By Jondi Gumz
Home prices are going crazy in Santa Cruz County, according to Gary Gangnes of Real Options Realty in Aptos, as would-be buyers bid $50,000, $100,000 and $200,000 over the asking price.
In March, the median price for single-family homes — the midpoint of what sold — set a new record: $1,125,000.
Gangnes said overbidding locally reached the highest percentages ever:
- 41% of the homes sold for more than $50,000 over asking price.
- 26% of the homes sold for more than $100,000 over asking price.
- 12% of the homes sold for more than $200,000 over asking price.
In Aptos, sale prices are 109 percent of the list price, according to Paul Bailey, co-owner of Bailey Properties.
Asking price for this 4-bed, 4-bath, 3,272-sq.ft. home at 135 Seabreeze Place is $1.95M. • Photo Courtesy of Bailey Properties
The median home price in Santa Cruz County crossed the $1 million mark in September before the holiday surge in COVID-19 cases and hasn’t looked back.
The number of homes available for sale topped 500 in the summer of 2018 and 2019, then during the pandemic of 2020, fell far below that.
As of the first week of April, there were 283 listings, an all-time low for that month, according to Gangnes, reporting that over the past 25 years, that week saw an average of 721 listings.
Only 175 of the 283 listings are active, as the other 108 are under contract with a buyer, he said.
“Compare 175 active listings to 147 closed sales in March, and the intense supply and demand relationship is clear,” he said.
Compare this March to March a year ago, when there were 102 sales — again, a sign of intense demand.
Overbids Are Persisting
A 1,540-square-foot home on Redwood Drive listed for $789,000 sold on April 27 for $887,500.
What’s driving the demand?
Bailey said it’s the work-at-home trend created by the COVID-19 pandemic attracted people who work in tech and are attracted to Aptos by the schools, the neighborhoods and the beach.
He’s representing the seller of 135 Seabreeze, on the Seascape Golf Course, asking $1.95 million.
One potential buyer who works in tech has sold his home and is moving to Aptos to enroll his daughter in school. Another works in tech and is eyeing Rio Del Mar Elementary for his 4-year-old son.
Bailey sees Aptos displacing Scotts Valley and Westside Santa Cruz as the hot areas in the county.
“I think Aptos is going to become Los Gatos on the coast,” he said.
Personal Appeal
This explains why the Rintoul family, a couple with two children, mailed a letter to homeowners in Scotts Valley saying they are looking for a home with three bedrooms and two bathrooms in Santa Cruz, Soquel, Capitola or Scotts Valley.
“We thought we’d reach out to homeowners directly … since we aren’t seeing much on the MLS,” they wrote.
Their agent, Chris Simone, said, “It hasn’t worked yet,” but he’s still working with the family and will take calls at (408) 772-7113.
As Gangnes sees it, “a convergence of extraordinary influences” is boosting prices to record levels but these conditions are temporary:
- The record low mortgage rate was broken 17 times during the pandemic, as the Fed heavily purchased mortgage bonds; rates have increased in 2021.
- Santa Cruz, Monterey and Contra Costa counties have had an influx of work-at-home tech employees exiting San Francisco and Silicon Valley.
- National news of sharply rising prices motivate buyers to action.
Not enough people are listing their homes for sale to take advantage of this demand in the market.
Gangnes has several explanations: Some people are fearful of letting the public in their home due to concern about COVID-19 spread, people who would sell worry they wouldn’t find a replacement home locally to buy, and people who could move out of state are choosing to stay put during the pandemic.
One metric to track demand is the Unsold Inventory Index, listings divided by sales. Prices can increase when the index is below six months.
In March, the index was 1.9 months — and the pressure has been building.
Gangnes said the index has been below two months for six of the last seven months, which is very unusual because in the past, there was never a time with two consecutive months below 2.0.
“The Unsold Inventory Index is telling the story of the extreme difficulty would-be-buyers have been facing,” he said.
For would-be buyers losing out because their bid wasn’t accepted, they may buy a condo or townhome instead.
In August, before the UC Santa Cruz quarter began, the median price for condo and townhomes topped $750,000, and sales peaked at 60.
The median price remains fairly high — $640,000 in March, compared to $595,750 a year ago, with 55 sales, up from 30 a year ago.
And fewer people are selling condos and townhomes.
As of the first week of April, there were 55 listings compared to 104 in the first week of March 2020, before the pandemic, Gangnes reported.
Of those listings, 26 are under contract with a buyer, leaving only 29 active.
The trends Gangnes sees are also being seen in coastal California, according to the California Associatoin of Realtors.
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To view the local statistics, go to realoptions.com