MAY/JUNE 2012

Inside This Issue

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

Strouse Realty Group Town and Country Real Estate (831) 338-6481 Susan@StrouseRealtyGroup.com http://www.StrouseRealtyGroup.com DRE #01228878

> LOCAL MARKET TRENDS ..................... 1 > MORTGAGE RATE OUTLOOK ............... 2 > HOME STATISTICS .............................. 2 > FORECLOSURE STATS ........................ 3 > CONDO STATISTICS ............................ 3 > SFR PENDING VS. SALES CHART........ 4

The Real Estate Report

local market trends
SANTA CRUZ COUNTY
Trends at a Glance

Santa Cruz Market Continues to Heat Up

Low inventory and high demand are pushing the local real estate market into multiple offers with the attendant frustration of the losing bidders. see that changing much in the near future for several reasons. First, there is not a lot of new home building going The last few months of multiple offers has forced on, which is necessary to relieve the pressure. the sales price to list price ratio for single-family, reSecond, many existing homeowners arent going sale homes up to 98.8%, a level we havent seen anywhere. If they have good jobs here, where since May 2010. would they go? Plus, many of them are still Prices have yet to respond to the situation. The underwater and cant sell without taking a big loss. median price for homes has been moving in the Lastly, forget about phantom inventory. As of $450,000 to $500,000 range since January 2011. March, the banks owned 488 properties in the We expect prices to break out of this range in the county. That number includes homes AND condos. coming months. There are currently 658 homes AND condos The high end of the market, however that is defined actively listed for sale. in a particular city, is solid. The low end of the Even if the banks put all their inventory on the market is being driven by investors with cash and is market, its only five weeks worth! seeing the most activity. The middle market, the move-up market is soft because the entry-level Were stuck with this market for at least the next homeowners are still underwater. year. Whats next? Thats hard to tell because inventory is low putting constraints on the market breaking out. We dont

(Single-family Homes) Apr 12 Mar 12 Apr 11 Median Price: $ 480,000 $ 499,250 $ 479,000 Av erage Price: $ 529,855 $ 553,339 $ 525,589 Units Sold: 149 166 137 Pending Sales: 363 364 232 Inv entory : 490 448 441 Sale/List Price Ratio: 98.8% 97.6% 96.8% Day s on Market: 63 79 89 Day s of Inv entory 95 81 93

100% in two cities last month: Scotts Valley at 101.2% and Santa Cruz at 100.8%. Home sales have been higher than the year before for eight out of the past nine months. Inventory has been trending upwards, year-overyear, but thats coming off the worst levels of inventory in the past ten years. Pending home sales were up 56.5% year-overyear. Usually, this bodes well for the future. Unfortunately, in this multiple offer environment, many of these pending sales are not closing because the properties dont appraise, the buyers cant qualify for a loan, or they get cold feet. Pending sales, in a normal market, track closed sales very closely. But, since 2009, the disparity between pending and closed sales has widened to historically high levels. This is an extraordinarily tough market for buyers. Its important to be calm and realistic. If you dont know what to do or where to begin, give me a call and lets discuss your situation and your options.

APRIL MARKET STATISTICS

Multiple offers are pushing up prices in select cities. The sales price to list price ratio went over

Santa Cruz County Homes: Sales Momentum

60.0% 40.0% 20.0% 0.0% 0 A -20.0% 5 -40.0% -60.0% Sales Pending Median J O 0 A 6 J O 0 A 7 J O 0 A 8 J O 0 A 9 J O 1 A 0 J O 1 A 1

J O 1 A 2

2012 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
01-12 10-11 07-11 04-11 01-11 10-10 07-10 04-10 01-10 10-09 07-09 04-09 01-09 10-08 07-08 04-08 01-08 10-07 07-07 04-07 01-07 10-06 07-06 04-06 01-06 3.0%

