JULY/AUGUST 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

California Homeowner Bill of Rights Passes Legislature
State lawmakers passed a groundbreaking set of foreclosure relief bills Monday that supporters say will help hundreds of thousands of struggling Californians stay in their homes. The legislation, the first of its kind in the nation, stops a practice by mortgage lenders that critics call one of the most egregious: "dual tracking," where a lender pursues foreclosure proceedings on a homeowner even though the homeowner is seeking a modification on the terms of the loan. A second part of the legislation requires banks to provide a single point of contact to borrowers at risk of default: someone who is responsible for helping them avoid foreclosure. In addition, the legislation imposes a $7,500 civil penalty on banks that approve documents that have not been verified for accuracy. For renters of property that has been foreclosed on, the new laws will require the purchasers of foreclosures to honor existing leases, and to give at least 90 days notice to move if there is no lease. Lastly, the National Mortgage Settlement that the states’ attorney generals signed with the five major banks will be extended to home loans that are not currently covered. The next step will be for Governor Brown to sign the bills. Kudos to Attorney General Kamala Harris for shepherding these bills through the state senate and assembly.

(Single-family Homes) Jun 12 May 12 Jun 11 Median Price: $ 498,500 $ 517,500 $ 537,500 Av erage Price: $ 536,763 $ 565,915 $ 615,608 Units Sold: 160 216 174 Pending Sales: 339 337 246 Inv entory : 507 525 444 Sale/List Price Ratio: 98.6% 98.8% 96.0% Day s on Market: 71 61 73 Day s of Inv entory : 92 73 74

SALES MOMENTUM…
for homes dropped two points to +10.3.

PRICING MOMENTUM…
had been on the up-swing the past five months, turned down in June, losing one point to –3.9.

JUNE MARKET STATISTICS
Sales of single-family, re-sale homes were off 8% year-over-year. Unlike the rest of the Bay Area, home inventory was up 14.2% from last June. That’s six months in a row inventory has been higher than the year before. The median price for homes fell 7.3% year-overyear. This after five months of year-over-year gains. Pending home sales, another good indicator of market movement, were up 37.8% year-over-year.

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

CONDO STATISTICS…
The median price for condos gained 8.2% yearover-year. Inventory problems affected sales which were down 9.1% from last June. This is an extraordinarily tough market for buyers. It’s important to be calm and realistic. If you don’t know what to do or where to begin, give me a call and let’s discuss your situation and your options.

Santa Cruz County Homes: Sales Momentum
60.0 40.0 20.0 0.0 0 M M J S N 0 M M J S N 0 M M J S N 1 M M J S N 1 M M J S N 1 M M -20.0 7 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
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%

Jun 8, 2012 -- HSH.com's broad-market mortgage tracker -- our weekly Fixed-Rate Mortgage Indicator (FRMI) -- found the overall average rate for 30-year fixed-rate mortgages was unchanged, holding at a record low of 3.98% for a third consecutive week. The FRMI's 15-year companion was also unchanged this week at 3.27%. Important to homebuyers and low-equity-stake refinancers, already-low FHAbacked 30-year mortgages also held firm at 3.66%, while the overall average rate for 5/1 Hybrid ARMs finished at 2.89%, a decline of a just 0.01%.

the bust. Better still, the homes being built are being snapped up, so inventory levels remain quite lean, with just 145,000 units built and ready for sale, about a 4.7 month supply at the present rate of absorption. To meet demand, builders will need to keep building, which is an important support for the economy. So the first half of 2012 has come and gone. We are still in a glass-half-full at best kind of economy, arguably no better nor worse than we started the year. Federal Reserve programs are still in play, financial markets are still in various forms of flux, unemployment is about the same, give or take a little, and there's no easy or clear path ahead. We remain on a stumbling economic path and seem likely to remain here for some time to come yet.

We've noted on a number of occasions that low and even record low interest rates are great, but being reliably available is most key to the recovery of the housing market. That rates can be relied upon to be attractive enough to entice a borrower in at the beginning of a transaction is of little use to them should they no longer be available to complete it. This is more important to would be home buyers, as that process can take many months to come to fruition.

4.0%

5.0%

6.0%

7.0%

8.0%

0 MM J S N 0 MM J S N 0 MM J S N 1 MM J S N 1 MM J S N 1 MM 7 8 9 0 1 2

Santa Cruz County - June 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 $ $ $ $ $ $ $ $ $ $ $ $

