NOVEMBER/DECEMBER 2010 Susan Strouse, B.S., M.A.

Inside This Issue Strouse Realty Group

American Dream Realty
> LOCAL MARKET TRENDS ..................... 1 5522 Scotts Valley Dr.
> MORTGAGE RATE OUTLOOK ............... 2 Scotts Valley, CA 95066
> HOME STATISTICS .............................. 2 (831) 338-6481
Susan@StrouseRealtyGroup.com
> STATISTICS: TRACKING MOMENTUM .... 3
http://www.StrouseRealtyGroup.com
> CONDO STATISTICS ............................ 3 DRE #01228878
> CHARTS: SP/LP & SALES YTD ........... 4

The Real Estate Report

local market trends SANTA CRUZ COUNTY
Trends at a Glance
(Single-family Homes)
Oct 10 Sep 10 Oct 09
Median Price: $ 513,873 $ 535,000 $ 518,000
Av erage Price: $ 572,392 $ 680,397 $ 572,403
Units Sold: 112 139 172
Sales Momentum Faltering Inv entory : 748 821 607
Sale/List Price Ratio: 96.0% 97.3% 98.8%
Sales momentum for single-family, re-sale homes the high number of foreclosure and short sales, Day s on Market: 67 84 77
in Santa Cruz County dipped into negative territory which require lender approval. This has pumped up Day s of Inv entory 200 171 106
in September for the first time since January 2009. the number of pending sales, which, in a normal
This trend continued in October. market would indicate increasing sales in the com- MORE STATISTICS…
ing two months. But, because a majority of pending The median sales price for single-family, re-sale
WE CALCULATE… sales are foreclosure or short sales, a greater po-
sales momentum by using a 12-month moving homes was down, year-over-year, for the fourth
tion of these sales never close. month out of the past five. The median price was
average to eliminate seasonality. By comparing this
year’s 12-month moving average to last year’s, we PRICING MOMENTUM… down 0.8%.
get a percentage showing market momentum. on the other hand, generally lags the buying and Inventory turned downward, as is its wont this time
selling indicators provided by the sales momentum of year, dropping 8.9% from September. Year-over-
IN THE CHART BELOW… trend. In the chart below, the purple line shows the year, inventory was up for the fifth month in a row:
are two of the most important statistics determining median price momentum indicator.
21.3%.
market momentum. The blue shows momentum for
home sales while the red line shows momentum for As you can see, when the sales momentum indica- The sales price to list price ratio was down 0.7 of a
pending home sales. tor changed to a sell signal in May 2005, prices point to 96%. The ratio’s median since 2003 is
didn’t peak until November, when they started a 97.9%.
Sales momentum peaked in July and has been gradual decline. The median price indicator really
trending down ever since. Pending sales, which started falling when it crossed the 0 axis in Febru- Remember, the real estate market is a matter of
normally track closed sales closely, have jumped ary 2008. neighborhoods and houses. No two are the same.
out of the norm due to the large number of foreclo- For complete information on a particular neighbor-
sure and short sales in the past two years. The sales momentum indicator hit its low in June hood or property, call.
2008 then started turning up, but the price indicator
IN A NORMAL MARKET… kept falling until sales momentum’s next peak in
pending sales close within 60 days. In today’s mar- May 2009, when pricing momentum started picking
ket, pending sales are taking much longer due to up.

Santa Cruz County Homes: Sales Momentum

50.0%
40.0%
30.0%
20.0%
10.0%
0.0%
-10.0% 0 FMAMJ J ASOND0 FMAMJ J ASOND0 FMAMJ J ASOND0 FMAMJ J ASOND0 FMAMJ J ASOND1 FMAMJ J ASO
-20.0% 5 6 7 8 9 0
-30.0%
-40.0%
-50.0%
-60.0%
Sales Pending Median © 2010 rereport.com

