The Broker's Record

Santa Cruz Home Sales – October, 2008

November 23, 2008

I’ve been remiss in keeping up with my blog! It’s been a hectic past couple of weeks, a lot has been going on, so much so that I hardly know where to begin. I know one thing that is of a great interest to everyone, though – the latest home sales data! OK, this data is about a week old, but I bet you haven’t seen too much of it, so here it goes.

For starters, we have some good news. The median home price in October 2008 in Santa Cruz county rose to an even $500,000. In September, you may recall (but you probably don’t!), the median price was $475,000 – that is up a whopping 5% month-over-month. The bad news, though, is that the median price in October 2007 was $732,500 – so, year-over-year, prices have dropped 31.7% in Santa Cruz county.

In terms of sales volume, there were 138 single-family homes sold in October, county-wide – that’s down from 143 in September, but up from 106 in October 2007. Also, some good news for sellers out there is that the amount of inventory (i.e., the competition) is getting low – we are down to just 195 days worth of homes for sale – versus 215 days of inventory in September, and a whopping 361 days of inventory in October 2007.

What does it all mean? The crystal ball is on the fritz, unfortunately – it all looks kind of hazy, darn it! But if you put a gun to my head and said prognosticate! I would say this: the market is still in decline. If you are a home buyer, time is on your side. If you are a home seller, and you can wait 2-3 years to sell, you might want to wait, because it’s possible we’ll be in a better market by then – however, if you plan to sell in the coming year, I’d urge you to accelerate your plans, because I’m pretty sure prices in most of the county will be lower towards the end of 2009 than towards the beginning.

I invite you all to subscribe to my monthly newsletter, the Santa Cruz Real Estate Report. Also, I do have Santa Cruz Real Estate sales data available on my web site, you can slice it and dice it many different ways, it’s a pretty fun, interactive tool.

Posted by SantaCruzBroker at 9:03am
No Comments »

Santa Cruz Conforming Loan Limit 2009

November 07, 2008

One thing that really affects the price of real estate is the affordability of real estate. For example, if there was no such thing as a home loan – that is, if everyone had to pay in cash – what effect would that have on real estate prices? I’m not much of a soothsayer, but I reckon prices would drop, dramatically.

Thankfully, of course, we do have home loans. The residential mortgage market has an enormous effect on the price of real estate. While the housing market was already softening considerably in 2007, there was one event in particular which really threw it for a spin, the sub-prime mortgage crisis. So-called “sub-prime” borrowers suddenly had no access to credit, and prices for lower-end homes took an immediate nosedive as their affordability evaporated.

Of course, the reverse was true on the way up – ridiculously easy credit, liar loans, lax underwriting standards, and mortgage fraud – all of this played a part in the enormous run-up in prices that we in Santa Cruz enjoyed for most of the early years of this decade.

Wether you are a prospective home buyer or a home owner, the role of credit is very important to you – it strongly shapes your ability to buy a home, or the price for which you will be able to sell your home. That’s why this morning’s news about the 2009 loan limits is so important.

I received a nice e-mail this morning from one of the lenders I regularly work with, breaking it down for Santa Cruz and Monterey counties. The good news is, the conforming loan limits for 2009 will stay the same as in 2008:

For Santa Cruz County, the new “high-balance” limits are:

1 unit $625,500

2 units $800,775

3 units $967,950

4 units 1,202,925

For Monterey County, we weren’t as fortunate. Here are the new limits:

1 unit $483,000

2 units $618,300

3 units $747,400

4 units $928,850

I asked the lender if a house with a legal accessory dwelling unit (aka “granny unit”) that could be rented would count as a “2 unit” property. The answer is no, the property must apparently be zoned as a duplex in order to qualify for the two-unit loan limit. If you are interested in borrowing more than the limit, you’ll need to hurry – the current limits of $729,750 expire on 12/15/08.

Posted by SantaCruzBroker at 11:47pm
No Comments »

Competence & Ethics of Santa Cruz Realtors

November 02, 2008

A few months back, I got a letter in the mail from the Santa Cruz Association of Realtors. It seems that in order to remain a member in good standing of the Association, I need to complete the Quadrennial Ethics Training Course – it is a course that every Realtor must take and pass every four years. The course material revolves around the vaunted Realtor Code of Ethics. It took me a couple of hours to complete the course, and I passed, with a score of 84% (the minimum score is 75%). Hmm, I hope that doesn’t make you think I’m not 100% ethical!

