3	3000	6969.00 SF

Now, in that same time period, we had four short sales close:

	Street Address	Area	DOM	Original List Price	List Price	Sale Price	Beds	Baths	Sq Ft	Lot Size Edit
1	122 STOCKTON AVE	43 West Santa Cruz	10	$699,500	$699,500	$675,000	2	2	1100	4791.00 SF
2	136 CAYUGA ST	42 East Santa Cruz	18	$483,000	$483,000	$500,000	2	1	784	2308.00 SF
3	131 PEARL ST	42 East Santa Cruz	134	$499,000	$374,800	$365,000	3	3	1475	3049.00 SF
4	120 GRANDVIEW ST	43 West Santa Cruz	14	$397,500	$397,500	$415,000	2	1	768	3920.00 SF

And finally, we had ten "normal" or what we sometimes call "organic" (how very Santa Cruz) sales. 

So, within the city, that means that about 1/3 of all sales in June were either short or bank owned.  That's pretty high, don't you think? 

How does that compare to the county as a whole? If you talk to people, the general consensus is that there are more Short Sales and REOs outside the city limits... well the statistics confirm that:

County wide, there were 31 REO sales in June, while there were 34 Short Sales and 78 Organic sales.  So, just a bit under 50% of all sales are distressed properties!!  WOW!

The conclusion:  If you own a property in distress, or close to being in distress YOU ARE NOT ALONE!  It also means that agents such as myself are getting more and more experience with these kinds of situations, and the more experience we have, the better we are at getting the job done. 

It also means that if you are NOT someone in distress, you are very lucky in one regard - but on the other hand if you want or need to sell, then your competition may very well be a distressed property.  The bottom line is that I don't see any price appreciation on the horizon... which is great news for buyers out there, not so great news for sellers. 

What do you think?  I'd love to hear your thoughts.

Jul. 9, 2010 - West Santa Cruz Market Update Jun-July 2010

The big news in the West Side statistics this month is that there were only 8 homes that closed escrow in June.  That’s pretty darned low for the middle of summer!  Looking back as far as 2004, I can’t find a slower June.   This is the level of sales activity normally seen in the winter months, and about ¼ of the activity we saw last June.  Wow!  What’s going on?  A contributing factor may be the end of the tax credits, but that can’t be the entire story… as those aren’t a motivating factor for every single buyer.  I have to wonder if it has more to do with larger economic factors that causing a lack of confidence in buyers.  The stock market is back down, and without any clear view towards home price appreciation, buyers are still wanting the “killer deal” to help justify why they should buy an asset that isn’t necessarily poised to increase in value… at least not yet.  So many buyers are holding back and waiting… wondering if prices will go down further before they go up, or perhaps some great deal is around the corner.   I think this is especially true for the more expensive homes.  We’ve seen several short sales and bank owned properties at the higher prices… are there more to come?  Will they have incredible prices?  That seems to be on the mind of the buyers.

On the more positive side of things, prices are still way down compared to a few years ago, and we now have record-setting low interest rates.  For buyers with a long term view, this could really be an opportunity of a lifetime!  Here’s some more information about that:
http://www.cbnorcalevents.com/RealityCheck/10July/NCJulyarticle.html

I suppose you have also heard about some of the “not so good” things going on in Santa Cruz recently, but I’m happy to see that the community is taking a stand.  Our city is a great place and it needs to stay that way!  Have you heard of the “Take Back Santa Cruz” group?  Here is their web site:
http://www.takebacksantacruz.com/
Just goes to show the great spirit behind our community – and how we can collectively make a difference.  Check it out!

If you know anyone thinking of selling, or considering a purchase, please think of me!  I’d be thrilled to make sure they get the best service and results possible.

