Santa Cruz Real Estate Experts Team Sedenquist

I love these Top 10 lists.  Apparently so do all you readers.  So here are some more ways to compare where you live with other cities. 

Best Cities for Building Wealth
Salary.com, which provides compensation information, has ranked the best and worst cities in which to build personal wealth.

Salary.com’s salary value index compares local salaries, the cost of living and unemployment rates among U.S. cities with populations greater than 250,000.

Other considerations including diversity of industry, education level of the cities’ population, proximity to post secondary institutions, percent of population below the poverty level and median travel time to work.

“The most favorable cities offer the largest difference between pay and costs," says Bill Coleman, chief compensation officer.

Cities at the bottom of the list typically represent the places where living is the most expensive and pay differentials are not proportionately inflated. Cities at the top are headquarters for large companies, have appealing amenities and are growing.

Here are the five cities at the top and bottom of the list:

Best Cities to Build Personal Wealth

1. Plano, Texas
2. Aurora, Colo.
3. Omaha, Neb.
4. Minneapolis
5. Albuquerque, N.M.

Worst Cities to Build Personal Wealth

1. New York
2. Washington
3. Los Angeles
4. Honolulu
5. San Francisco

Source: Salary.com (06/30/08) via REALTOR® Magazine Online

Lynette and I are seeing the return of investors to our rental housing market, especially in south county.  Even with smaller down payments, these properties will cash flow, and the rents are climbing.  This same trend can be seen elsewhere throughout the country.

Investors With Cash Are Kings in Today's Market
Some are calling this the best market for investors since real estate tanked in the early 1980s.

Investors, alone and in groups, are negotiating volume deals as they purchase whole subdivisions and bundles of 10 to 50 defaulted loans for pennies on the dollar.

"What we're seeing today dwarfs [the 1980s] by five or 10 times," says Bob Leonetti, president of SMI Funding, an Austin, Texas, company that originates and acquires private and conventional mortgages. "There are huge opportunities for investors."

"People who have cash positions now are going to do very well," says Central Florida real estate practitioner Mike Norvell of Developers Capital Realty in Leesburg, Fla. "It's just crazy the prices you can buy for right now for cash."

Source: Investor’s Business Daily, Kathleen Doler (07/07/08) via REALTOR® Magazine Online

We all try to save money for our retirements and for that future rainy day.  You know what rapid inflation actually does to your savings?  It means that in these U.S. cities, your savings have to be earning at least 6% or you’re losing money. (I don’t know about you, but I don’t know any banks that are paying 6% for CD’s. . .)

10 Cities Where Cost of Living Is Growing Fast
Forbes magazine looked at inflation in the 40 largest metro areas in the U.S. to see where prices were rising fastest.

The numbers were supplied by the Bureau of Labor Statistics and Moody’s Economy.com and reflected changes between January and June 2008.

Resetting mortgages, rising food prices and runaway fuel costs are the biggest sources of the pain.

Here are the top 10 cities with the highest annual inflation rates.

1. Seattle, 5.82 percent
2. Dallas, 5.82 percent
3. Washington, D.C., 5.74 percent
4. Miami, 5.71 percent
5. Portland, Ore., 5.68 percent
6. San Jose, Calif., 5.61 percent
7. Milwaukee, Wisc., 5.61 percent
8. Tampa, 5.60 percent
9. Phoenix, 5.44 percent
10. Los Angeles, 5.41 percent

Source: Forbes, Matt Woolsey (07/18/2008) via REALTOR® Magazine Online

“Go big, or don’t go at all.”  Apparently all this noise about a collapsing housing market doesn’t apply to the fabulously rich.  Check out what The Donald did. . .

Trump's Palm Beach Mansion Goes for $100M
Donald Trump has sold his mansion in Palm Beach, Fla., for $100 million to a Russian fertilizer billionaire Dmitry Rybolovlev.

Trump, who paid $41 million for the 60,000-square-foot oceanfront house in 2004, told the Associated Press, "I think it's a great sign for the area, a great sign for Palm Beach and all that Palm Beach represents. ... In an age of so many people getting hurt in real estate, it shows that you can still do well in real estate.”

Source: The Associated Press (07/16/08) via REALTOR® Magazine Online

Good news.  We all know that perception equals reality.  The American consumer sees better times coming.

Poll: Housing Market to Improve with New President
A recent survey conducted by Harris Interactive on behalf of Move Inc. shows that 44 percent of home buyers expect improvements in the housing market when the new president is installed next year.

At the same time, 81 percent of home buyers are still nervous about the current housing market and say there are barriers between them and home ownership. What kinds of barriers? Respondents cited the cost of a down payment (28 percent), their annual income level (20 percent), lack of confidence in the economy (26 percent) and high home prices (31 percent).

Despite these reservations, the survey indicates underlying demand for homeownership is healthy. While nearly half (41 percent) of current homeowners do plan to purchase a home again, 80 percent of all renters plan to purchase a home someday with 47 percent planning to purchase a home within the next five years.

Most home buyers (78 percent) are also willing to make sacrifices to save and earn extra income for down payments, and will compromise on neighborhood features and residential amenities in order to buy a home in the current market.

