SEPTEMBER/OCTOBER 2012

Inside This Issue

Susan Strouse, B.S., M.A.

Strouse Realty Group Town and Country Real Estate (831) 338-6481 Susan@StrouseRealtyGroup.com http://www.StrouseRealtyGroup.com DRE #01228878

> LOCAL MARKET TRENDS ..................... 1 > MORTGAGE RATE OUTLOOK ............... 2 > HOME STATISTICS .............................. 2 > FORECLOSURE STATS ........................ 3 > CONDO STATISTICS ............................ 3 > SFR PENDING VS. SALES CHART........ 4

The Real Estate Report

local market trends
SANTA CRUZ COUNTY
Trends at a Glance

This Market is Going Nowhere

Although prices have been rising nicely since the beginning of the year, most of this is due to more high end homes being sold. As part of this deal, state attorneys general gave up the right to sue the mortgage servicers for foreclosure abuses arising out of the robo-signing scandal. However, they reserve the right to sue -The bottom end of the market is being squeezed by or press charges for criminal behavior -- if they investors out-bidding home-buying families, and uncover improper acts when the loans were the middle of the market is going nowhere because originated or when they were securitized. those homeowners are still underwater. When will the new rules and bank policies be The market will continue in this vein for at least the put into place? Most of them have already next couple of years, unless we see some drastic become part of bank policies. principal reductions. When will homeowners find out if they're The recent court case against the big five lenders: eligible for a principal reduction or refinancing? Bank of America, Wells Fargo, Chase, Citigroup The banks have said they expect to get started and Ally Financial, requiring them to provide very quickly. The first step will be to identify principal reductions, may provide some relief. borrowers who qualify for the deal. What should I do if I think I may qualify for a AUGUST MARKET STATISTICS principal reduction or refinanced mortgage? Sales of single-family, re-sale homes were up Contact your lender/servicer and ask them to 14.1% year-over-year. review your case. Home inventory was up 0.8% from last August. If I take the money, what rights do I give up? Individual borrowers do not give up any right to sue. The median price for homes was up 13.1% yearover-year. The median price for homes is up 22% since January.

(Single-family Homes) Aug 12 Jul 12 Aug 11 Median Price: $ 555,000 $ 585,500 $ 490,750 Av erage Price: $ 603,561 $ 671,226 $ 558,358 Units Sold: 194 152 170 Pending Sales: 362 386 269 Inv entory : 478 506 474 Sale/List Price Ratio: 98.8% 100.1% 96.7% Day s on Market: 61 53 76 Day s of Inv entory : 74 100 84

Pending home sales, another good indicator of market movement, were up 34.6% year-over-year.

SALES MOMENTUM
for homes rose 0.1 of a point to +13.4.

PRICING MOMENTUM
turned positive last month for the first time since March 2011, gaining 1.6 points to +0.1.

WE CALCULATE
momentum by using a 12-month moving average to eliminate seasonality. By comparing this years 12-month moving average to last years, we get a percentage showing market momentum.

PENDING MOMENTUM
rose 2.6 points to +21.6.

CONDO STATISTICS
The median price for condos jumped 25.6% yearover-year. A bright note is the surge in prices since the beginning of the year. We calculate the median price for condos is up 40% since January. Sales popped last month, rising 91.7% year-over-year. Pending sales were up 48.6%, while inventory was off 43.3%. This is an extraordinarily tough market for buyers. Its important to be calm and realistic. If you dont know what to do or where to begin, give me a call and lets discuss your situation and your options.

Santa Cruz County Homes: Sales Momentum

60.0 40.0 20.0 0.0

0 F MA M J J A SO N D 0 F MA M J J A SO N D 1 F MA M J J A SO N D 1 F MA M J J A SO N D 1 F MA M J J A -20.0 8 9 0 1 2 -40.0 -60.0 Sales Pending Median 2012 rereport.com

Susan Strouse, B.S., M.A. | Susan@StrouseRealtyGroup.com | (831) 338-6481

The Real Estate Report

Mortgage Rate Outlook

30-Year Fixed Mortgage Rates
07-12 04-12 01-12 10-11 07-11 04-11 01-11 10-10 07-10 04-10 01-10 10-09 07-09 04-09 01-09 10-08 07-08 04-08 01-08 10-07 07-07 04-07 01-07 10-06 07-06 04-06 01-06 3.0%

