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SusanStrouseSZC

SusanStrouseSZC

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local market trends
The Real Estate Report
S
ANTA
C
RUZ
C
OUNTY
 
Strouse Realty GroupAmerican Dream Realty
5522 Scotts Valley Dr.Scotts Valley, CA 95066(831) 338-6481Susan@StrouseRealtyGroup.comhttp://www.StrouseRealtyGroup.com
DRE #01228878
Susan Strouse, B.S., M.A.
 
Susan Strouse, B.S., M.A. | Susan@StrouseRealtyGroup.com | (831) 338-6481
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The blue area is the number of days it would taketo sell all the homes for sale at the current rate of sales.The green line shows the number of homes in es-crow. Normally, this line tracks closely with the redline, which shows actual sales. As you can see, the two lines have diverged over the past year. This is due to many homes being putinto escrow as short-sales, contingent upon thebanks’ approval. This is being done even beforethe banks know about the short sale. Subse-quently, many of these escrows do not close.
 
05010015020025030035040045050005010015020025030035040006FMAMJJASOND07FMAMJJASOND08FMAMJJASOND09FMAMJJASOND10FMAMJJAS
   D  a  y  s  o   f   I  n  v  e  n   t  o  r  y   S  a   l  e  s   &   P  e  n   d   i  n  g
Santa Cruz County Homes
-
Sales, Pending & Days of Inventory
(3-month moving average)
Peak of buyersMarket
Sep 10 Aug 10 Sep 09
Median Price:535,000$ 522,500$ 541,000$  Average Price:680,397$ 578,473$ 607,568$ Units Sold:139152153Inventory:821826677Sale/List Price Ratio:97.3%98.2%99.8%Days on Market:845762Days of Inventory171163128
Trends at a Glance
(Single-family Homes)
Inside This Issue
>
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O
CTOBER
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OVEMBER
2010
DataQuick and often cited by local newspapers, isthat every transfer of real property is required bylaw to be recorded with the county assessor. Thisis the most accurate data available.The minuses of county assessor data begins withthe ability of buyers to ask the assessor not to re-veal the sales price. This is usually done only withhigh-priced, or high-profile transactions and onlyaffects a minute number of sales.The other major minus of county assessors’ data isit ONLY contains sold properties.The second most accurate data comes from thelocal Multiple Listing Services (MLS).The drawback of this data is it contains only thosesales in which a real estate agent is involved. Nor-mally, this would account for 85-90% of all sales. Inthis market, with the high number of foreclosureauctions, which are not reported to local MLSs, thenumber of sales drops into the 70-80% range.The real benefits of MLS data come in the type of data collected. The MLSs report on inventory, prop-Knowing how the market is trending is important inmaking astute decisions whether one is a buyer or a seller. For instance, if prices are trending upward,a buyer may decide to accelerate the purchase,while a potential seller may decide to delay.With the proliferation of real estate statistics on theInternet, the “noise” level is increasing making itmore difficult to know which statistics are importantand which are irrelevant.In this month’s report, we are going to start aprimer on real estate statistics to help you separatethe wheat from the chaff.The first two principles of real estate statistics are:1. Know the source of the raw data used, and2. Understand the methodology used to crunch theraw data.There are only two accurate sources of raw data,each of which has its pluses and minuses. The firstis data from the county assessors’ offices. Themain plus of this data, used by companies such as
Statistics: The Good, The Bad, and The Ugly
erties under contract to be sold, length of time ittakes to sell, and the sales price to list price ratio.This type of data is important for determining thedirection of the market.Bad, or inaccurate data, is rife on the Internet. Take Altos Research for instance. They scrape the Inter-net for properties for sale and build their reportsaround that. Nowhere on their site do they say their pricing graphs only reflect listing prices NOT soldprices. Here’s a quote from their FAQ: “Our systemanalyzes properties listed on the market for sale.” Another major source of inaccurate data is Zillow.While they do have assessors’ data for sold proper-ties, they also scrape the Internet for propertiesthat are for sale and use an algorithm to determinemarket value. They have consistently over-valuedmy home by 25%.
(Continued on page 3)
 
