Santa Cruz home sales rising, prices falling
February 15, 2009
The February 2009 edition of my newsletter is available, and once again I give you the skinny on the Santa Cruz Real Estate market for the previous month. As has been the case for several months, there is a bit of good news – the sales volume (number of houses, condos, etc., which have sold) has increased for the seventh month in a row, year-over-year.
Unfortunately, sales were not up month-over-month; in December of 2008, there had been 112 sales of single-family residences in Santa Cruz county; in January ‘09, that number had sunk back down to 79. It’s normal, though for January sales numbers to be quite a bit lower than sales in December. The important thing to look at, I feel, is the year-over-year gain or loss, and this year, sales were up a whopping 21.5% from January 2008.
The median price of a Santa Cruz home, however, continues its march downward, but at a slower pace than for most of 2008. The median price for January sales of single-family residences was $445,000, compared to $452,500 in December 2008. However, the median price in January 2008 was $610,000, representing a year-over-year price drop of 27%. Ouch.
It’s an interesting market, that’s for sure. If you watch TV or listen to the radio, you may have heard a commercial or two from the National or California Association of Realtors telling you this is a great time to buy, that there are a lot of homes for sale. In Santa Cruz, this is patently not true. There are not many homes for sale at all – the amount of inventory is down 21.6% from January a year ago, and inventory has been declining for nine straight months.
This low inventory, however, is not a result of blistering sales figures. Rather, inventory is low for one simple fact: this is a terrible time to sell your house in Santa Cruz, and sellers know it. There are many people who would like to sell their homes, but fear they will face a market of buyers with their knives out.
And, they are right. Buyers are definitely looking for a bargain. Any seller which wants to sell their home needs to ask themselves a simple question: can I wait to sell my home for, oh, 3 years? How about 4? It could easily be that long before prices are higher than they are today. If you have a house you need to sell in the next year, or even two, I have a hot tip for you: sell now. Price it under market to generate multiple offers, get over asking price, and get that property sold. Even though the market is dropping, your house is, right now, worth more than it’s going to be for some time to come.
Posted by SantaCruzBroker at 9:02am
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Santa Cruz and the Housing and Economic Recovery Act of 2008
July 30, 2008
Well, it has finally come to pass. It looks like the Federales have finally begun to seriously address what’s going on in the housing markets and in the broader economy. People ask me all the time, “What’s in the bill going through Congress?” Here is the summary of the key provisions from NAR (the National Association of Realtors):
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Wow, that’s a lot of key provisions – it is, as promised, pretty sweeping legislation. But it looks like there’s some bad news out there for Santa Cruz families facing foreclosure, namely that the loan limit for the foreclosure rescue/refinance is $550,440. I think a lot of people facing foreclosure have loan limits that are higher than that.
Overall, it looks like a pretty good piece of legislation to me. Not a panacea, of course, for all that ails us, but I don’t think there’s a “silver bullet” out there that’s going to make all our problems go away. This is a step in the right direction, and there are provisions in the bill that will directly benefit many homeowners and future homeowners in Santa Cruz.
Posted by SantaCruzBroker at 9:06am
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This is getting ridiculous
June 19, 2008
It has been way too long since my last blog post, and I’m sorry. It seems I’ve developed something of a readership, and people have been asking me, “What’s up, no blog posts?” Well…
I was away in Las Vegas last week, as I mentioned in a blog post. I attended the CRS training. It was OK, but it some ways kind of bogus. I had visions of writing a big huge blog post about that. One thing about the National Association of Realtors (and the California Association, too) is that they are notorious for putting out rosy scenarios to the public.
It seems they are also good at putting out rosy scenarios in their training classes, as well. For example, we were doing an exercise on calculating the rate of return on an investment in a home purchase – you buy it for this, you sell it for that, and assuming a modest 3% yearly increase in value, at the end of 7 years, you have made yourself a mint.
Except, of course, they left a lot of figures out – like the cost of sale, repair and maintenance costs, the money you spent paying your mortgage above what it would have cost to rent it that whole time, etc. Putting that aside, though, they came up with their “profit” figure, and said, “but wait, that’s an after-tax number, if you had figured that as pre-tax income, really you would be looking at $X!” To figure out $X, they took the gain and added 28% to it, because that’s the tax that you would have paid on it were it income.
Small problem with that, of course. Investments held for 7 years are long-term capital gains, and presently, the long term capital gains tax rate is 15% (or less), not 28%. Basic. Obama, bless his soul, wants to raise the long term capital tax gain rate so we can soak the rich, so those assumptions might change if Obama becomes president (as I hope he does).
There are myriad advantages to owning a home, and myriad ways to improve it and add value to it before you sell. But I do take issue with misleading Realtors to that degree during a professional training seminar. It seems like a breach of fiduciary responsibility to parrot bad numbers like that to your clients.
I have lots more to say about a bunch of topics, but unfortunately, no time to say it! Taking a week off like that really killed me, I am extra swamped now playing catch-up, so I must run. I plan to get back into a regular blog posting rhythm pronto. Please stand by!
Posted by SantaCruzBroker at 8:59am
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