Sep 7, 2012 -- Although the collective tenor of the eco-

nomic data released this week was fair, it was capped by a disappointing employment report for August. At a time of global economic troubles beyond its direct influence, and with the U.S. economy holding onto modest growth, how compelled is the Federal Reserve to make a substantial move? Mortgage rates retreated again this week, taking back another bit of the mild August rise. HSH.com's broad-market mortgage tracker -- our weekly Fixed-Rate Mortgage Indicator (FRMI) -found that the overall average rate for 30-year fixedrate mortgages declined by another three basis points (0.03%) to 3.86%. The FRMI's 15-year companion also decreased by three basis points, sliding to 3.14% and matching its record low. Important to homebuyers and low-equity-stake refinancers, FHAbacked 30-year mortgages eased back down to 3.46%, while the overall average rate for 5/1 Hybrid ARMs finished the weekly survey at 2.74%, down three hundredths of a percentage point from last week, establishing a new record low.

paused. The overall effect was to cause a 0.9% decline in outlays for construction projects, but residential (-1.6%), commercial (-0.9%) and public (-0.4%) all eased during the month. Although softer compared to June, all the components were measurably higher compared to a year ago, and the new home market has record-thin inventory levels, so some pickup after this pause seems likely. As noted here last week, low interest rates have no doubt helped the economy find some footing, but there is a question of how much additional benefit can be had by the Fed lowering record lows for rates. Low rates on their own are useful, but not a cure-all, and valuable only to those looking to borrow money. A business won't borrow to expand its operations and hire more people in a highly uncertain climate such as this; however, they will try to refinance existing debt and pocket the improvement in cash flow. We also have already had a lot of mortgage refinancing, with at least some unsated demand yet to go, but as with the above, there are limits. There are also plenty of consumer rates seemingly immune to the Fed's machinations, including credit cards and more, so the full benefit of lower interest rates becomes muted for many.

4.0%

5.0%

6.0%

7.0%

8.0%

There was a little fall off in construction spending in July. After being driven upward solely by residential spending over the past few months, homebuilding

The chart above shows the National monthly average for 30-year fixed rate mortgages as compiled by HSH.com. The average includes mortgages of all sizes, including conforming, "expanded conforming," and jumbo.

Santa Cruz County Homes - Prices & Sales

(3-month moving averageprices in $000's) $900 $800 $700 $600 $500 $400 $300 $200 $100 200 180 160 140 120 100 80 60 40 20 0
Single-family Hom e Sales Median & Average Prices

0 FMAMJ JASOND0 FMAMJ JASOND1 FMAMJ JASOND1 FMAMJ JASOND1 FMAMJ JA 8 9 0 1 2

Santa Cruz County - August 2012

Single-Family Homes
Cities County Aptos Capitola Rio del Mar Seacliff San Lorenzo Vly Soquel Scotts Valley Santa Cruz East County West County Watsonv ille $ $ $ $ $ $ $ $ $ $ $ $ Prices Median Average Sales Pend Inven DOI SP/LP 555,000 $ 603,561 194 362 478 74 98.8% 715,000 $ 701,667 3 21 38 380 96.7% 782,500 $ 876,900 10 10 13 39 96.3% 731,750 $ 911,875 12 24 39 98 95.8% 812,000 $ 945,500 4 7 11 83 95.0% 312,500 $ 321,759 34 68 64 56 101.2% 540,000 $ 638,064 8 15 34 128 97.6% 690,000 $ 732,972 23 35 52 68 98.7% 616,000 $ 659,567 52 68 93 54 99.1% 392,500 $ 436,562 16 46 68 128 98.2% 584,000 $ 584,000 2 10 9 135 98.9% 319,500 $ 338,356 18 48 12 20 100.0%

% Change from Year Before

Prices Med Ave Sales Pend2 Inven 13.1% 8.1% 14.1% 34.6% 0.8% 43.3% 25.0% -40.0% -4.5% 26.7% 52.1% 60.5% 66.7% 11.1% -50.0% 12.6% 29.7% -20.0% 14.3% -31.6% 54.4% 80.8% 0.0% 133.3% -15.4% 0.6% -2.8% 6.3% 30.8% -34.0% 5.9% 7.3% 14.3% -11.8% -2.9% -1.4% -8.9% 4.5% 29.6% -14.8% 7.1% 3.0% 26.8% 6.3% -49.2% -7.9% -24.5% 33.3% 58.6% -22.7% n/a n/a n/a n/a n/a 11.0% 21.1% 50.0% -9.4% -66.7%

