Santa Cruz Real Estate  Digest,  Ed. 17
January, 2017 - In This Issue:
In This Month's Issue
In this month's Digest you will find national and local news as well as informational pieces on topics that we have found to be increasingly important in the real estate industry. 

Social Media has become a powerful tool for Real Estate Agents and home Sellers. However, it's important that you understand exactly what tools are being used to market your property. We explain how the Schneider Estates Social Listing Method can be used to sell your home using social media

Kyosho-Jutaku or Micro homes in Japan are beautiful in form and function. As we anticipate increased density in Santa Cruz in the Bay area, we may be able to learn a thing or two about using space wisely from the Japanese. 

Research shows that rents are starting to cool in the Bay Area, so what does this mean for Santa Cruz?

Affordable housing  has been on the minds of many, and the truth is, we are facing a housing crisis in California. One Assembly Member has proposed a solution.

By using the internet, buyers can make more informed, precise and profitable decisions than ever before without leaving the comfort of their homes. To help you take advantage of these tools, we have created a narrative, accompanied by online recourses
to s upport you on the path to homeownership

Real Estate Market Statistics 
For Santa Cruz, Santa Clara, and  Monterey

The reports contain median home prices, real estate price statistics, valuable information about mortgage rates and much more.

Selling Your Home With Social Media

In an earlier newsletter, we mentioned tech-savvy solutions used at Schneider Estates. Let's peer into Facebook's Paid Advertisements . It's important to see how these paid ads work to get properties sold, and how unpaid "ads", also known as "posts", are not as effective.
The Social Listing Method uses paid advertising on Facebook to market your property to the people who are most likely to buy it. Because we invest in these ads, we are able to take advantage of Facebook's algorithms to identify thousands of potential home buyers whose incomes meet the threshold to buy your home. Furthermore, we identify people who have specific interests (as identified by Facebook) that make them likely candidates for real estate purchases and investment.
Free postings on Facebook are not the same in cost, target market and ultimate effect. Agents will tell clients that they "use social media to advertise" which usually involves posting listings on social media at no charge. It's unlikely that very many people who have not accepted a friend request, or liked your agent's business page, will see the post. This is not target marketing. Furthermore, agents often use social media to network and so a large proportion of the people seeing your property's post are going to be other agents, who already have access to your property on the MLS. See the difference?
It takes money to get your property into the minds and hearts of real buyers on Facebook and other social media platforms. We do the groundwork to find and leverage the most effective marketing tools available on these websites to give your property the greatest exposure. 
Check later digests for information on how we use other social media platforms such as Instagram and Pinterest to advertise your property.
If you have questions about how we can use social media to enhance your selling experience, please call us.

Using Online Tools to Make Informed and Profitable Home Buying Decisions

We have consistently provided an array of useful online tools that buyers can use to estimate mortgages, compare renting versus buying, find down-payment help, and much more.

Buyers can make more informed, precise and profitable decisions than ever before without leaving the comfort of their homes. We have created a narrative, accompanied by online tools, to support you in the path to homeownership. We will help you:
  1. Secure a mortgage.
  2. Find down-payment assistance programs if necessary.
  3. Make wise choices about the cost of renting versus the cost of buying both long and short term.
  4. Find and buy a home you love, creating peace of mind.

We will support you through each step all the way to homeownership, with a calm, gentle, and wise approach.

Step 1) Your Mortgage Rate.

If you are planning to pay all cash, or have visited a lender and know what mortgages are available to you, skip ahead to Step 2.

If you are still here, visit this  site .

Give as much information as possible. Here are notes to help:
  • The median home price for an SFR in Santa Cruz is $805,000. This may be a good starting point for the purchase price, but if you have found a home that is selling for a different price and suits your needs, fill in that purchase price instead.
  • Your down payment should equal the money you have in savings or investments, or expect to receive as a gift. In California, over 400 down payment assistance programs are available. Use  this site to find out if you qualify for one.
  • You can use free online resources like  Credit Karma to check your credit score if you do not know it. Despite popular belief, this "soft inquiry" will not hurt your score.

Step 2) Rent vs Buy?

To gain a better understanding of the cost, gain, and bottom line of buying vs renting, use Zillow's online rent vs buy calculator found  here (make sure and read the explanation below the graph).

Check out these notes to help you with the form:
  • Use the same purchase price as above.
  • If you want to increase your accuracy, click "More" and use these tips:
  • If you've visited a lender, and know the mortgage rates are available to you today, put this value (or average of values) in "Mortgage rate". Or, use the rate found in Step 1.
  • If you plan to use it as a residence rather than rent it, make your first-year rent forecast 0%.
  • If it is not a condo and has no HOA fee, insert $0 for "HOA fee".

Many other fields default to standard costs, percentages and amounts, so be sure and change them whenever you know the exact values. Precision will give you more exact results.

Step 3) Finding your Dream Home

At this point you have a rough idea of available mortgage rates and the cost vs benefits of buying. If you've concluded that buying is the right decisions for you and your family, then meet with a qualified mortgage broker to get pre-approved. If you are a first time home buyer, we suggest you go through the  Mortgage Basics Tutorial  provided by Investopedia. This simple yet informative tutorial will help you understand the differences between fixed vs variable rate mortgages, mortgage costs (including points), amortization schedules, your loan eligibility, and much more.  

After getting a pre-approval letter, you are now ready to look for a home!

We recommend that our clients start the path to homeownership by calling us to get setup on an automated property search. We can set the search to fit any criteria you may have, including bed/bath configurations, a specific location, home type, and more.  There are some questions that first time homebuyers should be asking about the home but do not. We bring these points up if needed to ensure that our search is efficient. You will get updates whenever a new home comes on the market that fits your needs, and when you find one that you like, we can show it to you!

