Santa Cruz County Market Trends heading into 2010
February 15, 2010
With interest rates hovering at historic lows, particularly for homes in the Monterey Bay Area which qualify for preferred financing rates due to their ‘non-jumbo’ status (generally speaking, those mortgages less than $625500), the local market has seen a steady uptick of activity of late.
This is true for volume of sales (up 15% from January 2009 to January 2010) and for median pricing as well (up ~9% from the January 2009 median price of $437K to a $480K median sold price for Santa Cruz County for January 2010)
Housing is obviously a key driver of the nation’s overall economic activity, and this modest improvement in the local housing market has a spillover effect on consumer spending and jobs in related industries. However, while the recent trend has been encouraging, unemployment remains high, and foreclosures are continuing to have some influence on the local market at all price ranges.
The hottest part of the local market is in the $500-$700K range; if you have property in this price range and are motivated to sell, there hasn’t been a period better than now for about 25 months and counting.
On the other hand, luxury homes in Santa Cruz County (those selling for $1M and above) are still experiencing softer market conditions, putting downward pressure on prices.
Key factors to watch in 2010: most economists agree that mortgage interest rates will rise in the latter part of 2010, and that this will occur even if the Federal Reserve does not hike the prime lending rate.
This predicted rise in interest rates is worth keeping an eye on, and will likely occur due to the following fact: the low rates in the market for the last 18 months have been due to the Federal Reserve’s aggressive purchases of mortgage-backed securities. When private investor’s pulled back from purchasing mortgage backed securities due to the ‘freefall’ in the fall of 2008 when the nation’s banking system neared total collapse, the Federal Reserve stepped in and became a ‘market-maker’, with enormous amounts of money plowed in with the Fed’s direct purchase of mortgage backed securities.
Thus far, the Fed’s activity totals almost $1.25 trillion dollars, but those purchases are due to stop near the end of March. This move will likely cause interest rates to turn upward. How much will they rise? Economists estimates have varied, but many predict that they will climbing by more than a percentage point by year’s end.
The bottom line:
If you are a Buyer trying to ‘time the market’ with the perfect combination of low mortgage interest rates and low prices, you are likely in that zone already.
If you are a homeowner who is thinking of selling and you are waiting on the sidelines hoping for dramatic improvements in selling prices, most market experts concur that we are bumping along the bottom of a real estate market that is likely to either stay flat for the next two tp three years, or see small further declines in the next year before we see a flattening in the two to three year period which follows. No one that I know of predicts a dramatic increase in home prices for at least five years.
We would be happy to assess your individual situation at no cost to you (yes, it is a freebie). We will also provide comparable sales information for your neighborhood and similar homes in your price range, and develop a marketing/selling or buying plan that matches your needs.
When you see the unparalled marketing expertise and work ethic we bring to each client relationship, you will experience first-hand our proven track record of professional selling and marketing.
We believe we consistently supply professional selling skills and market expertise that is unmatched in the Monterey Bay area, and we would much appreciate the opportunity to demonstrate it to you in the year ahead.
In the meantime, please follow us on Facebook, look for our ‘tweets’ on Twitter, contact us by telephone or or via email, and watch for our periodic blog updates on local market conditions.
Kind regards,
Michael Lavigne, Broker/Realtor
Michael Lavigne Real Estate Services
Michael Lavigne Real Estate Services
331 Capitola Avenue, Suite B
Capitola, CA 95010
(831) 227-3039 Cell
(831) 603-5620 Fax
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