California 2019 Real Estate Forecast

sebfreyCommentary, Local

Crystall Ball

It’s that time of year, and high-profile prognosticators are breaking out their crystal balls to come up with their California 2019 real estate forecast.  For the past couple of years or so, I’ve given you a blow-by-blow video of Leslie Appleton-Young’s California market forecast (Leslie is the Chief Economist of the California Association of REALTORS, aka C.A.R.).  This year, though, I’m going to skip that and instead give you just C.A.R.’s forecast highlights, and a round-up of other California real estate forecasts for 2019 as well. But let’s start with C.A.R.’s 2019 California real estate forecast…you can get it right from the California Association of REALTORS web site, from their October 11th presentation to REALTOR members. Also, I do have a copy of Leslie’s slides from the presentation she made to the Santa Clara County Association of REALTORS on November 16th, 2018 – if you want to download the slide deck as a PDF, you can do so using this link. In a nutshell, here’s what Leslie and the folks at C.A.R. are predicting for the 2019 California real estate market: A combination of high home prices and eroding affordability is expected to cut into housing demand and contribute to a weaker housing market in 2019, and 2018 home sales will register lower for the first time in four years… In essence, the message from C.A.R. is that the California real estate market in 2019 can be characterized as changing “from great to good.”   I’ll break out a few key predictions for you. California Association of REALTORS … Read More

Santa Cruz Real Estate Forecast 2012

Seb FreySanta Cruz Real Estate

It’s a new year, so it’s time to blow the dust off the ol’ blog and provide to all those who find it with an update on the Santa Cruz Real Estate market for 2012.  But before we get too far into 2012, let’s discuss oh-so-briefly how we did in 2011.  Perhaps it’s no surprise, but we ended 2011 with a median home price that’s down 7.2% to $485,000 as compared to the December 2010 median home price of $522,500.  But that’s a lot better than the median home price in November – which hit bottom at $416,500, the lowest median price of the year.  In fact, every month of 2011, single-family home prices were lower in 2011 than they were in the same month the previous year, with the exception of June (which was up 5.3% over the previous June). It is pretty clear that 2011 was not a great year for real estate in Santa Cruz – but then, it wasn’t a great year anywhere, except for a few neighborhoods where a handful of newly minted dot-com millionaires are looking for digs. Of course, the kind of price declines we saw in 2011 were mild compared to what we had seen in years past, when the market dropped with dizzying speed.  Clearly, the rate of decrease has slowed down, which I think all will agree is a positive sign. To check out all kinds of whizzy charts and graphs for our market, check out my Santa Cruz Real Estate Market Data page – you … Read More

New Year, Old Challenges for Santa Cruz Real Estate

Seb FreySanta Cruz Real Estate

What she doesn’t say is that there is a lean supply of homes because so many people are waiting for the market to turn around before they sell – and many many other people who would like to sell cannot, because they are effectively trapped in their homes which are “underwater” (that is, they owe more on the homes than they are worth). … It means that in the face of weak employment and stagnant incomes, when interest rates rise (as they are apparently rising now), the prices people will be able to pay for housing are going to drop – and that’s going to bring house prices right on down too. … Suffice it to say that while it may be true as the President says that there is a clear trend of lower unemployment – that trend could be easily reversed and, as the article I linked to notes, the drop in unemployment is largely due to the fact that 206,000 more people have given up looking for work and are no longer counted as unemployed. tealeaves.jpg I’ve sipped the last of my Earl Grey and I’m looking down at what’s left in my cup, and I’m trying to make sense of what I see there. … Our pre-tax payment will be considerably higher than that, of course – so I for one really hope they don’t pull the plug on the mortgage interest tax deduction – which could , of course, have a really deleterious effect on home prices depending on how it is implemented.

Santa Cruz Real Estate Great Debate

Seb FreySanta Cruz Real Estate

You really need to look at the year before to see how the market performed – and from the statistics, we can see the median home price, county-wide, is actually down 33.5% in April of 2009 compared to a year ago. … Honestly, I am mystified how people can take a few anecdotes, completely ignore the state of the economy and the housing market as a whole, and now herald, with strident authority, that we are now at the bottom of the market and THIS, TODAY is the time to buy, or you will miss out on the chance of a lifetime. … Well, that’s not true – short sales can also occur at those prices, and some people who have had their homes a long, long time may have enough equity in them to compete with all the REOs and short sales. … Personally, I think it’s going to put increased pressure on the bottom of the market, as many people who were looking at buying a lower-priced “starter” home may now be thinking of stretching to go for one of these “premium” foreclosures which I expect we’ll be seeing.

It’s Nigh Time to Buy in Santa Cruz

Seb FreySanta Cruz Real Estate

A few days ago, after about a month’s silence, I wrote something of a “doom and gloom” blog entry about Santa Cruz real estate – in fact, I’m proud to say, the entry was even picked up on the HousingDoom.com blog, which I read now and again to stay in touch with my darker side. You see, I felt the need to vent about what I see as a lot of hype by various individuals and organizations saying what a great time it is to buy some real estate. As I’ve said before, it may in fact be a good time for you to buy some real estate here in Santa Cruz. In any market, it really depends on your situation. All I’m saying is, don’t buy into the hype – positive or negative – about the current real estate market. Do your own research, make up your own mind. Make an informed decision, and be prepared to live with the consequences. It may be that you decide that it makes sense for you to buy some real estate right now in Santa Cruz. Over a hundred people bought property in the county in February – and did all of these 100 people make a horrible mistake? Indubitably, some of them did. Just as indubitably, some of them made very shrewd investment decisions which will yield rich rewards down the road. After all, let’s not forget the golden rule of real estate: you make money when you buy, you reap the cash when you sell. If … Read More

Is 2009 The Year to Buy Santa Cruz Real Estate?