May 4, 2012 -- Mortgage rates eased downward this week to again land at new record lows. After a hopeful late winter and early spring, the economic data began to point to a lower trajectory for growth, and that's where we find ourselves at the moment. Troubles in overseas economies continues to show, while inflation has leveled for the moment. These ingredients are the recipe for lower interest rates in general, as investors look for places to park cash away from uncertain stock markets. Once you mix in a Federal Reserve still accumulating long-term Treasuries and mortgages, you've got everything you need for rockbottom mortgage rates. It would be better if more borrowers could take advantage of them, though. HSH.com's broad-market mortgage tracker -- our weekly Fixed-Rate Mortgage Indicator (FRMI) -- found that the overall average rate for 30-year fixed-rate mortgages eased by two basis points (0.02%) for the week, and at 4.15%, now stands at a new record low, the third recordsetting week of 2012. The FRMI's 15-year companion also shed two basis points (.02%), slipping to a new record low of 3.39%. Important to homebuyers and low-equity-stake refinancers, already-low FHA-backed 30-year mortgages dropped by another single basis point to 3.79%, a fresh low-water mark, while the overall average for 5/1 Hybrid ARMs was unchanged, holding at an average 2.97% for the survey period, its lowest level ever.

In a special question, the Fed asked lenders to compare their willingness to make a mortgage to borrowers in 2006 and 2012 using similar FICO and LTV standards. It what has been painfully obvious to even a casual observer of the mortgage market, lenders are much less willing to lend now compared to then. The reasons are widespread, but include trouble getting mortgage insurance for borrowers, the GSEs requiring buybacks on failed loans, unclear regulations, weak home prices and more. To a degree, all of these issues rely on the other to be solved, and given the thorny issues involved, it may be some time before that happens. That's a shame, since making it somewhat easier to get a mortgage loan would tend to foster demand, firming home prices. If prices start to rise, losses on failed loans would slow, which might allow some leeway on buybacks. Fewer failing loans would see mortgage insurers in better fiscal straits, allowing them to ease rigid rules. If the market starts to function better all around, regulators might be less tempted to make drastic changes, and new regulations might come sooner rather than later, easing the anxiety of over-regulation which has hung over the market for several years now. It goes without saying that a functioning housing market would revive the economy in a number of ways. Presently, it's not the only facet of the economy which isn't firing on all cylinders, but it is a sizable one.

4.0%

5.0%

6.0%

7.0%

8.0%

0 MM J S N 0 MM J S N 0 MM J S N 1 MM J S N 1 MM J S N 1 M 7 8 9 0 1 2

Santa Cruz County - April 2012

Single-Family Homes
Cities County Aptos Capitola Rio del Mar Seacliff San Lorenzo Vly Soquel Scotts Valley Santa Cruz East County West County Watsonv ille $ $ $ $ $ $ $ $ $ $ $ $

% Change from Year Before

Sales Pend2 Inven 8.8% 56.5% 11.1% 125.0% 41.7% -33.3% 100.0% 14.3% -21.7% -38.5% 75.0% -25.0% -66.7% 50.0% -25.0% -26.9% 4.2% -20.2% 233.3% 5.3% -23.7% 100.0% 37.9% -19.1% -11.1% -9.3% -28.0% 30.8% 15.6% -19.4% n/a n/a n/a 17.6% 58.5% -35.7%

Susan Strouse, B.S., M.A. Susan@StrouseRealtyGroup.com (831) 338-6481 Page 2

Prices Prices Median Average Sales Pend Inven DOI SP/LP Med Ave 480,000 $ 529,855 149 363 490 95 98.8% 0.2% 0.8% 495,000 $ 520,192 9 17 24 77 98.1% -4.1% 4.5% 483,250 $ 572,562 8 8 18 65 96.1% -20.0% -0.7% 550,875 $ 772,481 8 28 42 152 98.3% -25.1% 2.4% 773,250 $ 773,250 1 6 12 348 96.8% 57.5% 25.3% 325,000 $ 311,118 19 50 71 108 97.6% -1.8% -4.7% 590,000 $ 581,600 10 20 29 84 99.3% 35.3% 37.3% 600,981 $ 683,973 20 40 55 80 101.2% -8.5% 2.0% 536,159 $ 580,197 32 68 108 98 100.8% -12.5% -15.1% 355,000 $ 528,519 17 37 58 99 96.4% 22.4% 37.8% $ 0 0 0 0 0.0% n/a n/a 303,394 $ 295,809 20 65 18 26 99.2% -5.2% 1.4%

Single-family Hom e Sales

Median & Average Prices

The chart above shows the National monthly average for 30-year fixed rate mortgages as compiled by HSH.com. The average includes mortgages of all sizes, including conforming, "expanded conforming," and jumbo.

