Santa Cruz County Real Estate Report for April 2008

MAKING SENSE OF THE STORY FOR CONSUMERS:

The riskiest markets are those with high foreclosure rates, slow or no job growth, and a glut of homes on the market. Markets like Detroit, Cleveland, and Miami display all three characteristics.

By contrast, transactions are rising in San Diego, and that’s a good sign (assuming the increase is sustained). Rising transaction numbers may mean credit is becoming easier to come by and buyers are looking somewhat more favorably on the market. In fact, Forbes suggests prices also may begin to rise over the next six months. That’s because there usually is a lag between increases in transaction numbers and price increases.

The Forbes report also projects better times ahead for San Diego and Sacramento thanks to a 125 percent increase in Fannie Mae/Freddie Mac conforming loan limits. In San Diego, the report notes, 18 percent of the market will see improved lending conditions.

BUYERS WAITING FOR THE RECESSION to pass before getting into the market might not want to wait too long: Clive Granger, winner of the 2003 Nobel Prize in Economics and professor emeritus at UC San Diego, says the U.S. economy has been in a recession for about four months. He expects the current recession to last an additional 2-6 months, depending on what occurs in the housing and financial markets.

SINGLE FAMILY HOME STARTS will drop to their lowest level in 50 years this year, Freddie Mac Chief Economist Frank Nothaft told a lunch audience last week. That’s good news for resale housing, which has a lot of unsold inventory to work through before prices can begin to move up. He expects that life should begin to return to the housing sector late this year or early next but says prices may not recover significantly until 2010.

LOCAL MONTHLY STATS for March show that the most activity in the Santa Cruz County market was in the $600,000 price range with the listing ratio vs the selling ratio at <6.3%>. Following in second were homes in the $500,000 price range followed by homes priced over $1M. In addition, only 14% of those sold were short sales or bank owned and they were all under $500,000 and mistily in the Watsonville area.

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March Statistical Highlights for Single Family Homes:

* Inventory up 15.0% compared to March 2007, and increased7.6% from February 2008
* Sales down 46.3% compared to March 2007, but UP 2.8% from February 2008
* Days on the market increased to 113, month prior 107, prior year 86
* Median home price increased from prior month to $675,000, and decreased 9.9% from March 2007
* Sales price vs.listing price ratio increased to 95.57% from February 2008
* 14.6 months of inventory available at the end of March as compared to 6.8 in March 2007
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(These statistics are believed to be accurate but not guaranteed)

So what area of the market do you think is selling closer to listing price? Maybe you would be surprised to know it is the $900,000 price range, followed closely by $800,000 and the $700,000.