Well, here’s a cheery little note from CNNMoney: new home prices have fallen by an average of 10%, the biggest drop since 1970. You can read about all that here:
Sounds pretty dire, but there are a couple of things worth remembering. The first is that new home builders are always the first folks to slash prices. They need to cut and run to free up capital, for new projects, as well as to pay off the short-term loans they take out to build these projects. So, new home sales are a different beast than existing home sales – and overhwlemingly in Santa Cruz, we have a preponderance of existing home sales. The next thing to remember is that real estate is a local business – what’s going on in Florida and Las Vegas has very little to do with what’s going on in Santa Cruz.
That CNNMoney article does link to another article that hits a little closer to home, though: the 10 worst areas to invest in. Here, take a look:
I was dreading seeing Santa Cruz or some nearby area on that list…I mean, Santa Cruz is kind of famous among people who follow real estate prices for having just about the least affordable housing in the country. But no, we didn’t make the list…although lots of other California towns did. Six of the ten, in fact, are in California. Most of them are in the Central Valley, where a lot of speculators rushed in to buy up cheap homes. And, actually, a lot of them who sold last year did in fact clean up in the Valley. The one area that wasn’t in the Valley that’s on the list is Vallejo/Fairfield – essesntially a bedroom community, which, given rising gas prices and moderating home prices “closer in” I can easily understand.
The sky hasn’t fallen – but the clouds still linger.