Santa Cruz County Real Estate Report for May 2008

SOMETIMES ALL THE NEWS IS NOT BAD!

** Home values dropped 7.7% nationally in the first quarter and five California metropolitan areas were among the markets whose prices plunged by the highest percentage year over year and whose homeowners had high rates of negative equity, according to a report issued the first week in May by Zillow. Nationally, a little more than half of homeowners who purchased during the 2006 market peak today owe more on their home than its current value. Despite the year-over-year decline, the nation as a whole and the four California markets cited as having the greatest decline experienced gains when home prices are annualized over five years. Owing more than a home is worth may not be a problem for homeowners who can afford the monthly payment or who plan to stay in the home for an extended period.

** Fannie Mae’s regulators have taken steps to help free up additional sources of cash by reducing the mandatory reserves the company must maintain. The Office of Federal Housing Enterprise Oversight has said it will again reduce this surplus requirement by five points to 15 percent. That will be followed by another five-point cut in September if Fannie Mae’s position does not worsen. Seventy-five percent of mortgage-backed securities are issued by Fannie Mae and the smaller Freddie Mac. The federal government has positioned the two companies as key players in the effort to restore liquidity and stability to the nation’s real estate finance system.

** Worries that subprime mortgages originated during the peak real estate market would sideswipe borrowers with giant monthly payment increases have been reduced by Federal Reserve rate cuts and other steps to stimulate the nation’s credit markets. In fact, some borrowers with resets occurring today are finding their monthly payments staying much the same. Without the Fed’s rate cuts, more than $100 billion in subprime ARMs would have jumped at least two percentage points. Now, only about $60 billion in these mortgages will adjust up by more than two points.

LOCAL MONTHLY STATS for April show that the most activity in the Santa Cruz County market was in the over $1M price range with the listing ratio vs selling ratio at <9.73%>. Following in second were homes in the $400,000 price range followed by homes priced between $500-$700K. Of all those sold, the average days on market was only 55 as compared to the pending sales which are 112 days on market. This stat is particularly interesting when discovering that 36.4% of the pending are either REO or short sales.

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April Statistical Highlights for Single Family Homes:
* Inventory increased 8.8% from March 2008, and up 8.6% compared to April 2007
* Sales increased 43.8% from March 2008, but still down 19.2% compared to April 2007
* Days on the market decreased to 106, month prior 113, prior year 104
* Median home price increased from prior month to $759,750, and decreased only 2.1% from April 2007
* Sales price vs.listing price ratio increased to 96.91% from March 2008
* 10.9 months of inventory available at the end of April as compared to 10.3 in April 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 $800,000 price range. Were these sales once over a million? Could be as volume is down 23.7% annualized.

I hope you enjoy my monthly newsletter. Remember, this is truly a buyers market. It is an opportune time to buy with prices low and with reducing inventories. Too soon to indicate a change? Maybe........only time will tell.

U.S.home slump puts owners under water, as reported by Zillow

Home values dropped 7.7 percent nationally in the first quarter and five California metropolitan areas were among the markets whose prices plunged by the highest percentage year over year and whose homeowners had high rates of negative equity, according to a report issued Tuesday by Zillow. Nationally, a little more than half of homeowners who purchased during the 2006 market peak today owe more on their home than its current value.

130 of 160 metro markets included in the survey now are priced lower than a year ago. Among the California markets suffering the greatest decline: Stockton (-33.5 percent), Riverside/San Bernardino/Ontario (-26 percent), Greater Sacramento (-20.5 percent) and Los Angeles/Long Beach/Orange County (-16.4 percent).

Despite the year-over-year decline, the nation as a whole and the four California markets cited as having the greatest decline experienced gains when home prices are annualized over five years. Home prices experienced a net gain of 4.7 percent nationally over five years, 6.2 percent in Los Angeles/Long Beach/Orange County, 5.8 percent in Riverside/San Bernardino/Ontario, 1.5 percent in Greater Sacramento, and 0.3 percent in Stockton.

Zillow calculated that 95.8 percent of Stockton-area homeowners who purchased in 2006 now owe more than their home is worth: In Riverside/San Bernardino/Ontario the number stands at 88.5 percent; in Los Angeles/Long Beach/Orange County the number is 71.6 percent; and 69.4 percent in Sacramento.

Owing more than a home is worth may not be a problem for homeowners who can afford the monthly payment or who plan to stay in the home for an extended period. Those most affected are people who have lost a job or obtained a mortgage they couldn’t afford, those seeking to refinance into a lower or fixed interest rate, or those whose circumstances require them to sell now.