Archive for July, 2007
Preserving Historical Properties
July 29, 2007
Saw this in the Reister Pajaronian a couple days ago:
Castro Adobe to be restored
Actually, I have no idea what the Castro Adobe is. Well, I do, now that I have read the article, and I’ll be following up on it, at least to know where it is, so I can go check it out next time I down that way. This is a project that is reminiscent of the Redman House Project - another historical home preservation effort.
To me, it’s not so important if a 1950’s tract home gets bulldozed to put up an oversize house on a postage-sized lot somehwere out in Live Oak. Once we get down to a half-dozen or so 1950’s tract homes, we can maybe start worrying about preserving them. But unique properties such as the Castro Adobe or the Redman House deserve to be saved. Properties like this help tell the rich history of Santa Cruz county - a history that is easily forgotten in the fast pace of modern living.
Posted by Administrator at 7:36pm
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Gloomy News: Sales down, Foreclosures Up
July 25, 2007
From reading the headlines, it seems there’s some bad news on the national real estate scene. Here’s a sampling of a couple of headlines from CNN Money:
Home sales slump, but prices tick up
This one is about how home prices have gone up a tiny bit nationwide, but the amount of sales volume is the lowest in four years. Of course, four years ago, the market was going gangbusters, at least in our neck of the woods!
Here’s another cheery article about how Countrywide Home Loans, one of the biggest lenders in the country, is seeing a spike in delinquencies and an accompanying big drop in profits.
Prime borrowers catching subprime ills
What’s alarming about this bit of news is that the problem isn’t with sub-prime borrowers this time - this time it’s with “prime” borrowers. D’oh!
And here’s maybe a couple that you didn’t see - these come straight from the California Association of Realtors:
Interestingly enough, this article does say that the Bay Area sees “leaner inventory levels” than the state as a whole. That’s the strength of the Silicon Valley market there for you - it’s the same strength that underlies the Santa Cruz market as well.
But wait - there’s more! It seems that foreclosures are up - to a 10-year high:
California Foreclosure Activity Continues to Rise
They provide a nice table of data further down in the article. It turns out that in Santa Cruz, Notices of Default are up 112% - that is, from 73 in the 2nd quarter of 2006, to 155 in the 2nd quarter of 2007. A Notice of Default is not an actual foreclosure, though - it just means that the lender has filed a notice with the county that the borrower (owner) is getting behind on the payments. However, when it comes to actual foreclosed properties, Santa Cruz is up 258% year over year - in the 2nd quarter of last year, there were only 13 actual foreclosures by the lenders; in 2007, that has climbed to 46.
What does it all mean? Softness in the housing market, from the looks of it! If you’re buying anything less than a prime property, dig in and go low - you don’t want to buy today and have it worth 10% less next year. If you’re buying in a prime area, be aware that prices may be up over last year - check the latest statistics for the area you are interested in buying in.
Posted by Administrator at 8:21pm
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Rents going up in Santa Cruz County
July 19, 2007
Here’s a bit of interesting (yet hardly surprising) news:
Renters paying more in Santa Cruz County - By Jondi Gumz - Sentinel staff writer - July 19, 2007
Rents in Santa Cruz are on the way up! I was talking to a colleague yesterday and she told me she’s been able to raise rents by about 10% over last year on her rental properties. She mentioned the big factor being that UC Santa Cruz is going to have its largest class ever.
If anything, the rental figures cited in the article seemed a bit low. It looks to me as if they’re talking about prices in apartment buildings - old, “Class C” rentals. I always like to figure how much you could get per room. I think a good average figure is around $750 per room, up to $1,000 per room if the property is absolutely fabulous (great location, good parking, well maintained). My colleague was telling me that she has a couple of units up in “Condoland” (the condos right below UC Santa Cruz, off Nobel) that are two bedrooms, renting for $1,800 a month.
Wonders will never cease!
Posted by Administrator at 6:59am
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A Chat with Gary Gangnes
July 18, 2007
Today I had the good fortune to talk to Gary Gangnes. If you’re not familiar with Mr. Gangnes, he is the guy who is often quoted by the Santa Cruz Sentinel newspaper. He keeps lots of Santa Cruz county real estate market statistics, and is often quoted in various Sentinel articles about the state of the market.
