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Santa Cruz County median price home plunged

by Patti Lyles

February home price median retreats to $380,000
by Patti Lyles

The median price for a single-family home in Santa Cruz County plunged in February to $380,000, the lowest since January 2000, prompting one agent to declare the market has bottomed out.

92 sales, with homes in Watsonville, the area hardest hit by foreclosures, accounting for a record 33 percent.

And 66 percent sold for less than $500,000, the highest percentage in years, according to Gangnes.

In Watsonville, banks sold foreclosed homes at discounts of 30 percent to 50 percent.

A few examples:

124 Grant St. sold for $166,000, down from $490,000 in 2004.

38 Lower Cutter Drive sold for $215,000, down from $420,000 in 2003.

518 E. Lake Ave. sold for $235,000, down from $395,000 in 2002.

Those are not condo prices; those are single-family homes.

"We've hit our bottom in South County in single family," said Dee Dee Vargas, president of the Watsonville Association of Realtors. "If you're waiting to see if prices might drop a bit, you might miss the boat. We're seeing multiple offers. I've got more buyers than properties right now."

With a market full of "distressed" properties, banks selling foreclosed homes and homeowners seeking bank approval for short sales, closing a sale is "almost a miracle," she added. "We get a lot of curve balls thrown at us."

It might be a lender that insists on reviewing an appraisal before authorizing a loan or one that shuts down before providing the promised funds.

Entry-level buyers are taking advantage of FHA loans, but some are discovering there's a catch. Distressed properties need repairs to meet FHA health and safety standards, but banks want to sell the home as is and the buyers are stretched to come up with the required down payment.

Some investors competing with first-time homebuyers.

That's driven by a change in Fannie Mae and Freddie Mac guidelines. The two mortgage-buying entities had restricted investors to four properties. New guidelines allow 10.

Clients qualified for an FHA loan but the bank that owned the house accepted an all-cash offer from an investor.

"With banks, cash is king,"

Tai Boutell of Santa Cruz Home Finance predicts that interest rates for mortgages, pushed artificially low -- at or below 5 percent -- could go up by mid-year to the low 6 percent range. Buyers who wait until then hoping for prices to fall will pay more, he said.

For example, payment on a $500,000 loan at 5 percent would be $2,684 a month; if the home price drops 10 percent in six months and interest rate rises to 6.5 percent, the payment would be $2,844 a month.

While the low-end market is brisk, high-end activity has nearly dried up.

Only four homes sold in February for more than $1 million.

Longtime appraiser Glenn Fuller reported 212 listings in that price range at the end of last week.

"That's a lot," he said.

He tallied only 11 pending sales, leaving about 19 months of inventory.

In 2007. buyers were snapping up $2 million homes around the county. Now they just aren't selling.

Very few people can qualify under the new standards, Fuller said, and the typical buyer of the high-end properties had money in the stock market but doesn't seem as rich since the market tanked.


I want to buy a Santa Cruz Home in the next 60 days

by Patti Lyles

Q: I want to buy a Santa Cruz Home in the next 60 days. You asked me what my FICO scores are.  I just found out that the score was below what you would have liked.  My FICO scores are a little low, is there a way I can improve my scores very quickly?

A: The first rule of maintaining and keeping a healthy FICO score of 720 or higher is NEVER BE LATE!  Primarily any MORTGAGE PAYMENTS. I can't emphasize the point of how important it is to never be late on your mortgage payments.

But it is not the sole deciding factor of your FICO score, the three major credit bureaus involved with FICO scoring are Experian, Equifax, and TransUnion. All three of these companies use algorithmic equations taking in a multitude of factors in determining your FICO score. The FICO score range is between 300 and 850 and to get the best rates from lenders today, a mid-score of 720 is needed.

For example, if you have the following three scores, 680, 730, 745, you are in a position to get the most competitive rates because your mid-score of 730 is over the 720 benchmark score. So what happens if your mid-score falls under 720? There are a few things you can do to get a rapid turnaround in 30 days.