Susan Strouse, B.S., M.A. | Susan@StrouseRealtyGroup.com | (831) 338-6481

 The Real Estate Report

Mortgage Rate Outlook

30-Year Fixed Mortgage Rates Nov. 5, 2010 -- After preparing the markets for the last With the American government borrowing money
several months, the Fed pulled the trigger this week (issuing new Treasury Debt) at a record pace since
10-10 on its latest plan to boost the economy. "Quantitative the recession began, it was expected that the glut of
07-10 Easing II" or QE2, as it's being called, will see the this new Treasury supply would flood the market and
04-10
01-10 Fed purchase $600 billion in new Treasury bonds by outstrip demand; in turn, this would cause interest
10-09 the end of the second quarter of 2011 -- and this in rates to begin to rise, particularly as the economy
07-09 addition to the expected $250 to $300 billion it will emerged from recession. Amid a shaky recovery and
04-09
01-09 also reinvest from the maturing mortgage portfolio it overseas market panics, this situation never oc-
10-08 holds from the last monetary stimulus program. curred, and there has instead been a steady appetite
07-08 for investments which are considered safe.
04-08 The open question is, will mortgage borrowers bene-
01-08 fit, and if so, by how much? The Fed's plan is to snap up so many of these Treas-
10-07
07-07 ury bonds that they drive up the price of them, which
Mortgage interest rates are already at rock bottom.
04-07 in turn drives down their yields. In this way, investors
01-07 HSH.com's overall mortgage tracker -- our weekly
won't be able to make money easily by buying these
10-06 Fixed-Rate Mortgage Indicator (FRMI) -- found that
07-06 low-yielding instruments, and so will find an incentive
the average rate for 30-year fixed-rate mortgages
04-06 to put their money into equities, other bonds, com-
01-06 eased by three basis points (.03%), ending
modities, wherever... but the effect is hoped to be a
10-05 HSH.com's national survey at 4.61%. Important for
07-05 de-concentration of investment dollars, spreading
first-time homebuyers and low-equity-stake refi-
04-05 money around the broader economy... if it works.
01-05 nances, FHA-backed loans are available at an aver-
10-04 age rate of 4.26%, while the overall average rate for You can read the full report here:
07-04 hybrid 5/1 ARMs was 3.51% for the period. http://www.hsh.com/trends.html
04-04
01-04 HSH.com's public data series include rates for con-
forming, jumbo, and most recently the GSE's "high-
3.0% 4.0% 5.0% 6.0% 7.0% 8.0%
limit" conforming products and so covers much of the
mortgage-borrowing public.

The chart above shows the National

monthly average for 30-year fixed
rate mortgages as compiled by
HSH.com. The average includes mort-
gages of all sizes, including conforming, Santa Cruz County Homes - Prices & Sales
"expanded conforming," and jumbo. (3-month moving average—prices in $000's)
$1,000 250

Single-family Home Sales

Median & Average Prices

$900
$800 200
$700
150
$600
$500
100
$400
$300 50
$200
$100 0
0 FMAMJ J ASOND0 FMAMJ J ASOND0 FMAMJ J ASOND0 FMAMJ J ASOND1 FMAMJ J ASO
6 7 8 9 0

Santa Cruz County - October 2010

Single-Family Homes % Change from Year Before
Prices Prices
Cities Median Average Sales Pend Inven DOI SP/LP Med Ave Sales Pend2 Inven
Susan Strouse, B.S., M.A. County $ 513,873 $ 572,392 112 298 748 200 96.0% -0.8% 0.0% -34.9% -11.6% 23.2%
Strouse Realty Group Aptos $ 535,000 $ 544,906 8 17 39 146 95.6% -18.3% -31.8% 60.0% 13.3% 14.7%
American Dream Realty Capitola $ 635,500 $ 635,500 1 7 24 720 99.4% 21.7% 14.6% -75.0% -30.0% 4.3%
5522 Scotts Valley Dr. Rio del Mar $ 615,000 $ 753,643 13 14 68 157 94.6% -8.9% -14.7% 30.0% -33.3% 0.0%
Scotts Valley, CA 95066 Seacliff $ 480,000 $ 480,000 1 3 11 330 94.3% -7.2% -6.6% -75.0% -25.0% -52.2%
(831) 338-6481 San Lorenzo Vly $ 347,000 $ 371,368 19 46 103 163 95.0% 2.1% -1.4% -29.6% -29.2% 45.1%
Susan@StrouseRealtyGroup.com Soquel $ 560,000 $ 712,929 7 19 36 154 97.8% 1.4% 29.9% 75.0% 26.7% 9.1%
http://www.StrouseRealtyGroup.com Scotts Valley $ 657,500 $ 666,942 12 34 84 210 96.0% -11.6% -13.4% -40.0% 13.3% 29.2%
DRE #01228878 Santa Cruz $ 602,500 $ 711,875 24 63 168 210 95.7% -2.8% -12.7% -36.8% -17.1% 28.2%
East County $ 275,000 $ 368,222 9 33 79 263 93.2% -19.7% -19.4% -59.1% -5.7% 9.7%
West County $ 415,123 $ 415,122 2 5 26 390 92.9% 17.6% 17.6% 100.0% -37.5% 52.9%
Page 2 Watsonv ille $ 324,375 $ 323,625 10 38 43 129 101.9% 21.5% 20.0% -66.7% -13.6% 207.1%
 Susan Strouse, B.S., M.A.
Santa Cruz County Homes: Year-Over-Year Median Price Change Strouse Realty Group
40.0% American Dream Realty
30.0% 5522 Scotts Valley Dr.
20.0% Scotts Valley, CA 95066
10.0% (831) 338-6481
0.0% Susan@StrouseRealtyGroup.com
-10.0% 0 FMAMJ J A SOND 0 FMAMJ J A SOND 0 FMAMJ J A SOND 0 FMAMJ J A SOND 1 FMAMJ J A SO http://www.StrouseRealtyGroup.com
-20.0% 6 7 8 9 0 DRE #01228878
-30.0%
-40.0%
-50.0%

