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AUGUST/SEPTEMBER 2011

Inside This Issue

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


Strouse Realty Group American Dream Realty 5522 Scotts Valley Dr. Scotts Valley, CA 95066 (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 > ANNUAL TABLES ................................. 4

The Real Estate Report


local market trends
SANTA CRUZ COUNTY
Trends at a Glance

Should I Buy a Home Now?


Its funny, back in 2006 and 2007 almost no one was asking that question. Instead, they were asking, How much home can I buy? Wrong question at the wrong time. O.K., so youre afraid to buy because you dont know where home prices are going. Well, no one has a crystal ball, and, as Wall Street is fond of saying, the past is no predictor of future results.

(Single-family Homes) Jul 11 Jun 11 Jul 10 Median Price: $ 498,000 $ 545,000 $ 514,000 Av erage Price: $ 592,772 $ 621,828 $ 543,472 Units Sold: 112 170 147 Inv entory : 715 697 802 Sale/List Price Ratio: 97.1% 96.0% 98.1% Day s on Market: 70 75 69 Day s of Inv entory 192 119 164

But, as Baron Rothschild is credited with saying, Fast forward to today and buyers should be asking Buy when theres blood in the streets, even if the how much home can I buy and not should I buy a blood is your own. home now. Now for the caveats, yes, there are caveats! Yes, I know, a real estate agent will always say yes As always, the best homes, pristine move-in condiwhen asked if its a good time to buy a home. tion, in the best neighborhoods, i.e. schools, are But, todays market offers an unprecedented opselling first for the most money with multiple offers. portunity. Let me explain. If the best neighborhood is your primary criterion, First, take mortgage rates, back during the peak of and the best homes are beyond your means, conthe bubble in 2007 30-year mortgage rates were in sider fixer homes or condos and townhomes. the low to mid 6% range. Today? Rates are in the If the best neighborhood is not a consideration, but low to mid 4% range, a drop of 50%. a pristine home is, you will find less competition in Next, the median price for single-family, re-sale other areas. homes in Santa Cruz County peaked at $799,000 in November 2005. It bottomed out at $382,500 in Also, inventory is down because the people who February 2009. Yes, you missed the bottom! are underwater on their mortgages cant sell. The median price has averaged over $477,000 since the beginning of the year. Lastly, you will need to qualify for a loan. That should be your first order of business.

You will absolutely, positively need an in-depth neighborhood market analysis to buy or sell in this market. DO NOT DEPEND UPON ZILLOW FOR THIS!!! If I could get what Zillow says my home is worth, Id sell it in a minute. According to my calculations, Zillow has over-valued my home by 36%, and thats before selling costs! P.S. The conforming loan limits are dropping from $729,750 to $625,000 for closing after September 30th. Some lenders have already stopped processing loans up to the $729,750 limit, and all lenders will likely stop on or around September 1 for new applications. If you were planning on using an FHA loan to purchase a home with only 3.5% down and are looking at homes priced over $600,000, you have to purchase a home Now. Otherwise, save up a little more and get a conventional loan in the future.

Santa Cruz County Homes: Sales Momentum


60.0% 40.0% 20.0% 0.0% 0 FMAMJ JA SOND0 FMAMJ JA SOND0 FMAMJ JA SOND0 FMAMJ JA SOND1 FMAMJ JA SOND1 FMAMJ J -20.0% 6 7 8 9 0 1 -40.0% -60.0% Sales Pending Median 2011 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
07-11 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 10-05 07-05 04-05 01-05 3.0%

Aug. 5, 2011 -- HSH.com's broad-market mortgage tracker -- our weekly Fixed-Rate Mortgage Indicator (FRMI) -- found that the overall average rate for 30year fixed-rate mortgages decreased by fifteen basis points (0.15), moving to an average of 4.65%, a 2011 low. FHA-backed 30-year fixed-rate mortgages, especially important to first-time homebuyers and lowequity refinancers, saw a sixteen-basis-point (0.16) decline to close the week at 4.31%. Given the wide differential in interest rates, at least some borrowers should be considering hybrid 5/1 ARMs. The fiveyear fixed-rate periods of these loans declined by seven hundredths of a percent to close the week at an average of just 3.29%. A borrower with a $300,000 loan willing to accept the risk of higher future payments would save about $20,000 over the next five years.

about the terms of the deal. As far as revenues go, a growing economy will produce far more in the way of this then would any changes to marginal tax rates for some or even closing tax "loopholes". Perhaps the Congress might consider ways to foster confidence by businesses, so that they will start to hire again and boost the economy. Next week, mortgage rates will begin the week still trending downward. On Tuesday, there is a Federal Reserve Open Market Committee meeting; after this week, it's a reasonable assumption that they will be quite concerned about the fragile market psyche. We expect that the release which will accompany the meeting's close will nod toward modest growth, levelling inflation trends and troubles overseas. The Fed will of course say it is watching carefully and will employ necessary means to support the economy if it believes that it needs to do so, but will not tip their hand as to the form or timing of any such support, at least not yet. Other than that, a pretty light data calendar is on tap and we expect that mortgage rates will end the week perhaps unchanged from this week's figures.