The first and most immediate impact is to look at your credit cards. If you have any credit cards at or over 50% of the maximum credit limit, pay those credit cards to under 50% of the credit limit immediately. For example, if you have a bank credit card and the credit limit is $5,000 and you have a standing balance of $3,500, pay that down immediately to 50% of the credit limit, which means sending a payment of at least $1,000 to bring the balance under $2,500. One of the biggest detriments to your FICO score is having what is classified as a revolving debt (a credit card) maxed out or over 50% of the balance. Once the revolving debt is paid down to under 50% of the credit limit, the impact on your FICO score can be significant.

What happens if you don't have the cash to pay down your credit card debts to 50% of the balance?. If you do not have the $1,000 to pay down the balance, you can ask for a credit limit increase. With the above example in mind, requesting the bank to increase your credit limit to $7,000 will reduce your debt to 50% of the credit limit and can give you a boost in your scores. But this is only for the most disciplined of people because most people are in the habit of just spending and putting more on a credit card once they are granted a credit limit increase.

There are other things you can do to improve your scores to buy that Santa Cruz Home which include limiting credit inquires to no more than 12 a year, do not cancel credit cards you may have had for a long period of time, and there are a list of others which we can go into with the lender you choose to work with on any Santa Cruz Real Estate transaction.

How do vacation rentals work in Santa Cruz?

by Patti Lyles

Q. How do vacation rentals work in Santa Cruz?

A. First of all this is a function of specific rules (ordinances) in City of Capitola and the lack of any rules in the City of Santa Cruz, and in Santa Cruz County areas. 


As for the City of Capitola, there are strict ordinances that govern daily/weekly/vacation rentals. (That is any time period less than 1 month or 30 days.) The property must be zoned commercial and in the Village, Downtown to be rented in this manner. Also, there is a 10% hotel tax (otherwise known as room tax or transient tax) due at all times. Penalties for not paying this are extreme. 


Most is positive about vacation rentals. They are a vehicle to “have your cake and eat it too”.

You buy your Beach House, enjoy it when you want to (or when it’s not rented) and collect about four times the normal rent per month. A rule of thumb is vacation rentals get about the same income per week as you would get per month in the off-season. Of course, you must deduct cleaning, advertising, bookkeeping, maintenance, hotel tax, and any management charges. This total can range anywhere from 25%-45% of the price charged to the guest.


Another perk is the constant appreciation that Beach Properties in Santa Cruz County have enjoyed. Even in so-called down markets,  Beach Homes here have stayed strong since most are cash buyers that are not relying on large loans or high LTV’s (loan-to-value) and our limited product inventory.

Contact for more information about real estate or buying a vacation rental.


Once you leave Capitola, both north and south, you are in Santa Cruz County designation. These areas include Rio del Mar, Seacliff, Seascape, La Selva Beach, Manresa, and Pajaro to the south. To the north of Capitola, there is Opal Cliffs, Pleasure Point, Live Oak, and the Yacht Harbor. All of these areas have no restrictions except to pay the 10% Hotel Tax.


The City of Santa Cruz also has little or no restrictions on vacation rentals that I know of except the 10% Transient Tax due. Fortunately, this Hotel Tax goes to either the City or County areas where the property is located and into those coffers for use on roads and maintenance of that local infrastructure.  When choosing areas for your new beach home that you intend to rent, be sure to call one of the several local vacation rental management companies or a network of owners who want to manage their own. (You can call or email me for this list.) It is important that you ask which property areas are in most demand and exactly what amenities should the property have to get the most rent and be most desirable for vacation tenants.


In summary, the positive aspects of vacation rentals are the following: you have your own Beach House when you want it (maybe with a locked closet or room to keep your personal things on site); you enjoy the appreciation over the years; you off-set the expenses with great income; someone else (if you have a management company) takes care of the problems and maintenance; short-term rentals allow more owner control than long-term; you may need to use your assets for income gain; it’s good for the economy of Santa Cruz – tourism is our #1 business. People who rent vacation homes shop, eat, and are entertained in our little Paradise. Call or email questions


or comments regarding where to buy and how it works


Santa Cruz one of nation's best cities

by Patti Lyles

Outside Magazine issue latest issue names Santa Cruz one of the nation's best cities.

