(Source: Jondi Gumz Santa Cruz Sentinel, Calif. (MCT) — The housing market is heating up after months of stagnation, but ironically, that is one reason sales cooled off in June.
Last month, 164 single-family homes sold in Santa Cruz County, down from 212 in May, according to Gary Gangnes of Real Options Realty, who tracks the numbers.
The median price, the midpoint of what sold, was $494,500. It’s down from $775,000 at the peak of the housing bubble, but hovering to less than $500,000 for the past year.
So why a 23 percent slide in sales in the prime home-buying season?
Lots of deals are dying at the appraisal, with the bank refusing to loan money for a house under contract because the appraiser says it’s overpriced, according to Redfin, the online real estate company. Redfin contends the bottom was “so last year,” and Gangnes concurs.
Local listings for less than $500,000 attract a feeding frenzy, leading to a bidding war and offers higher than the asking price. But the appraisals are based on comparable sales from when the market was not so hot.
Frank Murphy of Keller Williams Realty had three escrows cancel in the last six weeks, one for appraisal issues.
“The appraisal was 15 percent less than the purchase price,” Murphy said. “The bank would not allow the appraisal to be adjusted to reflect more accurate information than that used in the appraisal, the principals could not agree on a new price, so the deal was cancelled. Appraisal values are hard to support when the market is stabilizing and/or improving, which is the case in some parts of the county.”
The Santa Cruz Westside is “hot,” said Sloane Devoto, a Coldwell Banker agent. “People are flocking to this area to buy second homes.”
She had lots of offers for a Westside homeowner pursuing a short sale who needed lender approval to sell for less than what was owed.
“The bank for the lienholder said it had to be a lower price,” she said. “They just appraised it differently and chopped a bunch of money off.”
She suggests buyers submit back-up offers, just in case the first offer falls through.
For a property in Boulder Creek, she said, the bank wouldn’t approve a loan unless repairs were made even though there was no code violation.
“Market value is what someone’s willing to pay, now the bank says we’ll make that decision,” she said. “Is anyone watching them making the rules?”
As of July 1, there were 841 local listings, down 17 percent from a year ago, with the usual summer spike nowhere in sight.
The unsold inventory index is 5.1 months, meaning that’s how long it would take to sell what is on the market. The index has been below normal for four months, pressuring home values upward, according to Gangnes.
Countering that pressure is the percentage of sales that are bank-owned, 23 percent in June, same as a year ago.
“Many markets have seen gains in their median sale prices at least partly, if not entirely, because of a change in the types of homes selling,” said Andrew LePage with DataQuick, a real estate information compamy. “The biggest change in many areas is a substantial drop in foreclosure resales, which your county didn’t see.”
A three-bedroom home at 154 Grunewald Court in Santa Cruz sold in June for $505,000; the owner had paid $660,000 in 2004. The bank foreclosed in March 2011.
A two-bedroom home at 577 Western Ave. in Brookdale sold for $133,000; the owner had paid $410,000 in 2004. The bank foreclosed a year ago, and reduced the price before a deal went through.
Jayson Madani of American Dream Realty said he sees the San Lorenzo Valley on an upswing. A home he sold for $340,000 in 2009 sold for $440,000 two weeks ago, he said.
Sales of high-end homes did not pick up in June; only 6 percent sold for more than $1 million.
Tony Andrews, a retired physician, and his wife Ann, a psychotherapist, are empty nesters planning to downsize. They are asking $1.45 million for their four-bedroom home on Henry Cowell Drive in the exclusive Woods Cove gated comunity outside Santa Cruz.
“They want to get the price they’re asking,” said Jana Page, an agent with David Lyng, so Andrews has a creative strategy to entire buyers.
If someone had a smaller home and wanted to buy this home and move up, we would take over their house payments and they could get a loan for the difference,” he said. “We have the ability to help them finance.”
He said he sees homeowners reluctant to sell and take a loss.
“If they would allow losses to be written off, you’d see a lot more homes on the market,” he said.
Follow Sentinel reporter Jondi Gumz on Twitter: @jondigumz
June 2012 statistics
Single-family homes
Median price: $494,500 ($535,000 a year ago; $507,500 in 2010; $483,000 in 2009)
Listings: 841 (1,009 a year ago, 1,116 in 2010)
Number of sales: 164 (167 a year ago, 149 in 2010)
Distressed: Bank-owned, 38; short sales, 30
Unsold Inventory Index: 5.1 months (6 months a year ago, 7.5 months in 2010)
Average price: $531,397 ($624,287 a year ago)
Condos
Median price: $295,000 ($268,450 a year ago; $284,000 in 2010; $299,000 in 2009)
Listings: 252 (300 a year ago, 285 in 2010)
Number of sales: 41 (44 a year ago, 38 in 2010)
Distressed: Bank-owned, 15, short sales, 8
Unsold Inventory Index: 6.1 months (6.8 months a year ago, 7.5 months in 2010)
Average price: $318,642 ($285,241 a year ago)
SOURCE: Real Options Realty, www.ror.com.
CLOSE TO THE MEDIAN
City of Santa Cruz
1004 Bay St., $484,000
120 Grandview Terrace, $485,000
130 Belvedere Terrace, $500,000
116 Continental St., $500,000
154 Grunewald Court, $505,000
Santa Cruz County
23650 Skyview Terrace, Los Gatos, $485,625
415 Eleana Drive, Ben Lomond, $494,000
783 Old San Jose Road, Soquel, $495,000
280 Crow’s Nest Drive, Boulder Creek, $497,000
3210 Malibu Drive, Live Oak, $505,000
Lowest
265 Fern Drive, Boulder Creek, $110,000
681 Creek Drive, Boulder Creek, $112,000
577 Western Ave., Brookdale, $133,000
442 Tuttle Ave., Watsonville, $155,000
6 Stewart Ave., Amesti, $160,000
Highest
250 12th Ave., Live Oak, $1.25 million
17788 Old Summit Drive, Los Gatos, $1.3 million
510 El Salto Drive, Capitola, $1.39 million
214 Beach Drive, Rio Del Mar, $1.647 million
420 Seaview Drive, Rio Del Mar, $2.25 million
Source: Real Options Realty
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©2012 the Santa Cruz Sentinel (Scotts Valley, Calif.)
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Distributed by MCT Information Services
Source: Jondi Gumz Santa Cruz Sentinel, Calif. (MCT)
