- In Scotts Valley, the median price of the 28 single-family homes that sold in the fourth quarter of 2013 was $672,500, according to Scotts Valley Realtor Karen Kufchak. That’s up 17.8 percent from the median price of $571,000 in the same period in 2012.
- In Felton, the median price of the 17 homes that sold in the fourth quarter of 2013 was $415,000, up 16.9 percent from the median price of $355,000 in the same period in 2012.
- Over two years, Scotts Valley’s median is up 19 percent from $565,000 in the fourth quarter of 2011. In Felton, median prices are up 66 percent from $250,000 in the fourth quarter of 2011, when only eight homes sold during the three months, and four of those were foreclosure sales by banks.
“Felton got really depressed,” said Scotts Valley Realtor Kurt Useldinger. “But it’s coming back.”
As strong as prices have been for the last two years, they’re still well below their highs. The median for Scotts Valley peaked in March 2006 at $823,000, according to website Zillow. Prices are still down 18 percent from then. In Felton, the median peaked in April 2007 at $560,000. Prices are down 25.8 percent since.
Among reasons for the strong market in the last two years are low interest rates, a strong job market in Silicon Valley, and a lack of homes for sale.
A year ago, homebuyers could borrow at a 30-year fixed rate of 3.5 percent, Useldinger said. Kufchak said borrowers can still lock in 30-year fixed rates “in the mid-4s with no closing costs.”
Home prices are especially strong in the price range of $700,000 to $900,000, said Wayne Shaffer, a broker in Santa Cruz for 41 years. Demand for homes over $1 million is “soft,” he said, partly because the property taxes alone amount to over $1,000 a month.
“But you get a lot more for your money with the higher-priced homes,” Shaffer said. “$1.5 million will get you a 4,000-square-foot house, but at $900,000 you’ll get 2,000 square feet or less.”
Who can afford homes priced at over $1 million? Workers at Apple, Google or other booming Silicon Valley companies, sometimes couples with each spouse making a six-figure income.
Santa Cruz Realtor Neal Langholz agreed that a hot market in Silicon Valley has heated up prices over here.
“Homes in Silicon Valley are getting offers from multiple buyers,” he said. “A house over the hill may get 5 to15 offers, while houses in Santa Cruz get 2 to 9 offers.”
Langholz said investors have also boosted prices. A couple of years ago, an investor could put down 25 percent on a rental property, and the rent would cover the cost of the mortgage, taxes, insurance and maintenance. It was the first time he had seen such opportunities since the early 1990s.
Now, home prices have risen and interest rates have inched up, so those kinds of investment opportunities are hard to find, he said.
A lack of supply is also lifting prices. According to Felton broker Robert Clark, who’s worked out of the same office on Highway 9 since 1959:
“You can’t build in San Lorenzo Valley because you need an acre to install a septic tank system,” Clark said. “We don’t have any acres left. You can’t build, so have to buy something that’s already built.”
- Mark Rosenberg is a financial adviser with Financial West Group in Scotts Valley, a member of FINRA and SIPC. He can be reached at 831-439-9910 or firstname.lastname@example.org.