Cheers,
-Michael
 

Description	Jun 09	Jul 09	Aug 09	Sep 09	Oct 09	Nov 09	Dec 09	Jan 10	Feb 10	Mar 10	Apr 10	May 10	Jun 10
Sold Average Price	632	661	677	805	626	745	632	715	663	670	811	729	695
Sold Median Price	626	643	660	710	595	633	599	664	601	625	743	660	675

Description	Jun 09	Jul 09	Aug 09	Sep 09	Oct 09	Nov 09	Dec 09	Jan 10	Feb 10	Mar 10	Apr 10	May 10	Jun 10
Active Inventory	66	67	69	73	65	60	47	41	52	55	57	67	69
Sold Listings	36	35	17	16	12	17	13	5	11	8	18	19	8

May. 7, 2010 - A short sale story - all's well that ends well?

In January of 2009, I went away for a long weekend with a few friends.  We rented a wonderful house at Sea Ranch, an amazing place on the northern California coast, about an hour south of Mendocino. Of course, I brought my laptop because I can't stand to be away from the business of real estate for long!

So, one morning I'm sitting at the dining room table at this house, having a lovely conversation with my dear friend Karen (not her real name) about the fact that she was thinking of moving because her landlord was raising the rent.
I asked her:  "So, have you considered buying?  You can get some amazing deals right now, you might be surprised!" 

Her immediate response was skepticism, but after I used my laptop to bring up a list of some very affordable condos, the seeds of possibility were planted.

In the next several months we looked at a lot of condos.  The market seemed to have plenty of short sales and foreclosures, so we were hoping to take advantage of that.  We wrote offers on several properties… but were never successful with any of the bank owned (“REO”) properties since Karen needed FHA financing.  It seems that the banks don’t look too kindly on someone who needs 96.5% financing (only 3.5% cash down payment).  There were lots of other buyers with wads of cash, and we always got beat out by them.

It would have been easy to get discouraged by our lack of success with the REOs.  But we didn’t and fortunately we found more success in the short sale arena, where the competition wasn’t as fierce.

Why was it easier for us to get in on a short sale?  Because they really aren’t any fun.  Not for anyone.  In order for us to actually succeed in purchasing a short sale, the seller’s bank (or banks!) need to decide that they’re willing to forgive some of the debt they are owed.  In order to do that, they go through a VERY lengthy process of evaluating the financial hardship of the seller, and the pros and cons of taking the property in foreclosure vs. accepting the current (short) sale.  The seller needs to bare their financial soul to the lenders, and the buyer needs to wait and hope that the sale will be approved.  It sometimes isn’t approved, so that wait can be in vain.

So, do all of you know why it’s called a “short” sale?  It means that the seller can’t sell the property for a price that would allow them to completely pay off their loan(s).  The funds received for the sale are SHORT of the amount required to satisfy the debt.  OK?

Back to Karen.  We wrote offers on several short sales – because you don’t know if the seller’s bank will approve it, you often get in on several of them to make sure that you get at least ONE of them.  We wound up being submitted for three of them.  In one case, several months later, the bank wanted us to increase the offer beyond Karen’s comfort zone.  So we gave up on that one.  On another, it went into foreclosure – clearly the seller’s bank decided that the short sale wasn’t worth it.

But we still had one.  And the listing agent seemed to really be “on the ball” in terms of getting things done, so we waited.  And waited.  And waited.  Finally – in the first few months of 2010, more than 9 months after writing the offer, it seemed that bank approval as imminent.  Ah but it was a fake out!  A new problem appeared: what about all those delinquent Homeowner’s Association dues, to the tune of over $6,000?  The seller wasn’t willing to pay.  The seller’s lender would only pay half.  What about the other $3000?  Karen didn’t have that kind of cash lying around!  So, we decided to try increasing the price of the condo by $3000 and asking the seller’s bank to foot the entire bill.  After many weeks of negotiating, waiting, prodding… finally the seller’s lender decided this was OK. 

But that solution only works if the condo will appraise for the increased price!!  So we had to cross our fingers and hope… and fortunately it worked!!  HOORAY! 