My perception of the public’s perception of Realtors is that the public does not think too highly of my profession. For example, now that housing prices have crashed in many parts of the country (and Santa Cruz is no exception!), many fingers are pointing at Realtors for behaving unethically – by, perhaps, stating as “fact” things like, “housing prices never go down” or “your house is guaranteed to appreciate” or “if you can’t afford the payments, you can always sell and make some money.”

Is it unethical to make statements like that? Actually, I don’t see anything in the Standards of Practice set out in the Code that would prohibit making such statements. However, the Preamble does says Realtor® members should:

eliminate practices which may damage the public or which might discredit or bring dishonor to the real estate profession

Do you think that maybe, some members of the public were damaged by making unsupportable claims such as the ones I mentioned above? It looks to me like making such claims is not a violation of the Standards of Practice and therefore no action could be taken against Realtors for making such statements, however, telling your client these kinds of things clearly goes against the spirit of the Code of Ethics as set forth in the Preamble.

Aside from the public perception that that some (or many!) Realtors may be unethical, there is also a perception that many Realtors are, simply, incompetent. I’m going to confess to something which I perhaps ought not: I share that perception to some degree. In my own real estate dealings, I have found few agents which I would call unethical – but many, to be honest, have demonstrated frighteningly little competence. That is, perhaps, not surprising given the low barrier of entry into the real estate profession.

However, this creates something of a paradox – the fact that it’s easy to become a Realtor, anyone can join so long as they are a real estate licensee – yet, per the code of Ethics:

The services which REALTORS^® provide to their clients and customers shall conform to the standards of practice and competence which are reasonably expected in the specific real estate disciplines in which they engage; specifically, residential real estate brokerage…

I am not quite sure how one becomes competent in the field of real estate short of actually practicing it – and practicing it means, in almost all cases, becoming a Realtor. The truth of the matter is, the training for a California Real Estate license is very basic, and in fact, has little to do with the actual practice of real estate, despite the fact that one of the core courses is Real Estate Practice.

For example, one of the key documents we Realtors use is the California Residential Purchase Agreement (RPA-CA). It’s eight pages long, and it is the document most often used in the purchase of Residential Real Estate in California. It is a bit complicated and somewhat involved – however, understanding how it works is not a requirement to get a real estate license, or to become a Realtor.

Ironically, there is no violation of the Standards of Practice if it is “reasonably expected” that Realtor members are clueless about the various forms and documents they use for their day to day business. Of course, another brutal truth is, most Realtors have no day-to-day business – they have week-to-week, or month-to-month: there just are not enough transactions to go around which can support a Realtor community as large as we have here in Santa Cruz, even considering our recently diminished numbers.

I find it admirable (as I hope you do, too) that the National Association of Realtors requires that members take this training course every four years. I found the course to be a good bit above average compared with other on-line, distance-based educational courses I have taken this year.

However, no Code of Ethics, in my opinion, can take the place of educating yourself about your Realtors’ background, skills, education, and qualifications. After all, buying or selling real estate in California is a transaction that typically involves hundreds of thousands of dollars. I strongly advise that before you write up that listing or purchase agreement, you make sure you know who it is you are dealing with, such that you are sure they know what they are doing.

Posted by SantaCruzBroker at 12:36pm
1 Comment »

Downtown Santa Cruz on Halloween

November 01, 2008

I’ve lived in Santa Cruz for quite some time – but when I say Santa Cruz, I really mean Santa Cruz county. Of all the years I’ve spent here, only two or so were spent living in the city of Santa Cruz. So I am not sure, to be honest, when this whole craziness on Halloween downtown started.

But one thing I’m sure of: it is, truly, crazy.

Last year was the first time I’d made it downtown. I am not quite sure when I became aware that there was some craziness going on downtown on Halloween night. Perhaps it was from stories I’d seen in the Santa Cruz Sentinel about people getting stabbed downtown on Halloween night – although, unfortunately, stabbings downtown are not as newsworthy as they once were.

This year, though, it appears as though Halloween went off without any serious violence. The place is absolutely lousy with cops, of course – from Santa Cruz, Scotts Valley, and Watsonville – but it wouldn’t surprise me if the county Sheriff had a few of it’s finest tromping around.

Despite the vague hint of mortal peril that comes from having 25,000+ people packed like sardines in a few blocks of the city center, salted, unfortunately with a few bad apples – I wholeheartedly recommend that if you are in Santa Cruz on Halloween, head on downtown and check it out. Now that Halloween in the Castro is dead, I reckon downtown Santa Cruz has got to be on anyone serious party-goer’s shortlist for best place to haunt the night away on Halloween.

The Santa Cruz Sentinel has a slide show of Halloween 2008 – and I found a nice photostream of this year’s festivities on Flickr.

Posted by SantaCruzBroker at 3:23pm
No Comments »