The Real Estate Report
Page 2
Mortgage Rate Outlook 
3.0%4.0%5.0%6.0%7.0%8.0%01-0404-0407-0410-0401-0504-0507-0510-0501-0604-0607-0610-0601-0704-0707-0710-0701-0804-0807-0810-0801-0904-0907-0910-0901-1004-1007-10
30-Year Fixed Mortgage Rates
CitiesMedianAverageSalesPendInvenDOISP/LPMedAveSales Pend2Inven
County,,.%-.%.%-.-..% Aptos,,.%.%.%.%.%.%Capitola,,,.%.%.%.-..%Rio del Mar,,.%-.-.%-.-.-.%Seacliff,,.%.%.%.%-.-.San Lorenzo Vly,,.%-.%.%-.-..%Soquel,,.%.%.%.%.%.%Scotts Valley,,.%.%-.%-.-..%Santa Cruz,,.%-..%-.-..%East County,,.%.%.%.%-..%West County,,.%.%.%-..%.%Watsonville,,.%-.-.%.%-..%
Santa Cruz County - September 2010
Single-Family Homes % Change from Year Before
Prices Prices050100150200250$100$200$300$400$500$600$700$800$900$1,00006FMAMJJASOND07FMAMJJASOND08FMAMJJASOND09FMAMJJASOND10FMAMJJAS
   S   i  n  g   l  e  -   f  a  m   i   l  y   H  o  m  e   S  a   l  e  s   M  e   d   i  a  n   &   A  v  e  r  a  g  e   P  r   i  c  e  s
Santa Cruz County Homes
- Prices & Sales
(3-month moving average—prices in $000's)
Susan Strouse, B.S., M.A.
 Strouse Realty GroupAmerican Dream Realty
5522 Scotts Valley Dr.Scotts Valley, CA 95066(831) 338-6481Susan@StrouseRealtyGroup.comhttp://www.StrouseRealtyGroup.com
DRE #01228878
The chart above shows the Nationalmonthly average for 30-year fixedrate mortgages as compiled byHSH.com. The average includes mort-gages of all sizes, including conforming,"expanded conforming," and jumbo.
Oct. 1, 2010
--After near stasis for the past six weeks,mortgage rates again managed a bit of a declineamid mixed economic messages. Increasing specu-lation that the Fed will initiate substantial purchasesof Treasury bonds (so-called "quantitative easing") tokick-start the economy from its bare expansionhelped to drive interest rates a bit lower.HSH's overall mortgage monitor -- our weekly Fixed-Rate Mortgage Indicator (FRMI) -- saw the averagerate for 30-year fixed-rate mortgages shed five basispoints to begin October at 4.70%. Important to first-time homebuyers and low-equity refinancers alike,30-year FHA-backed mortgages sported an averageof 4.40% for the week. The overall average for Hybrid5/1 ARMs declined by six basis points (.06%), finish-ing our national survey at 3.61%. HSH.com's FRMIsinclude rates for conforming, jumbo, and most re-cently the GSE's "high-limit" conforming products andso covers much of the mortgage-borrowing public.We mention above that the economic news seemsmore mixed to us. It wouldn't be hard to improveupon second quarter GDP, which came in at a finalreckoning of 1.7%, but there does seem to be a mildoverall uptick (or at least greater stability) in the newsfor September, the final month of the third quarter.There can be no doubt that 3Q10 will be a weak oneoverall, but to us, much of the weakness seemed tobe concentrated in July and August.The big employment report doesn't come until nextweek, and it's the big gorilla in a fairly empty room.Stock and bond markets enjoyed unexpectedly favor-able conditions in September, which is not noted tobe a historically great period for equities. October'sbeen known to be a difficult period, too, but if Sep-tember's any indicator, perhaps the markets are sim-ply becoming accustomed to being in active crisis,and can find reasons to celebrate when we're not.Here's hoping that the rally's got more substancebehind it than that, but there's nothing wrong with alittle optimism showing somewhere.P.S. If you missed it over the last few weeks, youshould have a look at our plan to help responsiblehomeowners who are underwater. Unlike the "FHAShort Refi" idea, the concept doesn't penalize home-owners or investors... and there might even be nocost to taxpayers, either. Curious? Read HSH.com'sValue Gap Refinance idea:http://www.hsh.com/ValueGapRefi.html 
 
Table Definitions _______________ 
Median Price
The price at which 50% of priceswere higher and 50%were lower.
Average Price
Add all prices and divide by thenumber of sales.
SP/LP
Sales price to list price ratio or theprice paid for the property divided bythe asking price.
DOI
Days of Inventory, or how manydays it would take to sell all theproperty for sale at the current rateof sales.
Pend
Property under contract to sell thathasn’t closed escrow.
Inven
Number of properties actively forsale as of the last day of the month.
Page 3
CitiesMedianAverageSalesPendInvenDOISP/LPMedAveSales Pend2Inven
County,,.%.%.%-.%-.%.% Aptos--.%n/an/an/an/an/aCapitola,,,,.%.%.%-.%-.%.%Rio del Mar,,.%-.%-.%.%-.%.%Scotts Valley,,.%-.%-.%.%-.%.%Santa Cruz,,.%-.%-.%-.%.%.%Watsonville,,.%.%.%-.%-.%.%
Santa Cruz County - September 2010
Condos/Townhomes % Change from Year Before
Prices Prices05101520253035404550$100$200$300$400$500$600$70006FMAMJJASOND07FMAMJJASOND08FMAMJJASOND09FMAMJJASOND10FMAMJJAS
   C  o  n   d  o   S  a   l  e  s   M  e   d   i  a  n   &   A  v  e  r  a  g  e   P  r   i  c  e  s
Santa Cruz County Condos
-Prices & Sales
(3-month moving average—prices in $000's)-50.0%-40.0%-30.0%-20.0%-10.0%0.0%10.0%20.0%30.0%40.0%
 
06FMAMJ J ASOND07FMAMJ J ASOND08FMAMJ J ASOND09FMAMJ J ASOND10FMAMJ J AS
Santa Cruz County Homes:
Year-Over-Year Median Price Change
Susan Strouse, B.S., M.A.
 Strouse Realty GroupAmerican Dream Realty
5522 Scotts Valley Dr.Scotts Valley, CA 95066(831) 338-6481Susan@StrouseRealtyGroup.comhttp://www.StrouseRealtyGroup.com
DRE #01228878
Then there is Yahoo Real Estate where they don’tbother with an algorithm to determine market value,they just quote Zillow and eppraisal.com, which over-values my home by 60%.In short, beware of the statistics you use. If the pur-veyor of statistics won’t say where they get their data,run for the hills! Focus on those statistics that comefrom reputable sources.
N
EXT
M
ONTH
 
This primer will continue with determining which statis-tics are useful for determining market trends and whichare useless.The three most fundamental statistics to track are:1. Inventory on the market,
S
TATISTICS
:
CONTINUED
 
2. The spread, or the difference between the askingprice and the sales price, and,3. Time on the market.We will discuss these and several more important sta-tistics in the next installment.So, subscribe to this report to make sure you are noti-fied when the next portion is available.

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