The additional delays meant that we didn’t close until early May 2010 – 11 months and two weeks after we wrote the offer.  Wow… how many buyers out there would be willing to wait that long?  Would you, especially since it’s not certain that it will succeed?  In the end Karen got a really wonderful place for a great price, but the amount of stress, and the amount of work that was required makes you wonder!

Congratulations to my dear friend, I am so happy that this ended well and I’m so glad to have been there for you.  As for the future, I truly hope that short sales become easier.  For everyone.  Seems to me that there is a lot of room for improvement in this process.
 

Feb. 15, 2010 - West Santa Cruz Market Update Jan-Feb 2010

Happy February!  I call this month the beginning of springtime in Santa Cruz – did you notice the cherry blossoms around town?  These and other beautiful flowers are welcoming the return of longer days!

We had a pretty quiet holiday season in west side real estate – only FIVE closings in January.  While that sounds low, it’s actually fairly normal for this time of year.  The number of closings typically start to pick up in April and May – which means those homes sold in March and April…. And those that sell typically come on the market in February and March.  First things first – bring on the new listings!

Inventory has been low so far this year – even a little lower than normal.  There were only 37 homes for sale in January.  However that number has already started to creep upwards.  We’re at 40 homes on the market as of today and next week (post Super Bowl) we will probably add several more.  So if you’re a buyer who has been frustrated due to lack of inventory, just a little bit of patience may be in order.  By the end of this month I suspect you’ll have some new things to consider.  The only question is whether we have developed any pent up demand for certain types of homes!  Don’t be afraid of a multiple offer scenario – if you want something you can still get it!  Talk to me and we can strategize your way to home ownership.

The median and average prices for January bounced off the December lows – so we are zig sagging our way around the low 600K to mid 700K range.  We’ve been there since last May – so I’m going to call this a FLAT MARKET on the west side since last May.  At the moment I don’t see any reason to think it’s going to change much either, at least in the next several months.  We have an economy that has improved a bit (except for the jobs scenario), but we also expect interest rates to start creeping up.  I’m thinking those are offsetting factors.  Will they completely cancel one another out?  Hmmmm, time will tell.   Will jobs start to come back? Will the economy improve very slowly or will we pick up quickly?  How soon will inflation kick in, and how hard?  These are the questions I have on my mind because I believe they will help me predict what we will see in the market – both here on the west side and in general.

Yes of course short sales and foreclosures will still be a factor, but they have been a factor for the past year, so what’s new?!   It’s not like these properties haven’t been selling – they are!  If they weren’t that would mean something. The key question in my mind is whether the short sales and foreclosures will continue to show up at approximately the current rate.  If they stay about the same – and in terms of our LOCAL situation I suspect that’s what we will get, then I don’t see how things could shift dramatically.

Were you hoping for something dramatic?  Sorry.  I know, it certainly would spice things up, wouldn’t it?  But I have to tell it like I see it.
Stay tuned though – I think we’re setting the stage for an active spring – once inventory picks up I think the number of sales will really spike! 

If you’re thinking of buying or selling in this market, talk to me.  I’m happy to explore strategies with you and find what works best for you personal situation.
Best wishes for a wonderful spring!

Description	Jan 09	Feb 09	Mar 09	Apr 09	May 09	Jun 09	Jul 09	Aug 09	Sep 09	Oct 09	Nov 09	Dec 09	Jan 10
Sold Average Price	840	760	810	731	685	632	661	677	805	626	771	632	715
Sold Median Price	797	775	742	685	600	626	643	660	710	595	692	599	664

 

Description	Jan 09	Feb 09	Mar 09	Apr 09	May 09	Jun 09	Jul 09	Aug 09	Sep 09	Oct 09	Nov 09	Dec 09	Jan 10
Sold Listings	6	6	7	11	13	36	35	17	16	12	16	13	5
Active Inventory	43	55	69	66	65	65	66	67	70	64	58	45	37

Jan. 6, 2010 - West Santa Cruz Market Update Dec 2009-Jan 2010

Happy New Year!

