Santa Cruz Median Home Price hit $920K in March

sebfreyCommentary, Local, Santa Cruz Real Estate, Silicon Valley Real Estate

Real Estate Report

The Santa Cruz real estate market is making headlines again.  A few weeks ago, the news was that the median home price in Santa Cruz county had dipped below $800,000 for the first time in 15 months.  But a fresh look at MLS data reveals that the Santa Cruz median home price hit $920K in March 2018.  This is believed to be the highest median home price ever recorded in Santa Cruz county. Here’s a quick break-down of the March 2018 Santa Cruz Real Estate Market data: $920,500 median single family home price (+12.3% vs. $820,000 a year ago) 132 Homes sold (+16.8% vs. 113 year ago) 37 Days on Market Average (-27.5% vs 51 DOM a year ago) $647/sf Average (+29.4% vs. $500/sf average a year ago) 210 New Listings hit the market (+2% vs. 206 a year ago) When the news hit a month ago that the January median price had dipped below $800K for the first time in over a year, I cautioned people that one month does not make a trend, it could easily be an outlier.  Likewise, March’s $920K number could also be an outlier.  Certainly, we are seeing a considerable amount of volatility in the market. Santa Cruz is 6th Hottest Housing Market in the USA Last month we reported on the 20 hottest housing markets in the entire United States.  Last month, Santa Cruz came in at #11.  This month, Santa Cruz is 6th hottest real estate market in USA.  This is according to a new article in Realtor Magazine.  Once … Read More

Investing in Home Price Futures

sebfreyCommentary

It's Raining Money

I received an interesting email this morning from John Dolan, who runs a web site at homepricefutures.com. I’m somewhat obsessed with the future of home prices, and if you count your home as one of your prime assets and biggest investments, I’ll bet you have at least a passing interest in future home prices as well! Here’s (a slightly edited version of) his email: I’m John H Dolan, the sole market maker for the Case Shiller (CS) home price index futures that are (VERY infrequently) traded on the CME (Chicago Mercantile Exchange). I support/tout/make markets in these contracts/ as I think there should be a place where: 1) people can express their views (financially) on where they think the CS index will be 1-5 years from now, but as importantly, 2) so that others can freely see, in real time, where people are willing to buy or sell these contracts on forward index values. There are 11 contracts –one for the CUS 10-city index, and then one for each of the ten component areas. No surprise, there’s a contract that covers San Francisco* (as defined by the Case Shiller index definitions). In being a repeat-sales index, that was originally conceived in the 1980’s, CS requires numerous actual “trades” (home sales). As such, their index calculation is an average over three months and over a broader geographic region). The graph to the left shows the historical CS SFR (Single Family Residence) index (in black) the recent closing prices on the CME contracts (in purple), current bids (blue … Read More

What Donald Trump’s Victory Means for Your Home’s Value

sebfreyCommentary, Mortgage

Donald Trump's Hair

Given the media coverage and all the polling predicting a narrow but solid victory for Hillary Clinton, many in California were surprised – some horrified, appalled, and outraged – when Donald Trump won enough states to claim an Electoral College victory and has been named President-Elect of the United States. However you may feel about The Donald and what it says about and means for America, the question that concerns me at the moment is what Donald Trump’s victory means for your home’s value? It’s an important question, of course, because so much of our net worth is tied up in our home values. If a Trump presidency turns out to mean even higher home prices, that’s good news for folks who already own homes, or who buy them, quick. On the other hand, might Trump’s administration result in a global trade war, total economic collapse, plummeting home prices and waves of foreclosures – again? The thing about the real estate market is that it is comparatively slow to react to changes in the economic landscape. The results of changes to fiscal or monetary policy can take months – or often times years – to work their way through the real estate market. Other markets, though, are much quicker to react. You may have heard that bond prices took a dive immediately after Trump’s victory. This is because the bond market believes that a Trump administration means sharply increased government borrowing and a rise in inflation. When bond prices take a dive, the inverse of that … Read More

Holistic Valuation of Santa Cruz Real Estate

sebfreySanta Cruz Real Estate

Holistic Valuation of Real Estate

Properly evaluating homes in Santa Cruz can be tough work. Improperly evaluating properties is easy, and can be done in less than a minute on the web. As many sellers may suspect, there is a difference from the quality of a valuation you can get automatically from the web, and the type of evaluation that is provided by an experienced, local real estate agent. Here we’ll explore Holistic Valuation of Santa Cruz Real Estate, and discuss some of the additional things to consider when determining the value of a home. Your run-of-the-mill property valuation website uses a computer algorithm that works to estimate a home’s value. After sending in a valuation request, this algorithm digs through tax records and sales information, cross-references it using factors such as home size, room counts, lot sizes, and age, then weighs the figure against additional factors such as proximity of the sales activity and time elapse of recent sales vs. local value progression rates. All of these elements are thrown into a formula, and out pops a value. The sophistication of the programming is remarkable, even if the results often aren’t. So what’s wrong with programming-based valuation models such as these?  Well, they are based on information that often times is inaccurate, especially for properties here in Santa Cruz. For instance, sometimes the actual square footage of a home is greater than what is reported on the Assessor’s records, which would throw off calculations. Or perhaps a home was built years ago, but underwent extensive remodeling just recently. A computer … Read More

