Three Santa Cruz homes sold for $1.5 million or more in one day, a rarity

By Jondi Gumz
Santa Cruz Sentinel
07/26/2013

SANTA CRUZ — Something statistically unusual in real estate popped up for the first time this year: Three homes in Santa Cruz sold for $1.5 million or more in a single day.

“It’s very unique for that to happen in one day,” said Paul Bailey, a local realtor in the county.

Sold home at 1035 Laurent St., Santa Cruz

The sales, all on July 16:

  1. 1035 Laurent St. (pictured) near Westlake Elementary, $1.72 million, four bedrooms, three baths, 3,217 square feet. The owner bought it in 1999 for $566,000 and listed it for $1.779 million.
  2. 224 16th St. near Sunny Cove Beach, $1.585 million, three bedrooms, 2 baths, 1,752 square feet. The owner bought it in 1998 for $559,000 and listed it for $2.95 million.
  3. 242 Fourth Ave., near the harbor, $1.5 million, four bedrooms, four baths, 2,356 square feet. The owner paid $450,000 in 1986 and listed it for $2.995 million.

This real estate trifecta is a relatively new phenomenon, according to a spreadsheet of million-dollar sales created by realtor Gary Gangnes.

BOOM TO BUST
It happened three times in 2000, the year of the dot-com boom, once in 2011 with the dot-com bust, but not at all in 2002, after the economy was shaken by the Sept. 11 terrorist attack the year before.
In 2004, sales for more than $1 million took off, and trifectas became more frequent. In 2005, there were six.
In 2006, there were two trifectas and March 30 marked the first and only time the county recorded four sales for $1.5 million or more.
Since the housing market collapsed, the trifecta has become a once-a-year phenomenon at best.

Asked if the trifecta signals a change or is an anomaly, Bailey said he is optimistic but thinks it is too soon to say. When he talked with agents Steve and Dianne Pereira, who specialize in beachfront homes, they reported “the upper end is still slow.” Tom Brezsny, a realtor whose average sale for five boom years was $1 million, was not surprised by the trifecta at $1.5 million.”That’s been a little of a sweet spot,” he said. “You can get a lot of house for that.”

‘LONG DRY SPELL’

He is mystified that demand for homes priced above $2 million has disappeared.”It has been a long dry spell,” Brezsny said. “We haven’t had one sale above the $2.5 million mark for seven months.” As an agent with a sale for $3.75 million last year, he clearly is dismayed.Notice how the asking price for two of the homes in the trifecta was more than $2.5 million and the owners accepted less.Brezsny said nine sales this year have been for more than $2 million, the highest being $2.55 million on Opal Cliff Drive.Only three are pending at that price point, including an 87-acre ranch on Two Bar Road in Boulder Creek.

With 53 homes listed above $2 million, Brezsny wonders, “How long it is going to take to sell those 53?”

SILICON NOT ALL HOT

He said the market is slow at the top end in Silicon Valley, too. Reports have focused on multiple offers, bidding over asking price, and rising values in Silicon Valley but Brezsny said the market for homes priced at $2 million to $2.5 million is “much softer over there,” puzzling analysts. “All kinds of people are scratching their heads trying to figure it out,” he said. He sees financing restrictions as one impediment. In the booming market, plenty of homes were for sale. Getting a loan without proving you could repay was easy.

People could sell a condo for $600,000 and buy a house for $800,000, the people selling the $800,000 home would buy a house for $1.2 million, and the sellers of the $1.2 million home would buy one for $1.6 million.

Homeowners could get a low-interest equity line of credit, pull out $200,000 to $300,000 for a down payment, get a loan for the rest. They would buy a new home first, confident they could put their old home on the market and it would sell.

With listings half what they were a year or two ago, prospective buyers are reluctant to sell, uncertain they can find a replacement to buy.Demand for rentals is up, so finding a rental is not easy, either.

URBANISM IS IN

The Facebook millionaires who real estate agents were expecting a year ago did not materialize. “Facebook faceplanted,” said Brezsny, referring to the stock price which fell after the initial public offering. “Other companies didn’t go public. IPO money wasn’t created.”

The current tech boom, with the emphasis on social media, doesn’t hire as much as Intel, IBM or Cisco, Brezsny observed, and the new software developers are younger and prefer an urban lifestyle to buying a home in the suburbs. Silicon Valley venture capitalists, who have the money to invest in real estate, have stayed in the stock market while it charts into record territory.

Meanwhile, baby boomer homeowners are aging, wanting to live where they can walk and ride bikes rather than getting in their cars and sitting in traffic.

“It’s an interesting conundrum,” said Brezsny. “I don’t know what’s going to break it.”

At a glance

Triple sales at $1.5 million or more

2008: Feb. 29
2009: Aug. 28
2010: Sept. 10
2011: None
2012: May 31
2013: July 16

Most expensive homes currently listed

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If you would like information on how homes are selling in a particular market in Santa Cruz, Capitola, Aptos or Watsonville, give real estate agent Hyko Roppel a call today at (831) 477-5815.

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