STATISTICS: TRACKING MOMENTUM

As we mentioned last month, the Internet is strewn with He uses the same basic formula for all five: (current 12-
statistics, some good, some bad, and some downright month moving average—previous 12-month mov-
ugly. So, what are statistics for? ing)/current 12-month moving average.
STATISTICS ARE FOR… FINDING THE DATA…
determining the best time to buy or sell real estate. If means tapping into a variety of sources.
the statistics you are tracking do that, they’re good. If
Sales data is the easiest to track. Local newspapers
they don’t, they’re misleading, at best.
publish this data each month. If you want historical
TRACKING MOMENTUM… sales data, you can call us and we’ll provide it for you.
is the best way to determine when to buy or sell real In California, new home building permits are tracked by
estate. The question becomes which statistics to track. the Construction Industry Research Board. The board
Robert Campbell, a San Diego based real estate inves- charges for their data. (http://cirbdata.com)
tor, in his 2004 book “Timing the Real Estate Market”, There are a variety of sources for mortgage loan default
lists five “vital signs” he tracks to time the market, in and foreclosure sales data starting with the county re-
order from strongest to weakest: corder’s office. Other sources, for which you will have to
1. Existing home sales pay are: http://dataquick.com, and
2. New home building permits http://foreclosureradar.com.
3. Mortgage loan defaults Interest rate data can be had at a number of different
4. Foreclosure sales, and sites: http://hsh.com, http://bankrate.com, or
5. Interest rates
(Continued on page 4)
Table Definitions
_______________

Santa Cruz County Condos- Prices & Sales Median Price

(3-month moving average—prices in $000's) The price at which 50% of prices
were higher and 50%were lower.
$700 50
Median & Average Prices

45
$600 40 Average Price
Add all prices and divide by the
Condo Sales

$500 35
number of sales.
30
$400 25
20 SP/LP
$300 15 Sales price to list price ratio or the
10 price paid for the property divided by
$200 the asking price.
5
$100 0
0 FMAMJ J ASOND0 FMAMJ J ASOND0 FMAMJ J ASOND0 FMAMJ J ASOND1 FMAMJ J ASO DOI
6 7 8 9 0 Days of Inventory, or how many
days it would take to sell all the
property for sale at the current rate
Santa Cruz County - October 2010 of sales.
Condos/Townhomes % Change from Year Before
Prices Prices Pend
Cities Median Average Sales Pend Inven DOI SP/LP Med Ave Sales Pend2 Inven Property under contract to sell that
County $ 292,000 $ 290,553 30 70 185 185 97.1% -16.0% -19.6% 25.0% -9.1% 14.2% hasn’t closed escrow.
Aptos $ - $ - 0 0 0 0 0.0% n/a n/a n/a n/a n/a
Capitola $ 402,500 $ 402,500 2 7 13 195 95.4% 15.0% 15.0% 0.0% 0.0% 0.0% Inven
Rio del Mar $ - $ - 0 0 0 0 0.0% n/a n/a n/a n/a n/a Number of properties actively for
Scotts Valley $ 312,000 $ 312,000 2 7 10 150 104.3% -17.9% -17.9% 100.0% 250.0% 233.3% sale as of the last day of the month.
Santa Cruz $ 355,000 $ 332,900 9 17 61 203 97.8% -11.3% -24.4% 0.0% -37.0% 8.9%
Watsonv ille $ 237,000 $ 210,000 8 19 16 60 98.2% 15.0% 6.8% 60.0% -5.0% 33.3% Page 3
THE REAL ESTATE REPORT
Santa Cruz County

Susan Strouse, B.S., M.A.

American Dream Realty
5522 Scotts Valley Dr.
Scotts Valley, CA 95066
(831) 338-6481
Susan@StrouseRealtyGroup.com
http://www.StrouseRealtyGroup.com

Go online to see the full report

with the city by city breakdown:

http://www.StrouseRealtyGroup.com
http://federalreserve.gov. While Campbell tracks 1- Santa Cruz County Homes: Sales Price/Listing Price Ratio
year t-bills, monthly mortgage rates can also be 101%
used.
100%
Next month, we will review the timing method Craig
Hall uses in his 2003 book, “Timing the Real Estate 99%
Market: How to Buy Low and Sell High in Real
98%
Estate.”
This author explains the difference between mo- 97%
mentum and contrarian investing. He identifies 96%
seven trends to track to determine when real estate
cycles are about to turn. 95%
0 FMAMJ J ASOND0 FMAMJ J ASOND0 FMAMJ J ASOND0 FMAMJ J ASOND1 FMAMJ J ASO
6 7 8 9 0
© 2010 rereport.com

Santa Cruz County Homes - Sales, Pending & Days of Inventory

(3-month moving average)
400 500
Peak of buyers Market
350 450
Days of Inventory

400
Sales & Pending

300
350
250 300
200 250
150 200
150
100
100
50 50
0 0
0 FMAMJ J ASOND0 FMAMJ J ASOND0 FMAMJ J ASOND0 FMAMJ J ASOND1 FMAMJ J ASO
6 7 8 9 0

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Information contained herein is deemed accurate and correct, but no warranty is implied or given.