The real estate market continues to be flat, but the stock market is up fairly significantly.  That means people are walking around with more money in their portfolios than they did one year ago.  For those of you with stock portfolios, I’m sure you’ve noticed:  2009 was a very good year for stocks.  Early in the year there was a multi-year low, a GREAT buying opportunity!  Now that prices have rebounded, perhaps it’s a good selling opportunity?

Take a look at this chart:

Now, how does that affect the real estate market?  The wealthier people are, the more they will consider purchasing real estate.  Time to pick up something for investment purposes?  Hmm, the stock values have gone up but the home values haven’t.  Sell high (stocks) and buy low (real estate) --- sound like a good proposition?  I think it does for some.

At the same time, interest rates are still low – not as low as they were a month or two ago – but still low, with a prospect of going higher.  The Fed  has cut back on their mortgage backed security purchase program, which will help rates to go up.  For people who want to get a loan, now may be a better time to do so than in a few months.

As far as the West Side is concerned, here are the highlights:
• In December, nothing over $812K sold.  The median and average prices dropped back down near the lows we saw in October.
• HOWEVER, we had 13 sales which is very healthy for December.
• Inventory is very low – under 45 homes on the market.  However, a few new ones have already started to trickle in, and I expect more to come.
• Lower priced homes are selling quickly, often with multiple offers.  There is a lot of competition for the homes that are perceived as good values.  Take a look at the sale prices in December – FOUR of them sold for higher than list price.

I am cautiously optimistic about the next few months!  As long as interest rates don’t change too much I expect we will have a very healthy market in the first few months of the year, especially for homes under $800K.   We need to keep an eye on the world of lending – this will play a huge factor in the market this year.  How high will rates rise? Will jumbo loans (greater than $729,750) become more easy to get, or will they continue to have a very strict criteria?   If we only knew the answer for sure we’d have a great view into how this year will play out.

If you’re thinking about doing something in real estate this year, LET ME KNOW, I’d love to help.
Best wishes for a FANTASTIC 2010!
-Michael

Dec. 7, 2009 - West Santa Cruz Market Update Nov-Dec 2009

There were sixteen sales in November on the west side – not shabby for this time of year.  The median and average prices are also staying relatively the same – we’ve been dancing around between $600K and $800K for about a year now.

I’ve been singing the blues (for sellers) regarding the high end for awhile now… and the song continues, but it’s not all bad news.  On the surface it looks really good in November – 3 houses over $1 million sold!  But let’s look a little closer.  700 Spring Street came on the market in late 2006 at just under $4 million, and never sold.  The owners put it back on the market this year at $2.2 million (that’s quite a shift!) and it still took about 4 months to sell – and they had to accept $300K below the list price.  Then there are the other two which sold very quickly: 648 Spring St and 119 Estates.  First, I should mention that the person who bought 648 Spring was the seller for 119 Estates.  This smart person was able to get the Spring St house at a very good price for what it is, so he was willing to put 119 Estates on the market at an extremely appealing price.  That’s the opportunity that exists now – find the really good buy, and then go ahead and sell for less than you’d like, it all comes out it in the wash!  And, you might wind up with a “lower than you would have otherwise had” tax basis.   If capital gains taxes is an issue for you, those could be less as well.  Hey, we all could use to pay less taxes, don’t you think?

So – all you high end sellers out there – if you’re going to buy as well, then don’t fret.  I won’t sing the blues to you, rather it’s a nice up-tempo number coming your way!

I’ve seen some rather high end beach homes sell elsewhere in the county in November.  There were 3 that sold for over $2million!  But I will say this to you:  two years ago they probably would have sold for about $3million, so don’t assume they’re doing much better.  (Let me know if you want to see the details on those, I’m happy to send that to you.)

