Santa Cruz County Real Estate Report for October 2007

ANALIZING, COMPARING, DECIPHERING, AND GUESSTIMATING........

Big changes happened in our Santa Cruz County market for September, but to me they are just a continuation of the cycle over the past 6 or 7 years. Since that time, our local real estate market has been on a roller coaster ride. In 2001, the number of sales dropped over 26% from the year prior when we had 23.5% appreciation. Sales have continued to decline every year until 2004 when once again we had double digit appreciation and sales were higher than in the prior 25 years. Then as you know everyone jumped on that bandwagon and 2005 had still greater appreciation but with 20% fewer sales. So the inventory goes up and down but the average sales price is 64% higher today than it was in the year 2000.

Looking at the individual niche markets since January 2007:
*Aptos had 192 sales, average sales price $1,008,324, 103 days on market, 11 months of inventory.
*Capitola had 33 sales, average sales price $931,075, 103 days on market, 9 months of inventory.
*San Lorenzo Valley had 202 sales, average sales price of $556,413, 101 days on market, 19 months of inventory.
*Santa Cruz had 340 sales, average sales price of $920,713, 81 days on market, 10 months of inventory.
*Scotts Valley had 136 sales, average sales price of $938,137, 99 days on market, 11 months of inventory.
*Watsonville had 93 sales, average sales price of $635,777, 105 days on market, 48 months of inventory.

Housing slump could reset itself: This is from the Sep. 25th Wall St. Journal: “One dismal milestone may soon move into the housing market’s rearview mirror, potentially giving rise to hopes for a rebound soon. Homeowners owning $31.8 billion in sub prime adjustable-rate mortgages began paying higher interest rates this month, according to Moody’s Economy.com. That is the highest amount of sub prime ARM’s due to reset over a one-month period in this housing cycle. By December, resetting sub prime ARM's are forecast to drop to $25.2 billion. By the end of 2008, they will have fallen to $3.6 billion, because lenders have largely stopped making such loans to borrowers with spotty credit histories. The tsunami of interest-rate resets has been a big factor in the jump in defaults ruling credit markets this year. Optimists might argue that a record supply of homes for sale, combined with a peak in ARM resets, means the housing market is near a bottom.”

Forecasts say area economy will do better than 'sluggish' state in 2008: California will manage to avoid sliding into a recession even as the credit crunch and housing meltdown take their toll on jobs and growth. A number of economists and studies predict the state will squeak by with sluggish growth and revive toward the end of 2009, while the nation's economy endures what one forecast called a 'near-recession experience.' At the same time, Silicon Valley and the Bay Area are performing better than the state or nation because of rising global demand for high-tech products. 'The Bay Area economy is actually the bright spot in California,' said Ryan Ratcliff, an economist with the University of California-Los Angeles Anderson Forecast, which released a report recently.

Here is what is happening in our local Santa Cruz County market:
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September Monthly Statistical Highlights for Single Family Homes:

* Inventory down slightly 1.25% compared to September 2006, and decreased 1.6% from August 2007
* Sales down 42.8% compared to September 2006, and substantially down 43.3% from August 2007
* Days on the market increased to 90, month prior 73, one year ago 77
* Median home price decreased from the prior month to $699,000, and decreased 6.58% from September 2006
* Sales price vs.listing price ratio decreased to 95.99% from August
* Month's worth of inventory County wide equals 16, compared to 9 in September 2006 and 4 months in 2005
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(These statistics are believed to be accurate but not guaranteed)