When it comes time make an offer on your dream home, you'll know how similar houses are priced and how long these properties stay on the market. This information makes you a more effective negotiator.

In summary, we believe in giving you information, support, knowledge and insight into the home buying process. From finding loan options and downpayment assistance programs to negotiating a fair purchase price, using the tools presented above, we know that you will make wise, informed and profitable real estate decisions.

Are Rents Starting to Cool?

Let's look at the Bay Area rental market as it can be a predictor for the Santa Cruz Rental Market. According to, the cost of renting is plateauing in the Bay Area. By mid-December, 2016 San Francisco was down 2.5 percent from December, 2015. San Jose and Oakland were down 0.7 and 0.8 percent respectively ( source).

Andrew Woo, a data scientist for attributes the softening rental market to construction of thousands of new units around the region, the usual seasonal slowdown, and unsustainably high rent increases over the past years.

However, surrounding areas are not following the same trend line. Areas such as Concord saw 6.8 percent higher rents in 2016 than in 2015. In Pleasanton, rents are up 8 percent. This suggests that the pressure for affordable rentals in the Bay Area has reached its peak and is driving renters into surrounding areas. Is Santa Cruz on a similar path?

Similar to San Francisco, rents in Santa Cruz have been climbing to new heights since 2014, as seen in this   Santa Cruz Sentinel article. High rents have persisted in Santa Cruz throughout 2016. There is a possibility that Santa Cruz will continue to absorb Silicon Valley rental demand, like Concord and Pleasanton. And, as seen in the graph below, rental increases slowed throughout 2016. The final analysis is that we do not expect a decline in rents soon and could see slight increases to continue throughout 2017 though a plateau is likely on the horizon.

( source )

What We can Learn from Japanese "Kyosho-Jutaku"?
During a recent trip to Japan, I was inspired by the minimalism and sophistication of their living quarters. Japan is 0.89 times as big as California, and habitable land is precious and often expensive on the islands. Apartments and houses are small, and yards are often tiny and scarce. Japanese homes are, on average, less than half the size of American homes. Household energy consumption in Japanese homes is less than half of that in US homes and this in part is due to smaller square footage per person.
Due to the supply shortage of housing in California, we expect construction to increase over the next few years. It is likely that neighborhoods will become more dense. The trend of higher prices for less space is likely to continue.
Just as the Japanese have learned to maximize small living spaces, we in the Bay Area and Santa Cruz may have to learn to live with less. What can we learn about living well in smaller spaces from the Japanese who do it so well?
Kyosho jutaku means Micro Home in Japanese and these small houses, often placed on "leftover land" epitomise infill. When designed well, these homes give a balance of aesthetic and practicality for everyday living:
(See more Japanese micro homes here .)
Yasuhiro Yamashita, an architect of micro homes, uses features like picture windows and small gardens to create space for the eye. He uses smart design, for example adjusting the height of the ceiling, to create spaciousness. A common theme in these tiny homes is to use every inch of space mindfully. You can often find hidden cabinets, shelves and drawers in the walls, under stairs, and in other interesting places. These houses have become even more accessible in Tokyo because computers can model the houses within a matter of hours, a job that used  to take years.
The following lessons can be learned from our Japanese friends: create spaciousness in small spaces with perception-focused design, for storage think outside of the box, and use technology to make appealing designs accessible to more people.

Four Bills Announced to Address the CA 
Affordable Housing Crisis

As  CNN reports , for every one person entering California, three are leaving. California's housing market is one of the most expensive in the country, with median home prices up by 71% since 2011. Here in Santa Cruz, we are no stranger to escalated home prices. In 2016, median price for condos set a record in July at $575,000, and the median price for single-family homes set a record in August at $827,000.

Assembly member of San Francisco David Chiu, along with Assembly members of Salinas, Los Angeles, and San Mateo announced four bills to address California's affordable housing crisis.

The first would end the state mortgage interest deduction on vacation homes. These funds, approximated to reach $300 million/year, would bolster the Low Income Housing Tax Credit program. (See more here .)

The second would increase enforcement of existing state housing laws. This would appropriate funds to the Attorney General to enforce existing state housing laws. The Attorney General already has this authority, but no funds allocated for this purpose. Fact sheets are forthcoming.

The third would catalyze production of housing on infill sites around public transportation. Through a reward system, this bill incentivizes local governments to complete upfront zoning and environmental review for these areas. (See more here .)

The fourth would create a program named "Housing for a Healthy California" which pays for the cost of housing chronically homeless individuals on Medi-Cal who receive services through a controlled funding source. Fact sheets are forthcoming.

( source )

If the bills make it through the first phases, they will not make it to the governor until September, and so we should not expect them to come into effect until late 2017 or 2018 if passed.
Christine's Corner

"Harmony in any community, whether a 
small group  or a whole society,  de pends
on a share commitment to ethical conduct."

By definition, harmony depends on different elements blending together to create a pleasing effect. This implies that harmony can only exist in the presense of differences. In real estate, we see differences in the buyer and seller viewpoints every day. When deals are harmonious, both parties tend to be more generous, timelines are met, and peoples needs are served. This is the kind of real estate we like to create. 

This is where ethics comes into play. One definition of ethics is: moral principles that govern a person's behavior or the conducting of an activity. Through ethics, we can learn to act with respect and honor toward the other party in the midst of our differences. Business deals that happen without ethics, without honesty, without recognizing the integrity of each person involved, and complete disregard for the morality of every person will create disharmony. While one party may profit in the short term, the long term effects are detrimental to our community and our country. This is why we believe in and practice the ethical approach to real estate transactions: harmonious deals benefit everyone, including our clients.