How is it I came to talk to Mr. Gangnes? It’s kind of a long story - I was given his cell phone number by the seller of a house which I was going to put an offer in on for one of my clients. I called the cell number because I wanted to get ahold of the listing agent to let him know I was sending in an offer. However, Gary Gangnes isn’t the listing agent for the seller’s home - somehow, the seller ended up with Gangnes’ card and told me it was his own Realtor’s phone number. To be fair, his Realtor is also named Gary, but works for a different brokerage. Hmmm!
Anyway, I called Gary Gangnes and said I’d be putting in an offer on his listing. He called me back an hour or two later and said, “What listing?” I said, “So-and-so street!” He was confused, because he had no such listing. It was a few moments before we figured out what had happened, that the seller had somehow become confused as to which Gary was actually his Realtor. 
After we figured out what was going on, I said, “Hey Gary - you’re the guy who does those market statistics for the Sentinel, right?” And he said “Right, that’s me!” - or words to that effect. So I thought, while I had him on the line, I’d ask him what his feel of the overall market is. He said: “It’s a solid market.” Basically, he feels that this market is much more of a “normal” market historically speaking, it just seems like a bad market, compared to the period 2000-2005. To his reckoning, home prices are holding fairly steady and sales happening at a decent pace.
It sounds like Gary and I reckon a bit differently on that - the median price is fairly steady, but definitely some segments of the market are dropping, and others continue to appreciate. But if one were to generalize in like a 60 second random phone call about the state of the market, I wouldn’t quibble too much describing it as Gary did.
Posted by Administrator at 9:58pm
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Mid-Year State of the Market
July 13, 2007
I’d like to start out by saying - another edition of my Santa Cruz Real Estate Report is out! For those of you who haven’t signed up to receive it, you can easily do so by clicking on this link:
If you’re reading this blog entry, I’ll tell you a little secret. Actually, you don’t have to sign up to receive my real estate report - you can get it simply by clicking on this link to the monthly Santa Cruz Real Estate Report. You can do that once a month or so and just download it without having to sign up for it! But signing up to receive it is going to be much easier - you get an e-mail when the newest monthly report is up on the server. You just click on a link to download it when you want to read it - there’s no PDF attachment to clog your in-box.
This month brings news that the median home price in Santa Cruz during the month of June has dipped down 4.2% from the month before, and is down 0.4% year over year. Days of Inventory - the number of days it would take to sell all the homes presently on the market, at the current rate of sale - stands around 230, with an average “Days on Market” of 95.
But what do all these numbers really mean to you, the Santa Cruz Home Buyer or Home Seller? Well, let me help break it down for you…
Buyers
If you’re in the market to buy a home right now, the 0.4% price decline is very interesting to look at. Put another way, if you bought a house in June of 2006 for $500,000, it would be worth $498,000 today. All of these numbers are useful only in the most general of terms, of course - there are many neighborhoods in Santa Cruz county which continue to appreciate, and others which are depreciating much faster than 0.4%. If, for example, you look on Page 2 of my Real Estate report, you will see that Aptos is actually up 15.2% from last year, and Scotts Valley is down 14.6%.
What I think that this 0.4% decrease in year-over-year home prices means is this: generally speaking, the market price is pretty flat, with some homes (principally lower-end homes and condos) declining in value as other homes (near the beach, or with fantastic views and beautiful land) continue their inexorable march upward.
With the market in a gentle decline, is it a good time to buy a home? The answer to that really depends on your personal situation. If you really are in no hurry to buy, it’s probably OK waiting to see if the prices continue to “improve.” If, however, you are tired of renting, are looking for the tax break, or are thinking about buying an investment property of some kind, it can be a good time to buy as well.
If you’ve got good credit and a decent down payment, money is still cheap and relatively easy to come by. If you’re looking to buy-and-hold, you probably won’t be seeing interest rates this low for 2-3 years - or longer! After all, “they” say that interest rates are still at historical lows. Buying now and locking in a low rate may make good sense for you - even if the home value is flat or even down over the next year or two; if you’re looking to hold onto the property for the long haul, it may make sense to buy now while the money is cheap.