% Change from Year Before

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

Prices Prices Median Average Sales Pend Inven DOI SP/LP Med Ave Sales Pend2 Inven 498,500 $ 536,763 160 339 507 92 98.6% -7.3% -12.8% -8.0% 37.8% 14.2% 380,000 $ 470,000 5 13 30 174 116.5% -24.5% -9.1% -61.5% -7.1% -11.8% 598,000 $ 764,000 5 8 14 81 95.8% -14.6% -23.5% 0.0% -11.1% -26.3% 660,000 $ 821,532 14 24 45 93 98.3% 69.2% 98.0% 366.7% 41.2% -31.8% 515,000 $ 498,250 4 3 16 116 97.9% 6.2% -23.5% -20.0% -50.0% 33.3% 320,000 $ 361,015 19 73 65 99 96.1% 16.4% 9.8% -20.8% 32.7% -36.3% 537,250 $ 555,880 10 18 18 52 100.7% 10.7% 0.8% 25.0% 0.0% -59.1% 659,000 $ 646,643 14 35 67 139 98.8% -14.3% -19.7% -17.6% 6.1% -1.5% 505,000 $ 568,936 47 73 107 66 98.3% -19.5% -16.8% -16.1% -7.6% -33.5% 361,500 $ 397,600 14 38 71 147 97.8% 1.8% -35.4% 7.7% 15.2% -11.3% $ 0 0 0 0 0.0% n/a n/a n/a n/a n/a 292,500 $ 282,172 18 33 12 19 99.7% -3.1% -7.8% 38.5% -40.0% -62.5%

Single-family Hom e Sales

Median & Average Prices

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.

Each day that interest rates remain low presents an opportunity for a household to recast its balance sheet with a mortgage refinance, or for someone to get a chance to buy a home. Each decline in gasoline or natural gas prices frees up billions of spendable dollars which can be used to support the economy We are starting to see some of the benefits of durably low rates, though. New Home Sales rose by 7.6% going forward. The situation at present couldn't be in May, climbing to a 369,000 annualized rate of sale. characterized as great, not by any means, but it still While still well below boom-year peaks, and even beats the alternative. what would be considered normal, they are also well above the absolute dismal bottoms we saw during

Santa Cruz County Homes - Prices & Sales
(3-month moving average—prices in $000's) $1,000 $900 $800 $700 $600 $500 $400 $300 $200 $100 200 180 160 140 120 100 80 60 40 20 0

Santa Cruz County Homes: Year-Over-Year Median Price Change
40.0% 30.0% 20.0% 10.0% 0.0% 0 FMAMJ JA SOND0 FMAMJ JA SOND0 FMAMJ JA SOND1 FMAMJ JA SOND1 FMAMJ JA SOND1 FMAMJ -10.0% 7 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 May, notices of default, the first step in the foreclosure process, in Santa Cruz County fell 33.3% from the year before. Notices were down 33.9% from April. Notices of sale, which set the date and time of an auction, and serve as the homeowner's final notice before sale, were down 56.5% year-over-year, and were down 40% from April. 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 April, cancellations were up 7.4% from April, but down 32.6% year-over-year. Properties going back to the bank decreased 12.9% in May from April. Year-over-year, properties going back to the back dropped 47.1%. The total number of properties that have had a notice of default filed decreased by 19.5% in April compared to April 2011. They were up 3.6% from April. The total number of properties scheduled for sale declined 7.3% from April, and, were down 13.7% yearover-year. The total number of homes owned by the banks was down 6% from April, and down 15.1% year-over-year. Banks now own approximately 422 properties in Santa Cruz County.

Santa Cruz County Condos- Prices & Sales
(3-month moving average—prices in $000's)
Median & Average Prices

Table Definitions _______________
50 45 40 35 30 25 20 15 10 5 0

$700 $600 $500 $400 $300 $200 $100 0 MM J S N 0 MM J S N 0 MM J S N 1 MM J S N 1 MM J S N 1 MM 7 8 9 0 1 2

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

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.

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 - June 2012
Condos/Townhomes
Cities County Aptos Capitola Rio del Mar Scotts Valley Santa Cruz Watsonv ille $ $ $ $ $ $ $

% Change from Year Before

Prices Prices Median Average Sales Pend Inven DOI SP/LP Med Ave Sales Pend2 Inven 296,000 $ 315,109 40 70 182 132 99.4% 8.2% 10.5% -9.1% 25.0% -31.6% 340,000 $ 340,000 1 0 4 116 97.4% -14.8% -14.8% 0.0% n/a 0.0% 300,000 $ 309,500 9 9 16 52 100.6% 15.4% 1.4% 50.0% 0.0% -30.4% $ 0 0 0 0 0.0% n/a n/a n/a n/a n/a 297,000 $ 351,220 5 7 5 29 97.2% 9.2% 29.2% 400.0% -41.7% -50.0% 313,000 $ 312,494 15 24 60 116 100.9% 9.2% -2.8% 7.1% 33.3% -18.9% 235,000 $ 211,470 5 14 5 29 99.5% 66.1% 17.2% -44.4% -39.1% -70.6%

Pend
Property under contract to sell that hasn’t 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) 400 350 300 250 200 150 100 50 0 0 FMAMJ JA SOND0 FMAMJ JA SOND0 FMAMJ JA SOND1 FMAMJ JA SOND1 FMAMJ JA SOND1 FMAMJ 7 8 9 0 1 2 Sales Pending © 2012 rereport.com

This Real Estate Report is published and copyrighted by http://rereport.com. Information contained herein is deemed accurate and correct, but no warranty is implied or given.

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