The Dirty Truth about Home Price Valuations

sebfreyCommentary

The Dirty Truth about Home Price Valuations

The Internet is swimming in offers for free, instant home price valuations. They’re all over Google search results, Facebook, Craigslist, and just about every Realtor web site. You can look up a home’s value on Zillow, eppraisal.com, and thousands of other sites which promise instant, online and accurate real estate valuations. But the truth is, there’s much more to know about your home’s value than you can get in any home price valuation. I’m here to tell you the dirty truth about home price valuations. I have performed literally thousands of home price valuations (aka CMA, or Comparative Market Analysis) over the years I’ve been a real estate broker. I’ve done them for all kind of properties, and in all kinds of markets. I’ve done exterior-only, full interior valuations, value estimates for mobile homes, commercial property and raw land valuations – the works! I feel very comfortable valuing property, and I think I do a pretty good job of it. But here’s the dirty truth about home price valuations: your home is not worth any one particular price. Rather, it is worth something within a range of prices, and could sell anywhere within that range. If anyone could reliably and consistently tell you exactly how much any particular property would sell for at a particular point in time, that person would be fabulously wealthy. It’s tantamount to having a crystal ball and being able to accurately prophecy the future. You see, a home price valuation is based on a whole series of assumptions about the state of … Read More

Planning for High Cost Real Estate

sebfreyCommentary

Land Use Planning Map

Real estate values in the Golden State have been soaring for the past couple of years – especially around the San Francisco bay area.  Of course, high-priced real estate is nothing new around here. In fact, it’s almost as though someone’s been planning for high cost real estate for years! But the dramatic price increases we’ve seen recently have again brought the high cost of housing in the bay area into sharp focus. One striking characteristic of the bay area real estate market in the past couple of years has been low inventory. In most of the region, there’s been far less than a six month supply of homes, which is what is considered a “balanced” market.  In some neighborhoods, supply has been as low as six weeks – or less.  Conventional wisdom dictates that when prices rise, supply will open up to meet that demand.  Yet in the face of steadily rising prices, that supply has yet to appear.  Many market watchers are wondering, when and how will that change? The possibility exists that we are now entering a new normal:  a perpetually low supply of available homes.  Faced with a growing population and a booming tech sector, this could well mean that we’ll see home prices continue to climb into the stratosphere – out of reach of the vast majority of the folks who make the area their home. Only the very well-heeled will be able to afford to buy property within a reasonable commute distance of the area’s major employers. Is this dystopian … Read More

Santa Cruz Real Estate July 2012 Market Update

Seb FreySanta Cruz Real Estate, Uncategorized

July 2012 Santa Cruz Real Estate Market Statistics It’s time once again for the Santa Cruz Market Trends Newsletter! The latest market numbers for June 2012 show the market moderating, with the median price coming in at $487,500 – this is down 8.3% from the year-ago median price of $537,500 and also down 3.7% from the May 2012 median home price of $517,500. Not only was the median price down, but the unit volume was also down. In June 2012, 162 single-family residences closed escrow in Santa Cruz county – that’s down about 8% from the year ago number, when 174 units closed escrow in June 2011, and down a whopping 26% from the previous month, May 2012, when 216 homes closed escrow. If you’ve been paying attention to what the national media is saying about the real estate market, you may have heard mention that a) prices are coming up and b) we have hit the bottom of the market. While both of those things may be true, what’s absolutely true is that now is the best time in over 5 years to sell your house in Santa Cruz. If you are thinking about selling any time in the near future, my advice is to strike while the iron is hot and get your property on the market ASAP. To get the full newsletter, broken down by different areas of the county and also by Single Family Residences as well as Condominiums, click here to download the full the Santa Cruz Real Estate Market Trends … Read More

How to Sell Your House for More Than It’s Worth

Seb FreySanta Cruz Real Estate

How to Sell your Home for More than its Worth

If you have a house that you need to sell, I’m going to bet that you’ll be wanting to get the most amount of money you can get for it – can I hear a boo-yeah, Amen to that brother?  Wanting to sell your house for top-dollar is a given, right? That is, after all, why you hire a professional Realtor as opposed to just putting a sign in the front lawn and trying to sell it yourself – yes? But the question is: How to Sell Your House for More Than It’s Worth? When you go to sell your house, you’re aiming to sell it for top dollar.  But what just does “top dollar” mean?  To me, “top dollar” means selling your house for 100% of fair market value – getting every dollar for your that your property is worth. Now it’s time to ask – do you think it’s possible to sell your house for much more than fair market value?  Is it possible you could get a buyer to pay you substantially more for your property than what it’s really worth? Most sellers will agree that it’s not likely they will be able to find a buyer who will wildly over-pay for their home.  But does that mean they won’t try?  Sadly enough, many sellers do in fact try to start much higher than the indicated market value for a property – and then, through a series of price cuts, eventually end up selling for a lot less than they initially asked – and, usually, … 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.

Caveat Emptor for Watsonville Investors

Seb FreySanta Cruz Real Estate

They are not looking to speculate on real estate – that’s how so many people ended up getting foreclosed on in Watsonville, and in California, and in many other places throughout our glorious but fading homeland . green_eyeshades.jpg A Speculator is someone who is placing a bet – they put some money down, and there bet is that the value of whatever they buy will go up. … These clients of mine are probably not what you would call professional real estate investors – but they want to buy real estate as if they were – and after they do buy a few properties, and if they keep with it, hey, before you know it – they will be professional investors, after all, every professional has to start somewhere. … What this means for my clients is that the amount of money they can afford to pay for a property, given their higher interest rate and lower rental rates means that they can offer less for a property than they had first thought – in order to make that 10% (or near 10%, anyway) return on their investment. … And, of course, the unemployment rate in Watsonville is reported to be at 25% – that’s huge, and I think it means a lot of people are going to be sharing housing, families living with families, rather than each family having their own individual place as I’m sure they’d prefer in many cases but owing to the weak economy cannot afford to do so at the moment.