About Santa Cruz County, CA

It was just a few years ago, we rarely saw homes being foreclosed by banks and later sold by banks on the MLS as REOs (Bank Owned Properties). On top of that, Short Sales were unheard of in those markets of yester year. However in today's market, a good percentage of homes are REOs or Short Sales and they all have one thing in common. These properties are bought and sold by banks or the banks have final approval of the property sale.

As of last month, banks controlled over 50% of the real estate transactions in Santa Cruz County. For the most part, Bank control of transactions and inventory is not good for the market. These distress properties are some times neglected, abandoned and stripped, resulting in lower property values when they are sold. Recently some cities have required banks to maintain properties they own and this has helped. However the over all impact of bank owned properties has had a major negative effect on home values.

With the current national trend of ten percent of homeowners being delinquent on their mortgage payment, we are sure to see a continued trend of bank controlled transactions and inventory. Both State and Federal governments have tried to stem this tide with loan modification programs and foreclosure moratoriums, but these programs have had very little effect to date. So unless there is a new approach to this problem, it will take several years to reduce the number of bank controlled properties and return to a market that is controlled by home owners and buyers. The good news is that there are alternative solutions that are being considered. I'll go into more detail on these alternative solutions in my next blog.

Bank Foreclosure (Homeowner is unable to make mortgage payment, Banks sells home through a foreclosure auction process. In most cases the Bank buy back the home at the auction for the value of the mortgage.)

REO ( After bank purchase of the home via foreclosure process, Bank sells the home on the open market through MLS or at public auction)

Short Sale (Homeowner owns home with a bank mortgage that is greater than the properties market value. Homeowner with Bank approval can sell home short of the value of the mortgage. Results in, Homeowner loses equity and Bank takes a loss on the mortgage.

Wachovia (aka World Savings and Golden West) currently has the most aggressive program to help homeowners avoid foreclosure. Today I attended training at the Santa Cruz Board of Realtors put on by a Wachovia Short Sale Manger from Santa Clara In the current world of processing nightmares for short sales and loan modifications, there is finally one lender is "getting it". It's not rocket science. When lenders have to foreclose on a home they lose a tremendous amount of money. However, if they work with the homeowner to keep them in the home with a loan modification or allow them to sell short, they are saving huge amounts of money from the bottom line. Wachovia has streamlined their loan modification process and short sale process, making it a quicker and smoother process. They are calling this the FAST TRACK. This means that if you know anyone with a World Savings, Golden West or Wachovia loan that is underwater or having some kind of hardship, we can help them get answers relatively quickly. This also means that if you are buying a short sale, and the seller's lender is Wachovia, you will most likely have an answer sooner than later. Wachovia says they will have it approved in 45 days or less.

What is also very exciting to actually have a direct contact with a Short Sale Manager at Wachovia. (Wachovia took over World Savings and Golden West so this applies to those loans as well) We have all been transferred through the never ending maze of a customer service phone tree, only to become increasingly disgruntled. Multiply that frustration tenfold when dealing with a large bank like B of A on a short sale. I know have the name, phone number, email, and physical address of an actual person that can make actual decisions on short sales!

Unlike most lenders, Wachovia is not requiring extensive documentation from the property owner to do a short sale. They only require a hard ship letter from the seller and a phone interview. If it is for a loan modification they will also want to see proof that the owner has the ability to pay. This is smart as many other modifications end up in back in default because they can't afford their modified terms.

Wachovia is also sending out letters to certain homeowners letting them know that their home was "pre-approved" for a short sale. If you get one of these letters, please contact me I can help you understand what it means.

If you or anyone you know would like help with getting qualified for a loan modification or short sale, please contact me and I will be happy to assist you at no cost to you.

As we near the end of 2009, there are some trends that have developed in the Santa Cruz Real Estate Market. For example, the low-end of our market has been on fire. We are seeing multiple bids on homes priced less than $500k. This is a result of several different factors, first is the availability of loan programs thru FHA, Freddie Mac, and Fannie Mae, second is the First Time Buyers $8000 credit, lastly a steady volume of bank owned and short sale properties with low prices. As seen by the chart below we have more property pendings that available home inventory. Thus we are seeing some price stabilization at the lower end of the market.

