Real Estate Digest
A California Real Estate Newsletter
Edition 5, December 2014
Blessings and Gratitude to each of You in our Holiday Season
Hello, and welcome to the Fifth Edition of the Real Estate Digest.  

This edition is about 2015, where are we now and where does the market appear we are going? For now, there is a large and powerful storm with big waves and big shifts in our state and county, so we may as well go with the flow. Some may want to keep their sights fixed on calmer horizons and stay out of harms' way, while others may be ready to jump on the waves and take advantage of changing tides. The two wave fronts are Affordability and Inventory.


Those who own homes, need to sell and are willing to price their properties in the market, and those with cash and borrowing power, will ride that wave. I am here to help you navigate the Santa Cruz Market and provide surfing instructions so to speak.  


Those who do not have a loan or the chance to get one, who do not have a down payment, and/or sellers who want more than the market is offering at the moment, would be advised to stay out of the surf for now.


If you're ready to jump on a wave, contact us today for real estate surf instruction. If you are planning to ride out the storm and are looking for ways to calm the mind and develop deep inner peace and harmony, inquire about meditation counseling, one of our complementary services for our clients at Schneider Estates.  


2015 FORECAST:  

Millennials on the Move, Affordability, and Inventory 's chief economist, Jonathan Smoke has his predictions and California Association or Realtors summed them up quite nicely for us. Here you go:


Smoke believes that millennials will break out in 2015 as homeowners and drive household formation. Households headed by millennials will see significant growth as a reflection of economic gains. Millennials will also drive two-thirds of household formations over the next five years.


Overall, both population and households have grown at a slightly higher pace in 2014, and this trend will continue in 2015 with modest improvement over 2014 increases.


Smoke commented, "The story about millennials not forming households and getting into home buying is more of a 2012 and early 2013 story. It's outdated. Our view of 2015 is informed by strong trends and indicators of what's happening today with millennials."


Existing home sales will grow as more buyers enter the market, motivated by a clear understanding that both rates and prices will continue to rise.


Low inventory levels and demand driven by improved employment opportunities will push home prices up next year. While first-time homebuyers have many economic factors working in their favor, increasing home prices will make it more difficult to enter the market.


Mortgage rates will increase in the middle of 2015, as the Federal Reserve increases its target rate by at least 50 basis points before the end of the year. Thirty-year, fixed rate mortgages will reach 5 percent by the end of 2015. 


Affordability will decline in 2015 by 5-10 percent, based on home price appreciation and increasing mortgage interest rates. This decline will be somewhat offset by increasing incomes.

Read the full story here.







Buyers and potential sellers,  please note:  get to know HAI: Housing Affordability Index. It is the most fundamental measure of housing's well being (from a financial perspective) in the state. The higher the number, the more people in the state can buy a home. It measures the percentage of households that can afford to purchase the median priced home in the state and regions of California based on traditional assumptions.


These numbers have dropped significantly in the past couple of years. As of 2014 Third quarter: 17% of people can afford a median priced home in Santa Cruz County; 27% in Monterey County, and 21% in Santa Clara County. See more here:


What parallels the HAI are home ownership rates. California has the third lowest home ownership rate in our country. As of Q2 2013, it is at 54%, behind DC and New York. It is right in line with low affordability index. Home ownership rates are at the lowest level in our country since 1995. See more here


I have a BIG question for you at this point in time: Is home ownership better for a country and for its citizen's? The USA tends to be pro home ownership, though not all countries have this stance. The German's and Swiss have some of the lowest home ownership rates of all industrialized countries. They have robust economies as well. Interesting, read more here. At Schneider Estates we are focused on creating harmony in the lives of our clients, customers, and community so we hope to help each of you decide if home-ownership is really the best option, and if so, provide counsel in your decision making. It's important to examine this matter in depth for each person. 






 If you look at PPP: Parity purchasing power, which measures actual output as opposed to fluctuations in exchange rates, China has surpassed our economy. China is has the largest national economic output in "real" terms of goods and services on the planet, as reported by the IMF. PPP means that a Starbuck's coffee produced in San Francisco and the same Coffee produced in Beijing have the same value, regardless of foreign-exchange rates. It's a real way of comparing economies. That is significant, and a big change for us as USA citizens. The Chinese are currently and in the future will likely be big players in our real estate market. We will have more on this in 2015. Read more about this topic here.  

Quick Links


Christine's Corner


Be Blessed. I write from the soul. The evolution of our soul is vastly more important than anything else, from my vantage point. So doing what makes us feel good and is morally and ethically sound, does not hurt others nor ourselves, is a good way to live. This is a soulful life. Please take a moment to contemplate this matter, embracing this challenge as way to evolve our soul as we learn to honor the basic birthright to food and shelter for all human beings.


Poverty is the most critical illness of any society. When we eradicate poverty, we will all live happier healthier lives. Ending homelessness is a focus where I, and you, can contribute. Yet how? Information is power: what is being done about it, locally and nationally?


First the big Picture. The National Alliance to End Homelessness in America publishes a report each year, which you can find here. If you like statistics and data, this is for you.



The report analyzes homelessness from 3 perspectives:

1. National and state trends in homeless populations.

2. Trends in populations at-risk of homelessness.

3. Beds available to homeless persons and usage of those resources. It establishes a baseline from which to examine shifts from transitional housing to rapid re-housing and permanent supportive housing.


HUD provides information on this topic as well: see here


Let's look at California, what are we doing state wide and in our central California coastal area?


This web site is the most extensive source of organizations addressing the potentially homeless and homeless populations of their communities. If you know of someone who is at imminent risk of homelessness, please give them this information. Review it yourself to get an idea of what is being done to evolve our communities: read

HUD provides information as well for California: see here


MOST IMPORTANTLY: 180/2020 Santa Cruz: An initiative to end homelessness in our county by 2020. They are always looking for community and financial support. Sign up to volunteer, donate, and read more about their work here.  Imagine how it would feel, no homeless people in our community.  


Schneider Estates
Christine Schneider, Broker
BRE# 01749537

Issue 5
December, 2014
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