4.0%

5.0%

6.0%

7.0%

8.0%

After a tremendous political fight, in exchange for being able to borrow more money at the moment, the debt ceiling agreement signed on Tuesday calls for spending cuts over the next ten years. This suggests that there won't be much in the way of additional spending to push economic growth forward anytime soon, and this in turn might exacerbate a slower recovery with a lower potential for inflation. Entities on both sides of the aisle expressed unhappiness
(3-month moving averageprices in $000's) $1,000 $900 $800 $700 $600 $500 $400 $300 $200 $100

0 FMAMJ JASOND0 FMAMJ JASOND0 FMAMJ JASOND1 FMAMJ JASOND1 FMAMJ J 7 8 9 0 1

Santa Cruz County - July 2011


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


Sales -23.8% -14.3% 66.7% -33.3% -50.0% -28.6% 0.0% -45.5% -32.5% -9.1% 0.0% -17.6% Pend2 4.3% -50.0% 0.0% 17.6% 50.0% -12.7% 66.7% 37.5% 20.9% -10.5% -33.3% 11.1% Inven -10.8% -16.3% -21.9% -22.5% -14.3% -4.5% 5.6% -32.6% -4.5% 23.9% -32.1% 8.1%

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


Strouse Realty Group American Dream Realty 5522 Scotts Valley Dr. Scotts Valley, CA 95066 (831) 338-6481 Susan@StrouseRealtyGroup.com http://www.StrouseRealtyGroup.com
DRE #01228878

Prices Prices Median Average Sales Pend Inven DOI SP/LP Med Ave 498,000 $ 592,772 112 337 715 192 97.1% -3.1% 9.1% 512,500 $ 871,917 6 11 36 180 95.1% -4.9% 49.6% 705,000 $ 909,200 5 9 25 150 94.7% 4.7% 15.7% 731,000 $ 867,596 10 20 62 186 97.5% 17.3% 37.8% 925,000 $ 925,000 1 6 12 360 97.5% 58.3% 58.3% 402,500 $ 400,595 20 55 105 158 96.7% 29.8% 19.9% 546,000 $ 565,421 7 25 38 163 96.4% -8.8% -12.3% 469,200 $ 641,825 6 33 64 320 95.1% -26.7% -5.3% 530,000 $ 694,148 27 81 169 188 96.9% -13.5% 2.2% 452,500 $ 509,573 10 34 88 264 98.5% 56.0% 33.9% 627,500 $ 627,500 2 2 19 285 103.1% 11.7% 11.7% 285,000 $ 300,600 14 50 40 86 99.5% 3.6% 9.0%

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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.

Santa Cruz County Homes - Prices & Sales


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% -10.0% 0 F MA M J J A SO N D 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 8 9 0 1 -20.0% 7 -30.0% -40.0% -50.0%

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


Strouse Realty Group American Dream Realty 5522 Scotts Valley Dr. Scotts Valley, CA 95066 (831) 338-6481 Susan@StrouseRealtyGroup.com http://www.StrouseRealtyGroup.com
DRE #01228878

FORECLOSURE STATISTICS
Notices of default, the first step in the foreclosure process, in Santa Cruz County decreased 24% in June from the year before. Notices were down 11.7% from May. Notices of sale, which set the date and time of an auction, and serve as the homeowner's final notice before sale, were down 46.3% year-over-year, and down 28.2% from May. 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 June, cancellations were down 40.2% year-overyear. Properties going back to the bank rose 4.1% in June from May. Year-over-year, properties going back to the back declined 12.1%. The total number of homes that have had a notice of default filed declined by 45.7% in June compared to June 2010. They were down 24.1% from May. The total number of homes scheduled for sale decreased by 6.3% from May, and, were down 17.9% year-over-year. Unfortunately, the total number of homes owned by the banks was up 18.7% year-over-year.

Santa Cruz County Condos- Prices & Sales


(3-month moving averageprices in $000's)
Median & Average Prices

Table Definitions _______________


45 40 35 30 25 20 15 10 5 0

$700 $600 $500 $400 $300 $200 $100 0 FMAMJ JA SOND0 FMAMJ JA SOND0 FMAMJ JA SOND1 FMAMJ JASOND1 FMAMJ J 7 8 9 0 1

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.

Santa Cruz County - July 2011


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

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

Prices Prices Median Average Sales Pend Inven DOI SP/LP Med Ave Sales Pend2 Inven 252,000 $ 264,517 30 60 229 229 98.4% -22.3% -33.1% -16.7% -34.8% 19.3% $ 0 0 0 0 0.0% n/a n/a n/a n/a n/a 252,000 $ 335,400 5 8 24 144 97.0% -12.4% 14.9% -37.5% 33.3% 33.3% 292,000 $ 292,000 1 0 46 #### 97.7% -26.0% -26.0% -50.0% n/a 9.5% 367,500 $ 334,333 6 6 7 35 100.2% 9.7% 0.0% 100.0% -33.3% -22.2% 339,000 $ 328,667 6 19 69 345 98.9% -22.4% -27.8% -40.0% -32.1% 9.5% 126,500 $ 157,786 7 18 19 81 97.8% -36.8% -27.0% 75.0% -14.3% 58.3%

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.

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THE REAL ESTATE REPORT


Santa Cruz County

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


American Dream Realty
5522 Scotts Valley Dr. Scotts Valley, CA 95066

(831) 338-6481 Susan@StrouseRealtyGroup.com http://www.StrouseRealtyGroup.com

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

http://www.StrouseRealtyGroup.com

Santa Cruz County


Sales Year-to-Date
2,000 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0

2003 Condos 302 Homes 1,116

2004 283 1,461

2005 321 1,190

2006 250 1,033

2007 227 925

2008 155 703

2009 172 835

2010 181 758

2011 183 818

Santa Cruz County Homes: Sales Price/Listing Price Ratio


101% 100% 99% 98% 97% 96% 95% 0 FMAMJ JA SOND0 FMAMJ JA SOND0 FMAMJ JA SOND1 FMAMJ JA SOND1 FMAMJ J 7 8 9 0 1 2011 rereport.com
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