Susan Strouse, B.S., M.A. Susan@StrouseRealtyGroup.com (831) 338-6481 Page 2

Santa Cruz County Homes: Year-Over-Year Median Price Change

40.0% 30.0% 20.0% 10.0% 0.0% 0 F MA M J J A SO ND 0 F MA M J J A SO ND 1 F MA M J J A SO ND 1 F MA M J J A SO ND 1 F MA M J J A -10.0% 8 9 0 1 2 -20.0% -30.0% -40.0% -50.0% 2012 rereport.com

Susan Strouse, B.S., M.A. Susan@StrouseRealtyGroup.com (831) 338-6481

FORECLOSURE STATISTICS
In July, notices of default, the first step in the foreclosure process, in Santa Cruz County rose 18% from the year before. Notices were up 10.3% from June. Notices of sale, which set the date and time of an auction, and serve as the homeowner's final notice before sale, were down 13.1% year-over-year, but were up 9.4% from June. After the filing of a Notice of Trustee Sale, there are only three possible outcomes. First, the sale can be cancelled for reasons that include a successful loan modification or short sale, a filing error, or a legal requirement to re-file the notice after extended postponements. Alternatively, if the property is taken to sale, the bank will place the opening bid. If a third party, typically an investor, bids more than the bank's opening bid, the property will be sold to the third party; if not, it will go back to the bank and become part of that bank's REO inventory. In July, cancellations were up 1.7% from June, but down 15.3% year-over-year. Properties going back to the bank were down 22.2 in July from June. Year-over-year, properties going back to the back dropped 71.2%. The total number of properties that have had a notice of default filed decreased by 15.4% in July compared to July 2011. They were down 7.2% from June. The total number of properties scheduled for sale were flat from June, but, were down 3.9% year-over-year. The total number of homes owned by the banks was down 2.7% from June, and down 29% year-over-year. Banks now own approximately 367 properties in Santa Cruz County.

Table Definitions _______________

Santa Cruz County Condos- Prices & Sales

(3-month moving averageprices in $000's) $600 $550 $500 $450 $400 $350 $300 $250 $200 $150 $100 50 45 40 35 30 25 20 15 10 5 0
Median & Average Prices

Median Price
The price at which 50% of prices were higher and 50%were lower.

Condo Sales

Average Price
Add all prices and divide by the number of sales.

SP/LP
Sales price to list price ratio or the price paid for the property divided by the asking price.

0 FMAMJ JASOND0 FMAMJ JASOND1 FMAMJ JASOND1 FMAMJ JASOND1 FMAMJ JA 8 9 0 1 2

DOI
Days of Inventory, or how many days it would take to sell all the property for sale at the current rate of sales.

Santa Cruz County - August 2012

Condos/Townhomes
Cities County Aptos Capitola Rio del Mar Scotts Valley Santa Cruz Watsonv ille $ $ $ $ $ $ $ Prices Median Average Sales Pend Inven DOI 371,750 $ 428,559 46 104 143 93 550,000 $ 541,667 3 5 6 60 340,000 $ 340,000 1 13 13 390 439,000 $ 473,200 5 8 28 168 354,900 $ 328,577 3 6 4 40 484,500 $ 470,077 13 26 59 136 129,000 $ 178,667 3 12 3 30

% Change from Year Before

Prices SP/LP Med Ave 98.9% 25.6% 27.0% 98.7% n/a n/a 100.0% 16.2% -17.6% 95.3% -43.4% -38.9% 101.0% 14.5% 8.2% 98.3% 60.2% 52.6% 103.9% -35.0% -10.6% Sales Pend2 Inven 91.7% 48.6% -43.3% n/a n/a n/a -75.0% 8.3% -27.8% 400.0% 300.0% -36.4% -25.0% 0.0% 0.0% 62.5% 4.0% -11.9% -25.0% -33.3% -83.3%

Pend
Property under contract to sell that hasnt closed escrow.

Inven
Number of properties actively for sale as of the last day of the month.

Page 3

THE REAL ESTATE REPORT

Santa Cruz County

Susan Strouse, B.S., M.A.

Town and Country Real Estate (831) 338-6481 Susan@StrouseRealtyGroup.com http://www.StrouseRealtyGroup.com

Go online to see the full report with the city by city breakdown:

Santa Cruz County Homes: Pending & Existing Home Sales

(3-month moving average) 450 400 350 300 250 200 150 100 50 0 0 F MA M J J A SO N D 0 F MA M J J A SO N D 1 F MA M J J A SO N D 1 F MA M J J A SO N D 1 F MA M J J A 8 9 0 1 2 Sales Pending 2012 rereport.com

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