Santa Cruz County Homes - Prices & Sales

(3-month moving averageprices in $000's) $1,000 $900 $800 $700 $600 $500 $400 $300 $200 $100 200 180 160 140 120 100 80 60 40 20 0

Santa Cruz County Homes: Year-Over-Year Median Price Change

40.0% 30.0% 20.0% 10.0% 0.0% 0 FMAMJ JA SOND0 FMAMJ JA SOND0 FMAMJ JA SOND1 FMAMJ JA SOND1 FMAMJ JA SOND1 FMA -10.0% 7 8 9 0 1 2 -20.0% -30.0% -40.0% -50.0% 2012 rereport.com

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

FORECLOSURE STATISTICS
In March, notices of default, the first step in the foreclosure process, in Santa Cruz County slumped 51.3% from the year before. Notices were down 11.8% from February. Notices of sale, which set the date and time of an auction, and serve as the homeowner's final notice before sale, were down 31.4% year-over-year, and were down 25% from February. After the filing of a Notice of Trustee Sale, there are only three possible outcomes. First, the sale can be cancelled for reasons that include a successful loan modification or short sale, a filing error, or a legal requirement to re-file the notice after extended postponements. Alternatively, if the property is taken to sale, the bank will place the opening bid. If a third party, typically an investor, bids more than the bank's opening bid, the property will be sold to the third party; if not, it will go back to the bank and become part of that bank's REO inventory. In March, cancellations were down 26.5% year-overyear. Properties going back to the bank decreased 42.1% in March from February. Year-over-year, properties going back to the back decreased 66.7%. The total number of properties that have had a notice of default filed decreased by 37% in March compared to March 2011. They were up 10.6% from February. The total number of properties scheduled for sale decreased 0.2% from February, and, were down 17.3% year-over-year. The total number of homes owned by the banks was down 4.1% from February, and down 5.8% year-overyear. Banks now own approximately 488 properties in Santa Cruz County.

Santa Cruz County Condos- Prices & Sales

(3-month moving averageprices in $000's)
Median & Average Prices

Table Definitions _______________

45 40 35 30 25 20 15 10 5 0

$700 $600 $500 $400 $300 $200 $100 0 MM J S N 0 MM J S N 0 MM J S N 1 MM J S N 1 MM J S N 1 M 7 8 9 0 1 2

Median Price
Condo Sales
The price at which 50% of prices were higher and 50%were lower.

Average Price
Add all prices and divide by the number of sales.

SP/LP
Sales price to list price ratio or the price paid for the property divided by the asking price.

Santa Cruz County - April 2012

Condos/Townhomes
Cities County Aptos Capitola Rio del Mar Scotts Valley Santa Cruz Watsonv ille $ $ $ $ $ $ $

DOI
% Change from Year Before
Pend2 48.4% -50.0% 100.0% 66.7% -27.3% 65.0% 26.7% Inven -29.7% -50.0% -10.0% -11.1% -60.0% -12.1% -42.1%
Days of Inventory, or how many days it would take to sell all the property for sale at the current rate of sales.

Prices Prices Median Average Sales Pend Inven DOI SP/LP Med Ave Sales 310,000 $ 313,813 45 95 168 108 97.8% 5.5% -3.7% 32.4% 369,500 $ 369,500 2 1 2 29 96.2% 34.5% 34.5% 0.0% 325,000 $ 327,000 4 14 9 65 96.3% 19.7% -6.9% -20.0% 623,000 $ 612,000 3 5 32 309 93.5% 39.2% 36.8% 50.0% 282,500 $ 283,750 4 8 2 15 104.8% -18.7% -17.7% 0.0% 298,000 $ 308,700 17 33 58 99 97.9% -15.2% -21.9% 70.0% 205,000 $ 189,400 5 19 11 64 99.9% 2.5% -6.2% -44.4%

Pend
Property under contract to sell that hasnt closed escrow.

Inven
Number of properties actively for sale as of the last day of the month.

Page 3

THE REAL ESTATE REPORT

Santa Cruz County

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

Town and Country Real Estate (831) 338-6481 Susan@StrouseRealtyGroup.com http://www.StrouseRealtyGroup.com

Go online to see the full report with the city by city breakdown:

Santa Cruz County Homes: Pending & Existing Home Sales

(3-month moving average) 400 350 300 250 200 150 100 50 0 0 FMAMJ JA SOND0 FMAMJ JA SOND0 FMAM J JA SOND1 FMAM J JA SOND1 FMAMJ JA SOND1 7 8 9 0 1 2 Sales Pending 2012 rereport.com

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