Looking forward, we have 21 pendings as of today, but all of them are under $860K.  What a happy segment of the market we have in those lower prices… price stability, medium to low inventory, a good number of buyers out there ready to make a move.  Life for sellers isn’t bad.

As always, I’m available for you if you have any specific questions, comments or needs. 

Nov. 9, 2009 - West Santa Cruz Market Update Oct-Nov 2009

This month I have some new and improved graphics that I hope will help you understand our local market even better.  Please let me know what you think of the changes – do they help? Are they clearer?  Your feedback and opinions are welcomed and important to me!

Regarding the market, if I were to create a headline for this month’s newsletter it would be “West Side Santa Cruz Prices and Inventory Both Continue their Gentle Decline.” 

The first chart below shows that the median and average sales prices.  October numbers show that the median and average sales prices haven’t been lower in any month over the last two years.  The trend lines show that the fall has been a gentle one, but the upward trend we saw in August and September did not continue and we fell off to new lows.

Then we look at our inventory numbers and we get a completely different story – inventory is also trending downward, which can cause a little upward pressure on prices. So the news isn’t all bad for the sellers among us.  Of course that probably depends on what segment of the market the seller is in, because we didn’t have any sales over $1 million in October.  I wish I had better news for the sellers at the high end but the difficulty in this segment continues.  Jumbo loans come with big restrictions, and the all-cash buyers out there want incredible deals, and most tend to think we haven’t reached the bottom of the market yet – and with regard to higher end listings, they might be right.  The low end is a different story, I haven’t seen those prices falling and I doubt they will.

At any rate, while the inventory has fallen, the number of homes selling has risen.  So – things ARE selling!  Buyers are out there, especially for homes under $800,000.

Happy Thanksgiving!!  If I don’t see you or speak to you before Thanksgiving, may it be happy and I hope you find lots of reasons to be grateful.  I think we live in an amazing and beautiful part of the world, and I love living in our wonderful community here in Santa Cruz.  What do you think?

Oct. 12, 2009 - West Santa Cruz Market Update Sept-Oct 2009

Happy Autumn!  The air has a chill and you can almost sense the coming rains… are you ready?  Is your house ready?  It’s time to think about your gutters being cleared, any drains on your property should be ready and clear of debris.  A little forethought now could save you an emergency situation in the middle of a storm.

Remember where we were a year ago?  Major financial issues were in the news and on everyone’s mind.  Home buyers were scared and sales fell.  There was talk of panic. Now we get to look back on it from a year later and what we see is very interesting!  This past month the median and average prices on the west side shot back up to almost exactly where they were one year ago.  The number of sales – 16 –  is up 25% from the 12 we had in September ’08.   So, prices are very similar but the volume of sales is up, which perhaps indicate that some confidence is filtering back into the market.  More buyers are buying, but they are also demanding good deals so the prices aren’t rising.

The high end of the market is still suffering the most, although we had four closings over $1 Million in September.  (Two of which were my listings, I have to note.)  That doesn’t mean those sales were terribly easy, as a lot of negotiating is going on, and when buyers know that there isn’t much competition (if any) out there, they tend to ask for the moon, and sometimes they just about get it!  Looking forward, only 2 out of 24 pending homes are above $1 Million, so the trend continues.  I also tend to believe that a “shadow inventory” of higher end homes is building – meaning people who are wanting to sell but are waiting for what they believe will be better conditions in the coming months or years.  I believe that will keep any rebound we will eventually have from being too quick and dramatic.

In the mean time I hope this newsletter finds you well.  If there are things on your mind that you’d like to discuss with me please don’t hesitate to let me know, I’m here for you!

Sep. 13, 2009 - West Santa Cruz Market Update Aug-Sept 2009

I’m writing this on Sept 11^th and remembering the events of eight years ago – a day that changed just about everything.  When people ask me “what do you think the market will be doing next year?” I sometimes think back to that day, and realize how iffy any prediction can be! One never knows what might happen to change just about everything again – for the bad or even for the good.