SANTA CRUZ - The median price for a single-family home in Santa Cruz County in March was $480,000, almost the same as a year ago, but sales were up 5 percent and listings down 9 percent, bringing fierce competition for buyers.
Of the 171 sales, 9 percent were for more than $1 million, more than any month since August, according to Gary Gangnes of Real Options Realty, who tracks the numbers, and 43 percent involved bank-owned properties or "short sales," where the lender accepts less than what is owed.
He noted the unsold inventory index, the number of listings divided by sales, has dropped to 4.6 months, a level at which prices are likely to rise.
Foreclosures, where a mortgage-holder has been given notice their home will be sold, are down 14 percent from a year ago, according to the Santa Cruz Record, but nearly 400 local homeowners face that situation and about 175 have lost their homes at foreclosure auctions.
Local real estate agents offer a variety of scenarios for what might happen during this buying season, five years after the peak of the housing bubble when the median reached $775,000.
"We won't see a big burst of buyers out of the woodwork until maybe next year," said Justin Bare of David Lyng Real Estate, who expects people who sold in a short sale and are renting will need to time to rebuild their credit to buy again.
"A lot of people bought too high," he said. "They're still trying for a loan modification or they're trying to sell but their price is too high."
Anything less than $500,000 "is getting 10 to 20 offers," according to Bare.
"I had one on Sims Road (in Santa Cruz) and the first day there were 13 offers, with six all cash," he said. "It was listed for $299,000 and we ended up at $350,000. It was only 1,000 square feet. That's a pretty good price per square foot but it needs a lot of work."
He handled the sale of a three-bedroom house on Old Graham Hill Road in Santa Cruz for $480,000 after the seller had taken it off the market. He had buyers willing to deal with retaining walls needing $80,000 worth of work if they got their price.
With so few homes for sale, more buyers are "buying location" and "starting to see beyond the initial look of the house," Bare said.
As of the first week in April, there were 782 listings, compared to more than 1,000 three years ago.
Patti Boe of American Dream Realty said she is seeing buyers from Silicon Valley who gave up vacation homes and stayed in hotels during the recession back in the market again.
"We have a good strong economy in Silicon Valley," she said, noting the spillover effect as people working over the hill want to come to Santa Cruz to surf and be near the water.
At the high end, she sees more than one buyer interested but not always willing to pay full price.
Banks had halted jumbo loans for high-end homes, but now they're back "a little bit," she said, observing buyers for homes priced at $1 million and up often have cash.
A buyer paid $2 million in March for a three-bedroom home on Pleasure Point Drive; the asking price had been $2.6 million. Boe said the value dropped due to the Pleasure Point Park project that took away some front yards.
"I think it's going to be worth more," Boe said, noting the new owner got an offer for the full asking price but declined to sell. "The way the park is built, it will shield the house and create more privacy."
Bradd Barkan at California Dreaming in Felton expects to see "nothing but short sales and bank-owned" homes because of banks not having enough staff to deal with sales expeditiously.
He handled two sales to the same buyer, $80,000 and $85,000, both cash deals. One in Ben Lomond was less than 1,000 square feet and had been sold for four times that during the bubble; the other was in Lompico.
"When the market was booming, the bank did lend on these things," Barkan said.
What's lowering prices, he said, is unpermitted construction, common in San Lorenzo Valley, as homeowners sought to avoid the expense and red tape. He cited the case of a cabin on Cooper Street in Felton where the owner doing unpermitted work ran out of money and the bank foreclosed.
Katy King of Monterey Bay Properties believes the market has changed from two months ago.
"I'm not finding the same values," she said.
She represented the buyer of a three-bedroom home needing work on Mosswood Court, where a short sale for $477,500 closed in March.
"You wouldn't get that today," King said.
The asking price is $399,900 on a new bank-owned listing, a two-bedroom home on Hoover Road in Soquel that needs work.
"Comps tell you to write a lower price (offer) but you're not going to get it at that price," King said.
This month, housing analyst Mark Hanson, based in Menlo Park, questioned whether the shrinking number of listinigs is a sign of recovery.
He contends it's a byproduct of federal policy to postpone foreclosures, mortgage-holders owing more than what their home is worth (20 percent of borrowers in Santa Cruz County) and investors and first-time buyers who don't supply the market with a lower-priced house when they buy one the way a move-up buyer does.
In his perspective, "anything done to prevent the flow of distressed property into these markets will prevent a true recovery or even throw the market back into a housing recession."
Follow Sentinel reporter Jondi Gumz on Twitter: @jondigumz
March 2012 statistics
Single-family homes
Median price: $480,000 ($476,900 in 2011; $519,000 in 2010 and $399,000 in 2009, $650,000 in 2008)
Listings: 782 (857 in 2011; 896 in 2010)
Sales volume: 171 (163 in 2011; 129 in 2010)
Distressed: 40 bank-owned; 33 short sales
Unsold Inventory Index: 4.6 month (5.3 months in 2011)
Average price: $542,511 ($527,712 in 2011)
Condos
Median price: $299,000 ($247,000 in 2011; $363,033 in 2010)
Listings: 243 (268 in 2011; 259 in 2010)
Sales volume: 37 (32 in 2011; 28 in 2010)
Distressed: 5 bank-owned; 3 short sales
Unsold Inventory Index: 6.3 months (8.4 months in 2011)
Average price: $299,812 ($306,250 in 2011)
Source: Real Options Realty, www.ror.com
CLOSE TO THE MEDIAN
City of Santa Cruz
1024 Sumner St., $440,000
410 Dakota Ave., $455,000
1744 Escalona Drive, $465,000
119 Beachview Ave., $476,300
528 Western Drive, $525,000
Santa Cruz County
405 Pine St., Capitola, $475,000
140 Mosswood Court, Santa Cruz, $477,500
160 Old Graham Hill Road, Santa Cruz, $480,000
266 Smith Road, Amesti, $481,327
14 MacLeod Way, Scotts Valley, $483,000
Lowest
11392 Lakeview Ave., Lompico, $45,000
1250 Country Club Drive, Ben Lomond, $85,000
571 Barkett Lane, Felton, $96,000
15715 Kings Creek Road, Boulder Creek, $130,000
106 Carey Ave., Freedom, $140,000
Highest
817 Via Gaviota, Rio Del Mar, $1.425 million
1114 W. Cliff Drive, Santa Cruz, $1.485 million
208 Sunset Ave., Santa Cruz, $1.65 million
3054 Pleasure Point Drive, Live Oak, $2 millon
111 Via Concha, Rio Del Mar, $2.12 million
Source: Real Options Realty