Home sales in Santa Cruz County in December were brisk as median price, the midpoint of what sold, was $475,000, remaining less than $500,000 for 11 of the past 12 months. The figures come from Gary Gangnes of Real Options Realty, who noted the December volume was up 24 percent from a year ago. It was the highest since 2004, when the boom was on and the median was on its way to $775,000.
About 40 percent of the December sales involved distressed property, a little less than November, when the median was $410,000. Agents have been pressing banks to speed up approval of “short sales,” accepting a price that is less than what is owed, but there were more sales of bank-owned homes than short sales. The median price for condos was $249,000 on 33 sales; 64 percent were distress sales.
Tom Brezsny of Monterey Bay Properties, closed five sales in December, more than any other agent in the county but he doesn’t expect that pace to continue. “We’re back to 2001 prices on single-family homes,” he said. “Condo prices are back to 1999. They will be the last to go up.” Brezsny said he considers the spurt of sales to be the result of tension that built up, like the shock of an earthquake releasing tension underground.
“If things were busy in December, you would see a lot in January, and I don’t think you’ll see that,” he said.
Last month listings were down 9 percent from the previous year.That’s keeping traditional buyers, what Brezsny calls organic buyers, on the sidelines.”Organic buyers are not willing to buy anything that’s comes on, they want more, better houses,” he said. “Organic sellers are not willing to put their house on the market until they are more buyers.” So who’s buying? “Investors are jumping in because rents are skyrocketing,” Brezsny said.
‘Serious buyers were out in December,” said Debra Frey of Intero, who’s been working in real estate for 35 years and received the lifetime achievement award from the Santa Cruz County Association of Realtors.
Paul Bailey of Bailey Properties said investors are going after homes less than $500,000 and about 35 percent are paying cash. He had a cash buyer for apartments who expects a return of 5 percent to 6 percent. “It’s a values market, not an ego market,” Bailey said. “Above $800,000, buyers are not sure the values are there.”
Investors are coming from over the hill and beyond. Pacifica Cos., based in San Diego and doing business as REO Seastone, bought five foreclosures, four homes and vacant land, from Bank of America at year’s end. The five transactions totaling nearly $1.3 million were recorded on the same date. An affordable condo behind Target at 146 Rio Del Pajaro Court, Watsonville, which fetched $334,000 in 2006 sold for $142,500; a townhouse at 1200 Capitola Road in Santa Cruz that fetched $410,000 in 2004 sold for $210,000, and a home at 1100 White Road, Los Gatos, where the owner owed more than $900,000 sold for $199,000. Pacifica, run by the Israni family, did not return a call for comment, but according to a 2008 announcement on the company website, the family sees investments in distressed residential real estate as a good opportunity.
Other out-of-town buyers are trying their luck at the foreclosure auctions that take place Monday through Friday at 1:30 p.m. on the steps of the county government building. A bidding war broke out Friday over 194 Calabria St. in Aptos, a 2,900-square-foot house with four bedrooms and 3 1/2 baths. Listed for $799,000 and described as “stunning newer construction,” there had been no takers. The lender set the opening bid at a little more than $658,000, which covered the entire debt.
About two dozen people watched in fascination as the two bidders sent the price higher, and higher, and higher – up to $711,100.
“The property’s very good. It’s an ideal location,” said the winning bidder, a man who described himself only as a San Jose investor. He was represented by Peter Tiemann, of Santa Cruz Capital, which has bought up other distressed homes this year. The losing bidder upped the price by $100 more than three dozen times on behalf of the investor at his side.”Things are slow here (compared to over the hill),” said the investor, who declined to give his name. Brezsny found the bidding war surprising. “It’s indicative of how poor the choices are,” he said, suggesting that discretionary sellers could improve the market by putting their homes up for sale. “The more distress sales, the more property will go down in value.”
Appraiser Glenn Fuller said, “The high end is coming down faster than anyone realized.” A Sunny Cove home overlooking the ocean sold for $5 million, then $3.6 million and most recently $1.8 million, he said.
“There’a huge inventory of people thinking their house is worth more than it is,” he said, noting 299 homes are listed for more than $1 million but only six to seven sell at that price range in a month.
December 2011 Statistics
Median price: $475,000 ($503,250 a year ago, $549,500 in 2009 and $450,000 in 2008)
Listings: 705 (773 a year ago, 690 in 2009 and 944 in 2008)
Sales volume: 159 (128 a year ago, 146 in 2009 and 114 in 2008)
Unsold Inventory Index: 4.4 months (6 months a year ago)
Average price: $548,333 ($578,052 a year ago)
Median price: $249,000 ($275,000 a year ago, $338,250 in 2009)
Listings: 239 (251 a year ago, 209 in 2009)
Sales volume: 33 (33 a year ago, 36 in 2009)
Unsold Inventory Index: 7.2 months (7.6 months a year ago)
Average price: $276,639 ($316,629 a year ago)