Seb FreySanta Cruz Real Estate

The Housing Crash guy says: A landlords’ rule of thumb is that a house price should be a maximum of 15 times the annual rent for that place, yet in coastal areas, houses are still selling for 30 times annual rent I think he’s got a good point there – which goes to underscore my belief that prices in Watsonville are actually very reasonable at the moment. … Looking over the ads on Craig’s List, it’s safe to say that a 3 bedroom, 2 bathroom house would rent for about $2,400 a month in Santa Cruz, assuming it was in a not-so-great location. … Let’s look at the payment for a $500,000 house – but let’s assume you’re putting down a reasonable 10% instead of the FHA minimum of 3.5% – so you’d have a $450,000 loan, again at about 5.75% because with only 10% down, you’d still need to pay mortgage insurance. … Let’s say you’re in a tax bracket of 25%, and you can figure you’d save about $640/month in federal and state taxes, bringing your effective monthly after-tax payment to about $2,519 per month, or just about $120 more than renting.

Santa Cruz Real Estate in 2009

Seb FreySanta Cruz Real Estate

Happy New Year! I hope everyone had a safe and sane New Year’s Eve, and I hope that as I type this on January 2nd, most of you are taking the day off to spend on vacation, or with friends and family. We’ll all get back to the grindstone soon enough, but I think that after all the chaos and tumult of 2008, everyone deserves a four-day weekend to start off the new year. Can you feel it? I’m feelin’ it. I am, of course, referring to the angst surrounding the real estate market. There are a lot of people out there who would like to buy a home in Santa Cruz in 2009. There’s also a lot of people who would like to sell a home in Santa Cruz this year, too, but feel they cannot or should not because they now owe more than their homes are worth. Thanks to the likes of Google, many of you can easily find the predictions for the 2009 real estate market. I’ll give you a summary of what they’re saying: prices are expected to continue dropping through much of 2009 (probably all of it, if you ask me) but not by much. Interest rates should remain low at least for the first half of the year. We may start to see a rebound in prices in 2010, but it will be moderate. The much-loved California Association of Realtors has put out a report titled State of the California Housing Market 2008-2009. Unfortunately, they want you to pay … Read More

Santa Cruz Median Home Price: $475,000 in Sept. ’08

Seb FreySanta Cruz Real Estate

Still, though – if you have a house in Santa Cruz, you’re looking at it being worth about $58,725 less than it was this time last year, if your house is something like the median house. … I looked at Sold Single Family Residences: Median Price of Sold Houses in June & July of 1999 Watsonville: $247,000 (1.0) East side Santa Cruz: $390,500 (1.58097) West side Cruz: $395,000 3/2 1486 (1.59919) Capitola: $360,000 (1.457489) Soquel: $379,000 (1.5344) Felton: $310,000 (1.2551) What this says is that back in the summer of ’99, the median-priced house in Capitola cost about 1.457 more than the median-priced home in Watsonville. Now, let’s look at sales data from September 2008: Watsonville: $352,000 (1) East Side Santa Cruz: 615,500 (1.74857) West side Santa Cruz: 702,500 (2.0468) Capitola: $711,000 (2.01988) Soquel: $610,000 (1.73295) Felton: $486,500 (1.3821) (* August 2008) You’ll notice that compared to the 1999 ratio, the sampled areas in the county appear considerably higher relative to Watsonville than they have been historically. If we use the same ratio from the summer of ’99, here’s what prices in the rest of the county should look like today: Watsonville: $352,000 East Side Santa Cruz: $556,501 West side Santa Cruz: $562,914 Capitola: $513,004 Soquel: $540,108 Felton: $441,795 What does all this mean?

Is it safe to buy a house in Santa Cruz yet?

Seb FreySanta Cruz Real Estate

For example, our good, reliable, always-faithful friends at the California Association of Realtors (C.A.R.) report: C.A.R. reports sales decrease 28.5 percent, median home price falls 26.2 percent in February LOS ANGELES (March 24) – Home sales decreased 28.5 percent in February in California compared with the same period a year ago, while the median price of an existing home fell 26.2 percent, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) reported today. … Economy: Existing-Home Sales Rise, Prices Fall March 24 (Bloomberg) — Sales of existing homes in the U.S. unexpectedly rose in February as prices fell by the most in four decades. There are other data points we can look at – for example, check out this entry from the Countrywide Foreclosures Blog: 14,413 REO’s Offered For Sale on Countrywide Financial’s Website Total REO Asking Price: $2,976,805,967 (As of March 24, 2008) Sounds like a lot of REOs – but look at the chart – the inventory is going down. … They’ve got a bit of input on the New Home Sales numbers as reported by the Census: [From More on New Home Sales – Calculated Risk] There are actually two pieces of good news in the report.

It’s a Swing Thing

Seb FreySanta Cruz Real Estate

I stumbled upon a cool animated graphic, courtesy of CNN Money/Fortune, which I think many of you will find of interest:

…It’s interesting to see how most of the steep market declines we’ve seen over the past 50 years have been relatively short.

… Of course, the debate is still open as to if Real Estate is a better or worse investment than the stock market – how much of the price rise shown in the chart is due to inflation, etc.? I’ll leave that to you and your financial planner to discuss, but if the answer comes out that buying a house is an OK thing to do in a down market, with an upside looming around the corner, I’ll be here.