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.

Santa Cruz Realtor and Devil’s Advocate

Seb FreyCommentary, Santa Cruz Real Estate

One biggie is that I am completely and utterly swamped with work, and while my blog is actually very important to me, it falls into the “important but not urgent” quadrant of McCovey’s “first things first.” devil.jpg Another reason I haven’t written anything is that I don’t know quite what to say! Every day, I read the newspapers and the blogs and e-zines and and I watch TV and listen to podcasts, absorbing all the real estate news that there is, and I try to make sense of it all, I try to wrap my head around it and come to some kind of conclusion that I feel certain enough about to write up a blog entry, sharing my thoughts with you all… … The optimists in the crowd will also point to months of falling inventory – this time last year, there were 989 single-family residences for sale in the county, and now we’re down to 803. … I think an important thing to consider in all of this is that the inventory is not shrinking so much because of the high sales volume, but rather it is shrinking also because many sellers are letting their listings expire, or just outright canceling them, taking their homes off the market.

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 Conforming Loan Limit 2009

Seb FreySanta Cruz Real Estate

Of course, the reverse was true on the way up – ridiculously easy credit , liar loans , lax underwriting standards , and mortgage fraud – all of this played a part in the enormous run-up in prices that we in Santa Cruz enjoyed for most of the early years of this decade. Wether you are a prospective home buyer or a home owner, the role of credit is very important to you – it strongly shapes your ability to buy a home, or the price for which you will be able to sell your home. … The good news is, the conforming loan limits for 2009 will stay the same as in 2008: For Santa Cruz County, the new “high-balance” limits are: 1 unit $625,500 2 units $800,775 3 units $967,950 4 units 1,202,925 For Monterey County, we weren’t as fortunate. Here are the new limits: 1 unit $483,000 2 units $618,300 3 units $747,400 4 units $928,850 I asked the lender if a house with a legal accessory dwelling unit (aka “granny unit”) that could be rented would count as a “2 unit” property.

Billions, Trillions and a House in Santa Cruz

Seb FreySanta Cruz Real Estate

Flushing Money

I should have just sat there and watched as my hard-earned dollars evaporated, sucked it up, been a man, and lost all that cash, the price to pay for participating in our capitalist system. … So let me assure you – if you want to buy a house in Santa Cruz, and you have decent credit (at least a 580 FICO Score to qualify for an FHA loan, I believe) and you have the debt-to-income ratios required by the guidelines. … Mind you, the median price these days in the county is $585,000 (as of August), so it’s getting to the point where you can actually buy a habitable structure in a somewhat central location for that kind of bread. … That would leave you with a whopping loan of $482,500 and payments (all-in, including principal, interest, property tax, and insurance) of about $3,500 a month (roughly, approximately – and that’s before your considerable mortgage interest tax deduction ).

I’m buying an HP 12C

Seb FreySanta Cruz Real Estate

How about a smart phone – probably my suck-ass Palm Treo 700p can do most of what I’ll ever need. hp12c.jpg As you may have read, though, I’ll be going to Las Vegas next week to take some CRS Training classes, and it turns out, they require that you have an HP 12C Calculator . The 25th Anniversary Edition is now out, but I opted to save a few bucks and go for the classic. … But let’s face it, financing is a big part of the real estate puzzle, and there’s a lot to know about it. As always, my goal is to be the very best Realtor I can be and provide the highest level of service to my clients.