High-end home sales set a record; July median price at $725,000

21 percent of July sales over $1 million, median at $725,000, sales slow down

By Jondi Gumz

SANTA CRUZ >> All of a sudden, high-end homes are in demand, and many of the buyers are coming from Silicon Valley.

“The upper end is going crazy,” said Stephen Pereira of Bailey Properties, an agent since 1982. “More tech people are coming over … they know what they’re looking for.”

In July, 42 of the 197 sales were for more than $1 million, 21 percent, after 28 in June and 33 in May, according to Gary Gangnes of Real Options Realty who tracks the numbers.

The spike pushed the median price, the midpoint of what sold, to $725,000, the highest since December 2007, according to Gangnes.

During the second quarter, 77 Santa Cruz County homes sold for $1 million or more, up from 60 a year ago. That’s the highest since 115 homes fetched $1 million or more in the third quarter of 2007, according to DataQuick, a real estate information company. Sixteen sales at $2 million or more tied the record set in the second quarter of 2006.

Pleasure Point and Opal Cliff Drive are hot spots, with seven or eight homes on Opal Cliff being gutted for a makeover, retrofitted with new technology or becoming the site of a newly built home, according to Pereira.

“The southern end of 41st is a mecca of coffee shops like you’d find in San Francisco,” he said. “Or like on the Westside, that area off Swift you can walk or bike to, it’s got the beach vibe that people enjoy.”

July’s priciest sale: 1307 W. Cliff Drive, a 2,300-square-foot home that fetched $3.995 million from a buyer working in the tech industry.

“On West Cliff, this was the highest sale since 2009,” said Pereira, who represented the seller.

Asking prices of oceanfront homes are eye-popping: $7 million for 4600 Opal Cliff, a 2600-square-foot home coming on the market for the first time in more than 30 years, and $5.35 million for 4100 Opal Cliff, a newer 4200-square-foot home designed by local architect Frank Phanton.

Pereira said he’s closing a sale for a Pleasure Point home that had not changed hands since the 1930s.

“Properties are coming on the market trying to capture these prices we haven’t seen before,” he said.

A four-bedroom home on Las Olas Drive in Seacliff fetched $2.71 million with the buyer, who owns a house at the Summit, paying cash after selling a company over the hill.

“This is a second home for him,” said agent David Mann of Coldwell Banker. “He wanted the sand, his kids play volleyball.”

Another home on the same street is being torn down and rebuilt, Mann noted.

Craig Robinson of Keller Williams, who grew up in Santa Cruz and has been in real estate for 20 years, said 40 percent of his business is in Lake Tahoe and 70 percent to 80 percent of his sales attributable to Silicon Valley.

An executive with Barracuda Networks bought 185 Chalk Mountain Road in Scotts Valley for $2 million.

Robinson, who represented the seller, said tech people who are younger and getting married are thinking about quality schools.

“I live on Mountain Charlie Road, and my kids go to schools in Los Gatos,” he said. “We could send to Scotts Valley or Los Gatos, they’re very comparable.”

The sellers, the Broughtons, moved a few miles away, downsizing with their children off at college.

However, many baby boomers are not putting their homes on the market, a significant factor in the availability of homes for sale.

As of the first week of August, there were 656 listings in Santa Cruz County, the fewest for this time of year in 18 years, according to Gangnes, who noted listings have declined for 41 of the past 42 months.

Of the 443 active listings, 160 are priced over $1 million and 283 priced under $1 million, he said.

Short sales and bank-owned homes, which tend to be more affordable, made up only 7 percent of the transactions in July, according to Gangnes.

As values rise, sales are slowing.

Gangnes said year-to-date sales are down from 1,151 to 1,039, a 9.7 percent drop.

Mann attributes seller reluctance to the crash that took home values down 20 percent in 2008, then another 20 percent in 2009.

“That took their breath away,” he said.

Those who refinanced at historically low interest rates may be unwilling to pay rates that have moved up.

Seb Frey of Realty World Virtuoso noted “short sales,” where lenders accept less than what’s owed on a mortgage, are down 80 percent from a year ago, but some loan modifications have terms that make a sale prohibitive or costly, keeping homes off the market.

With pending sales down 57 percent in July from a year ago, Frey predicts the market will flatten for the next six months.

If you have questions about the current home buying market or interested in the value of your home, then please give Hyko Roppel a call today at (831) 247-3803.

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