CA S Cruz

Mercury News


Look who's selling homes in Santa Cruz County.

Countrywide, US Bank, Deutsche Bank and Downey Savings and Loan sold homes in March. So did Wachovia and three other financial institutions.

Look what's not selling so fast: Million-dollar homes.

In March, only 11 percent of the sales were for more than $1 million and 20 percent were for less than $500,000, according to Gary Gangnes of Real Options Realty, who tracks the data. The trend was the reverse in February, with 24 percent of sales more than $1 million and 19 percent less than $500,000.

The switch pushed the median price of a single-family home down in March to $650,000 from $682,500 in February -- but not as low as $599,000 in January, when 33 percent of homes sold for less than $500,000. The median is the mid-spending point of what sold during the month.

Only 75 homes sold in March, the fewest number of sales for a month in 11 years, an indication of buyer reluctance despite lower list prices. The previous low -- 143 sales -- was set last March.

The unsold inventory index, which shows the time it would take to sell the homes on the market at current sales rates, rose everywhere in the county but Watsonville. In every area, there is more than an eight-month supply of homes, an indication that prices may decrease further.

Among the factors cooling the market: More foreclosures, dropping values and homeowners having difficulty refinancing
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into more affordable mortgages, creating a cycle of more foreclosures.

Trulia, a real estate Web site, reported in February that the median price of a bank-owned, or REO, home in California was 24 percent lower than the median list price of homes for sale.

In Santa Cruz County, bank-owned homes are selling at a discount. Among the examples in March:

• 233 Vista Del Mar Drive, Watsonville: Foreclosed in December and sold by Downey Savings and Loan for $490,000. Previously sold for $829,000 in 2005.

• 52 Hawthorne Ave., Watsonville: Foreclosed in January and sold by US Bank for $305,000. Previously sold for $579,000 in 2007.

• 148 Holly Drive, Watsonville: Foreclosed in July and sold by Credit Suisse for $395,000. Previously sold for $685,000 in 2005.

• 612 Bonita Drive, Aptos: Foreclosed in September and sold by Citigroup for $465,000. Previously sold for $500,000 in 2003.

"REOs really drive down prices in an area because the banks are going to keep lowering the price on a home until it sells," said John Wake, an associate broker in Scottsdale, Ariz. "Joe Homeseller, on the other hand, often has the option of continuing to live in the home if he does get "his price" so prices don't fall as fast in areas without a lot of REOs."

Wake theorizes that the more a market is overvalued, the greater the declines in home prices and the faster the correction. He's seen that in the outskirts of Phoenix, where home builders had the market power to raise prices, and he's waiting to see if the corrections in the inner markets will be slower and weaker.

Neither the Santa Cruz Association of Realtors nor the Watsonville Association of Realtors tracks the number of REO sales, but judging from transactions listed in the weekly Santa Cruz Record, Watsonville has more bank-owned sales than other parts of the county.

Ganges doesn't specifically track REOs but he found 12 of the 28 homes sold in Watsonville in January, February and March were bank-owned. The 12 properties were on the market an average of 118 days before a purchase contract was obtained, he said. One sold in one day and two others in about two weeks; another took 295 days.

"I believe that there are more bank owned sales lately," said Stephen Pearson of Century 21 Classic Properties and president of the Watsonville association. "The majority of the homes on the market are short sales. That is changing as more of these homes are foreclosed."

Pearson, who is working as a listing agent for various banks, has noticed the price differential for REO homes.

"With a bank-owned property, they are sometimes priced under market value and are attracting multiple offers," he said. "They are also typically a 30-day escrow and you can get a response to your offer in days."

Compare that to a "short sale," where a buyer offers to buy a home for less than what is owed.

"Many times by the time you get a response the buyer has found something else," Pearson said.

Lenders are taking up to 60 days to respond, said Mary Saccullo of Santa Cruz Title Co., a speaker at Saturday's Housing Expo sponsored by the Santa Cruz Association of Realtors.

"I think they're overwhelmed," she said. "It was a trickle. Now it's not a trickle."

Home hunters who are looking for good deals should make sure their finances are in order, which could be a challenge given the current restrictions on credit.

"Be ready to make an offer when a property comes up," Pearson said. "The properties that are well priced sell fast."
Contact Jondi Gumz at 706-3253 or jgumz@santacruzsentinel.com.
March sales


1996: 154
1997: 196
1998: 207
1999: 192
2000: 228
2001: 165
2002: 179
2003: 162
2004: 230
2005: 195
2006: 159
2007: 143
2008: 75
SOURCE: Real Options Realty,
www.ror.com
March housing figures


single-family homes
Number of listings:
1,208 (11-year high)
Number of sales:
75 (11-year low for March)
Median price: $650,000
(was $682,500)
Average price: $707,546
(was $857,124)
Unsold Inventory Index: 16.1 months
•Santa Cruz: 9.4 months (was 6.3)
•Aptos: 10.3 months (was 10.2)
•Capitola: 11.6 months (was 9.4)
•Live Oak: 17.8 months (was 15.2)
•Soquel: 18.0 months (was 15.0)
•Scotts Valley: 18.2 months (was 13.7)
•SLV: 19.9 months (was 11.3)
•Watsonville: 23.4 months (was 32.3)

Condos
Number of listings: 290 (12-year high)
Number of sales: 20 (lowest in 11 years)
Median price: $424,850 (was $395,500)
Average price: $483,986 (was $402,773)
Unsold Inventory Index: 14.5 months (was 25.5)
Source: Real Options Realty,
www.ror.com