In the middle section of the market (Homes between $500k to $1m) there is better balance between inventory and pendings. Prices have begun to stabilize in this marketSegment. If a property is priced right in this market segment, it will sell fairly quickly. Again low interest rates, lower than usual inventory and lower prices are helping. It is a great time for Buyers that are moving up or scaling down. Certainly short sales and bank owned properties have had an impact on lowering prices. Thus Buyers can see some real value in this market segment.

The high-end of the market is really struggling at this time. This market segment has not been hit as hard with bank owned properties or short sales as of yet. But we are starting to see some downward pricing adjustments. This is due to several factors. One, financing is more difficult for high-end homes, second we have too much inventory, and lastly we are starting to see more short sales and bank owned properties.In the greater Bay area, high-end homes in the Hillsborough and Atherton have fallen in value by 14%. In our area, beach properties have not been hit as hard, but high-end country properties are being hit pretty hard. It is a great time for an all cash buyer in this market segment.

Hi All,

I am loving this new tool from Claurus Market Metrics. I shows graphically the Real Estate market trends in all aspects like Days on Market, Supply vs Demand, Median Sold Price, Number of Expireds . . .

The Real Estate Market in Santa Cruz County is very diverse and really varies area by area. For details on a specific area/neighborhood contact me. Here is an overall view of market trends over a 1 year period in all of Santa Cruz County:

Median Sold Price Oct '08 vs Oct '09 Up 2%

Number of Sold Properties Oct '08 vs Oct '09 Up 22%

Months Supply of Inventory Down 68%

As you can see the number of sales has increased dramatically, while the median sale price is up just slightly year to year, about 2%. Months supply of inventory is also down dramatically from 10.4 months supply is October 2008 to only 3.3 month supply in October of 2009. The lower end of the market is really busy with multiple offers and over asking price offers commonplace.

There are some great buys out there for those who are ready and able. To begin you search for your Santa Cruz home click here: http://www.listingalert.net/search_request/index.asp?WebID=J3l6U

Feel free to contact me anytime to talk about market trends, today's best buys, the Santa Cruz area etc . . . I am happy to help!

Jessica Wallace, Realtor

(831) 419-9345

www.YourSantaCruzRealtor.com

The U.S. House of Representatives

passed a bill extending and ex-

panding the Federal Tax Credit for

First-time Home Buyers on Novem-

ber 5th. The bill was passed in the

U.S. Senate the day before and will

now go to President Obama for his

signature, where it is expected to

be signed this week.

The tax credit will be extended

through April 30, 2010, with a 60-

day extension if a binding contract

is in place prior to the deadline.

First-time home buyers will continue

to receive a tax credit of up to

$8,000, while existing homeowners

will receive a reduced credit of up

to $6,500. Existing homeowners will

be eligible for the $6,500 if they

have lived in their current resi-

dences for at least five years. The

bill also will increase the qualifying

income limits from $75,000 for sin-

gle tax filers and $150,000 for joint

filers, to $125,000 and $225,000,

respectively. The purchase price of

the home is capped at $800,000.

The changes, among other things,

are aimed at encouraging so-called

“move-up buyers” to sell their first

homes and buy a larger or more

expensive place.

Under additional provisions in the

bill, taxpayers can claim the credit

on purchases completed in 2010 on

their 2009 income tax returns. The

bill maintains the provision that

home buyers do not have to repay

the credit provided the home re-

mains their primary residence for 36

months after purchase, and waives

this requirement for active duty

military personnel who move due to

a military order. “The success of the home buyer tax

credit and its positive impact on the

real estate market is clear,” said

C.A.R. President James Liptak.

“According to our research, nearly

40 percent of first-time buyers said

they would not have purchased a

home if the federal tax credit for

first-time home buyers was not

offered. This underscores the sig-

nificance of the federal tax credit to

the housing market’s recovery in

California.