SANTA CRUZ -- How much home can you buy for $500,000 in Santa Cruz County?
In November, it was enough to buy a two-bedroom home on Santa Cruz's Westside, a four-bedroom Colonial in Ben Lomond with a creek in the backyard or a three-bedroom home in Soquel. All three sold last month after the owners dropped their asking prices.

November saw the most sales in eight years, according to Gary Gangnes of Real Options Realty, who tracks the numbers. This year, the number of sales has topped 2,800, according to the Santa Cruz Record, surpassing the 2007 peak of 2,650 transactions before crashing to 2,160 in 2008.
The median price in November, the midpoint of 171 sales, was $510,000.

The price for 1725 Escalona Drive was initially $519,000. The sellers came down, and the couple making an all-cash offer got a home for their son who plans to attend UC Santa Cruz, said Jill Newgren of David Lyng Real Estate.

The price for 282 Hart Lane in Ben Lomond was $549,000 before the sellers dropped the price, attracting multiple offers. Seb Frey of Thunderbird Real Estate said his clients got the house after writing a letter to the sellers explaining why this house was perfect for them and they were willing to wait out the short sale process.

The asking price for 1661 Franky Court in Soquel was $525,000 in October, and the longtime owner agreed to accept less. Gangnes pointed out signs of a recovering market: The median price has topped $500,000 for five straight months after 18 months of mostly being in the $400,000 range. For 14 of the last 15 months, sales have been higher than what they were a year ago. Traditionally this is a slow time for real estate due to the holidays, but Newgren, who handled two sales in November and two in December, pointed out, "People who are looking are people who want to buy."

Listings have been shrinking for 22 months. As of the first week in December, there were 598 listings, down from 813 a year ago and 887 two years ago.

"We have eight active buyers and nothing to sell them," said Ruth Bates of Thunderbird Real Estate. "If you think your home is worth between $500,000 and $700,000, Santa Cruz to Aptos, you will have multiple offers in first two weeks guaranteed."

She helped buyers close on 520 Quail Run in Aptos for $500,900 in November.
The five-bedroom home was a short sale, where the home is worth less than what is owed. The deal was in escrow 271 days, requiring three appraisals and approval by Bank of America and Chase. The sellers got $18,000 in relocation benefits.

Bates said her clients, who have a 3-year-old and a 18-month-old, had been looking for three years and submitted a letter about their family with their counter-offer.

"Do not be afraid of short sales," she said. "You can get good deals if you are willing to hang in there."

She encouraged homeowners with a distressed property to consider a short sale.
"The banks are offering nice financial incentives now," she said.

With listings down and sales up, the unsold inventory index dropped to 3.5 months, the lowest since June 2005, according to Gangnes. The index shows how long it would take to deplete the current inventory of homes for sale at the current sales rate. Generally when the index falls below six months, prices tend to rise.

Foreclosures are declining but they remain a factor in comparable sales. More than 1,000 homeowners in the county have gotten a default notice for not paying their mortgage this year, a sizeable number, but down from 1,400 a year ago. Sales involving bank-owned homes or short sales have declined but haven't gone away. These distress sales comprised 30 percent of single-family sales and 25 percent of condo sales in November. Bates said it's more common for investors to buy homes at foreclosure auctions, improve and re-sell them.


At a glance
CLOSE TO THE MEDIAN
City of Santa Cruz
1725 Escalona Drive, $500,000
119 Palmetta St., $510,000
223 Roosevelt Terrace, $515,000
670 Market St., $529,000
316 Stanford Ave., $530,000
Santa Cruz County
282 Hart Lane, Ben Lomond, $499,000
1661 Franky Court, Soquel, $499,000
520 Quail Run, Aptos, $500,900
120 Kent Court, Scotts Valley, $520,000
228 Treasure Island Ave., Seacliff, $520,000
Lowest
1203 Country Club Drive Ben Lomond, $40,000
11790 Highway 9, Brookdale, $110,000
635 Boulder Brook Drive, Boulder Creek, $120,000
141 Orchard Drive, Boulder Creek, $155,000
911 Redwood Drive, Aptos, $180,000
Highest
109 Fanmar Way, Capitola, $1.625 million
500 Bear Valley Road, Aptos, $1.755 million
348 Kingsbury Drive, Rio Del Mar, $1.8 million
50 Hillview Way, La Selva Beach, $2.125 million
1441 San Andreas Road, LaSelva Beach, $4.685 million
SOURCE: Real Options Realty
November 2012 statistics
Single-family homes
Median price: $510,000 ($410,000 a year ago, $536,000 in 2010; $550,000 in 2009; $433,000 in 2008 and $740,000 in 2007)
Listings: 598 (813 a year ago, 887 in 2010; 779 in 2009)
Sales volume: 171 (135 a year ago, 119 in 2010, 140 in 2009)
Distressed: 20 bank-owned, 31 short sales
Unsold Inventory Index: 3.5 months (6 months a year ago, 7.5 months in 2010)
Average price: $593,570 ($460,725 a year ago)
Condos
Median price: $320,000 ($232,620 a year ago, $287,700 in 2010, $310,000 in 2009, $297,000 in 2008, and $497,500 in 2007)
Listings: 193 (246 a year ago, 248 in 2010, 206 in 2009)
Sales volume: 43 (34 a year ago. 20 in 2010, 29 in 2009)
Distressed: 8 bank-owned, 7 short sales
Unsold Inventory Index: 5.4 months (7.2 months a year ago, 12.4 months in 2010)
Average price: $371,814 ($266,325 a year ago)
SOURCE: Real Options Realty