If you’ve got not-so-good credit and not much in the way of a down payment, is now a good time to buy? It may be - talk to a lender. If you can find a loan that makes sense for you - one that you can afford, and get out of with no early termination fees, you should proceed to the next step: see if there’s a house that makes sense for you. For mid- and low-end homes, it’s definitely a buyer’s market. Take advantage of it. Remember, the list price is just the asking price. In June, sellers were only getting 97.2% of their asking price - and that doesn’t include any credits (possibly totaling tens of thousands of dollars) the seller may have given the buyer.
Know what’s going on in the neighborhood you wish to buy in. Get a sense of the seller’s motivation. The best properties, recently listed, are going to sell for close to full asking price, or maybe even over if the asking price is good enough to attract multiple offers. However, the properties that have been on the market a while - especially the vacant ones, which are probably costing the owners a lot of money every month - can provide great opportunities for buyers, if the seller is properly motivated. However, if, for whatever reason, the seller is not flexible on the asking price, make sure that the price is a fair one for the buyer. Remember, you lock in the profit when you buy, and make the money when you sell.
Sellers
Now, what about if you’re interested in selling rather than buying - what does this 0.4% number mean to you? Again, that’s just a general number - you really need to look right in your own neighborhood. Unfortunately, I’m not able to provide neighborhood-by-neighborhood statistics, but my report does break down the various MLS areas.
Figure out what MLS area your home is in, and see what prices are doing there. Get realistic about what your home might be worth. Look at the homes that have actually sold, and what they have sold for - you can try Zillow.com, for example, although it’s not that accurate necessarily. Also, you really should talk to a Realtor. A Realtor - like me, for example! - would be happy to create for you a Comparative Market Analysis for your property, showing what comparable homes in the area have sold for in the last six months to a year. In a market like this, the fresher the comparable sales data, the better.
After you’ve summed up the market situation in your neighborhood, ask yourself: given that I can realistically expect to get only $XXX,000 for my property right now, is this really the time for me to sell? It’s important to get the “realistic” part right. Look at the “Days on Market” - the county average in June was 95 - but it Watsonville it was as high as 201! That’s right - if you want to sell your home in Watsonville, you can expect it will be on the market nearly seven months.
Of course, no matter where your home is located, if you want it to sell, it has to be priced right. It can be a total wreck, and it can still sell in 30 days - if it’s priced right. If it’s priced not-so-right, it will sell closer to the average of 95 days, and if it’s way over-priced, it’ll take longer to sell. Remember, it’s (almost) always about the price, given the location, condition of the property, and, very importantly, market conditions - principally, what else is for sale and at what price.
What’s happening in Watsonville is that there are many people who would like to sell, but cannot afford to sell it below a certain price (which is in most cases, the amount they owe to the lender, plus the costs of sale). This means that people are just waiting it out - nearly seven months! - before they get a price that’s somehow workable for them. Those sellers that bought year ago and can afford to sell cheaper than much of the competition are the ones who are selling their homes relatively quickly.
Location is just one thing you can’t really change about a property - but you can change some other factors that affect the property’s value and how long it will take to sell. It’s all the things you’ve probably read a million times before - clean up your house. Box up most of your personal stuff and move it to storage, or the garage. Spiff up the landscaping (cheap!), give it quick paint job on the exterior, and the interior, too, if you can. At least clean the floors and carpets seriously, and install new carpeting if the carpeting is bad.
What you want is to make your home shine compared to the competition - and there’s a lot of competition out there for most properties. In June, there were 166 sales of single-family homes - and 1,286 of them actively listed on the MLS. That means that in June, there was a nearly eight-month supply of homes for sale county-wide…but if you’re in Watsonville, there’s nearly a two-year supply of homes on the market right now.
It’s definitely a very interesting market today. There are a lot of opportunities out there for buyers, and a lot of gnashing of teeth for most sellers. If you’re in the market to buy, there’s a lot of smart purchases to be made. If you’re in the market to sell, consider waiting for conditions to improve, but if you have to sell, be realistic about what you can really expect to be able to sell for.
Posted by Administrator at 3:12pm
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