Santa Cruz County Real Estate Report for March 2008

NEW HOME CONSTRUCTION DOWN 62%
New home construction starts in California fell 62% in January as homebuilders continued to cope with slow sales and the ongoing credit crisis, according to the latest data from the California Building Industry Association (CBIA). CBIA Chief Economist Alan Nevin said the drop in new residential projects breaking ground coupled with the ongoing push to move existing inventories, carry the potential to produce a 'severe shortage' of new housing once the real estate market rebounds.

INTEREST RATES ON LONG-TERM, fixed, and adjustable mortgages are at historically low levels. The Fed st arted cutting interest rates to bolster the economy in September, and recently has turned much more aggressive. In eight days in January, the Fed slashed rates by 1.25 percentage points — the biggest single-month reduction in a quarter-century. Since September, the Fed has cut its federal funds rate - what banks charge each other on overnight loans - by 2.25 percentage points to 3 percent. It also cut its discount rate on direct loans it makes to banks by 1.75 points to 3.5 percent. Rates are expected to move lower at the Fed's next meeting on March 18.

RATES MAY SHRINK ON JUMBO MORTGAGES. Homeowners and homebuyers who live in expensive housing markets may be pleased to learn that the federal government recently increased the size of mortgages that Fannie Mae and Freddie Mac can purchase and the Federal Housing Administration, or FHA, can insure. The higher loan limits are expected to help people in high-cost housing markets buy homes and refinance existing mortgages, though the extent of such aid won't be assured until the new programs are put into place.

The law instructed HUD to publish the new conforming and FHA loan limits for each county within 30 days after President Bush signed the legislation, which would set a March 14 deadline. Until then, it's nearly impossible to pinpoint the limits for each county because the law is very technical and HUD hasn't yet said which data source it will use to set the median home prices.

LOCAL MONTHLY STATS are out and show a continued decrease in the number of sales. The good news is that sales were up from January and most agents in the know agree there has been an upturn in the activity. Personally, I am seeing those who have been looking for some time getting more serious. In all honesty, it is a great time to buy. No matter where you choose to invest, the market is exce ptional and presents an opportunity long overdue.

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February Statistical Highlights for Single Family Homes:

* Inventory up 20.9% compared to February 200 7, and increased 6.2% from January 2008
* Sales down 44.5% compared to February 2007, but UP 16.4% from January 2008
* Days on the market decreased to 107, month prior 145, prior year 129
* Median home price decreased from prior month to $664,000, and decreased 7.5% from February 2007
* Sales price vs.listing price ratio decreased to 94.83% from January 2008
* 13.9 months of inventory available at the end of February as compared to 6.4 in February 2007, but down from January 2008
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(These statistics are believed to be accurate but not guaranteed)

Here is an interesting stat: In February of 2007 only 7.3% of the sales were under $500,000 as compared to February 2008 at 17.5%. In addition, there were 79 active listings under $500,000 at the end of February 2007 and currently there are 295. The saga continues...........