Many of their choices may reflect changing values, including a growing concern over the environment, the importance of community features and the rising cost of fuel.

"These findings show that despite the difficulties home buyers face in the wake of the subprime crisis and their concerns about economic uncertainty, underlying demand appears relatively strong. Consumers see better times coming," said Lorna Borenstein, president of Move, Inc.

Source: Move Inc. via REALTOR® Magazine Online

Or maybe not.  It is interesting to see the country waking up to find ourselves in a financial mess.  Even more shocking?  Putting the wrong crew in power in Washington does actually make a difference.  Will the new president wield a magic bullet to fix the economy?  Time will tell. . .

Obama, McCain Seek to Fix Housing Problems
Which candidate would do a better job of handling housing prices?

According to a recent AP-Yahoo News poll, 25 percent of those surveyed said Barack Obama and 17 percent thought John McCain. But nearly 30 percent said neither.

Both Obama and McCain envision the Federal Housing Administration providing new, cheaper mortgages to distressed home owners.

Obama wants to create a $10 billion fund to counsel distressed home owners before they slide into foreclosure; help people sell homes they bought but could not afford; and team with state governments, community groups, and lenders to ensure loans can be modified in a timely manner to avoid foreclosure or bankruptcy.

McCain sees a more limited government role. "In some cases, lenders and borrowers alike were caught up in the speculative frenzy that has harmed the housing market," the Arizona senator said. "It is not the responsibility of the American public to spare them from the consequences of their own bad judgment."

Although most voters think the next president will have a "great deal" or "some" influence over housing prices, there is unlikely to be a quick fix.

"The odds of that are slim to none," says Cal Jillson, political science professor at Southern Methodist University. If the next president can make people more optimistic about the future, "the slow rebuilding of confidence will help to increase home values," he contends.

Source: The Associated Press, Jeannine Aversa (07/06/08) via REALTOR® Magazine Online

Everyone agrees that the long term prospects for our real estate market show continued growth and increasing demand.  But where is this demand going to come from?  Most everyone I know already owns a house and is waiting for prices to head back up.  Harvard University offers this bit of bright news. . .

HOUSING DOWNTURN SLOW TO REVERSE, BUT DEMAND EXPECTED TO CLIMB OVER NEXT DECADE
Record numbers of foreclosures, coupled with tighter lending practices, will make it more difficult for the country to recover from the current housing slowdown, but immigration growth is expected to create a demand for more homes over the next decade, according to a new study released Monday by the Joint Center for Housing Studies at Harvard University.

"The State of the Nation's Housing 2008" says that a return to home affordability levels seen in 2000 will take a combination of continued home-price declines, interest rate reductions, rent deflation, and a boost in consumer spending. "Historically, housing markets recover only after the economy has entered a recession and a combination of falling mortgage interest rates and house prices have improved housing affordability," said Nicolas P. Retsinas, director of the center.

The report adds that the credit crunch stemming from the subprime mortgage crises will likely continue to drag on the nation's economy across several sectors for an unforeseeable amount of time. The study does suggest that immigration is expected to keep up with its current 1.2 million annual pace over the next decade, which, coupled with other social and cultural factors, should feed a consistent rise in demand for more housing.

More real estate statistics.  This time showing median prices from much, much more expensive markets in our golden state.  Check out this list of areas where home prices are actively climbing!  What economic recession?  What real estate downturn?

Statewide, the 10 cities with the highest median home prices in California during May 2008 were

• Los Altos, $1,710,000
• Burlingame, $1,700,500
• Saratoga, $1,506,500
• Mill Valley, $1,475,000
• Los Gatos, $1,350,000
• Newport Beach, $1,250,000
• Cupertino, $1,172,500
• Santa Barbara, $1,066,000
• Rancho Palos Verdes, $950,000
• San Carlos, $900,000

Statewide, the 10 cities with the greatest median home price increases in May 2008 compared with the same period a year ago were

• Sonoma, 61 percent
• Cupertino, 16.7 percent
• Mill Valley, 14.6 percent
• Los Gatos, 10.2 percent
• Sunnyvale, 4.7 percent
• Fullerton, 3 percent
• Burlingame, 2.1 percent
• Santa Barbara, 2 percent
• Los Altos, 1.8 percent
• Folsom, 0.5 percent

If you’re wondering how many single family homes in Santa Cruz County priced under $500,000 are available on the market, I have some very interesting news for you.  Over the last two months I’ve posted these numbers as compared to three years ago when there was only 1 home.  Two months ago there were 270, last month it went up to 292, and today…… down significantly at only 138 homes.  Remember, these totals are for single family homes, not including condos or townhomes.  I believe we’re seeing a shift in Buyers attitudes.  I think Buyers are realizing that it’s time to jump in and buy before the market changes.  With lending guidelines getting ever more difficult, and interest rates climbing, it may be time for you or someone you know to make your move!

If you have been considering a purchase, but waiting for the market to reach bottom, we are getting close.  Don’t wait too long and miss the boat!  Give us a call and we’ll see if the time is right for you.

Dan & Lyn
July 2008

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