Santa Cruz Home owners once again have proof they live in one of the best towns in America. The upcoming issue of Outside magazine names Santa Cruz in its annual list of the most desirable places to live.


The editors at Outside Magazine said they chose Santa Cruz for its mix of laid-back and cosmopolitan atmospheres. The story describes it as, "old-time hippie culture, complete with dread locked street urchins and lots of wheatgrass, blending with the Volvos and BMWs of the high-tech crowd".

John Bradley, a senior editor for Outside Magazine, said the magazine was looking for "smallish" towns that could blend outdoor treasures with an active nightlife.

"It's that juxtaposition in lifestyle of sports and culture that makes Santa Cruz unique," said Bradley. In its profile of Santa Cruz, Outside recommends hiking in Henry Cowell Redwoods State Park, surfing at Cowell's and tasting local wines at Soif Wine Bar.

Living in paradise does have its drawbacks, though.

Resident Kris Carson, 60, admitted it was hard to make a living in Santa Cruz, and the housing prices don't help.

Santa Cruz has one of the highest costs of living on Outside's list.

But Carson said it's worth it because, "Santa Cruz lets me be myself" As an avid sailor Carson said he loves being near the water. He also acknowledged Santa Cruz's proximity to San Francisco as a bright spot, especially because Santa Cruz "is a terrible town for restaurants," said Carson, a construction manager.

Even those who don't live in Santa Cruz are influenced by its charm.

"It's magical," said Stacie London, who attended UC Santa Cruz and is now an industrial design artist who lives in Los Angeles. "It has everything you'd want for a healthy lifestyle"

London and her husband said they are considering moving here after spending just a few days in town and driving Highway 1 from Half Moon Bay. They said they are impressed with the friendliness of the people and the diverse array of cultural and physical activities. "This would probably be a great place to raise children," said Luis Herrera, London's husband.

This is not the first time Santa Cruz has graced the magazine, popular with outdoor enthusiasts. In 2003, the magazine named Santa Cruz the best college town in America.

The editors at Outside chose one town with a population less than 100,000 in each of nine geographic regions. The August issue hits newsstands July 10.

Contact your real estate agent or look at her site at or for Vacation homes, beachfront and oceanview homes.

Best Towns in AmericaOutside Magzine selected the nation's best cities, with less than 100,000 residents, to live in by region. Santa Cruz was given the honor for the California coast.

 #1California Seaside: Santa Cruz.

  • Northwest: Bend, Ore.
  • Rocky Mountain: Jackson, Wyo.
  • Southwest: Santa Fe, N.M.
  • Midwest: Iowa City, Iowa
  • Northern Lakes: Duluth, Minn.
  • Southern: Asheville, N.C.
  • Atlantic Coast: Portland, Maine
  • New England: Burlington, Vt.

What Your Money Will Buy in Santa Cruz Real Estate

by Patti Lyles

What Your Money Will Buy in Santa Cruz Real Estate

How much house your money can buy, and where, is crucial information to know before you begin your house hunt. Let's face it, If your budget is $350,000 and you're trying to replace that 2,500 square foot, four bedroom house in Kansas, something has to give. That house costs closer to one million in Santa Cruz County.

Santa Cruz County West

Under $300,000

Absolutely nothing. Nada. Zippo

Try Watsonville.

$350,000 to $600,000

2 or 3 bedroom, 2 bathroom condo in either Mariners Cover or Shelter Lagoon.

2 bedroom, 2 bathroom home on a very small lot.

3 bedroom, 1 bath older home in the Lower Westside.

$600,00 to $800,000

Luxury town home, 3 bedrooms and 2 bathrooms in Village Circle near the University.

3 bedroom, 2 bathroom older charmer on the Lower Westside.

2 bedroom, 2 bathroom fixer historic Victorian with lots of history and a large lot.

$800,000 to a Million

Newer 3 bedroom, 2.5 baths, gated Mediterranean town house on Beach Bill with ocean views one block from beach.

3 bedroom, 2.5 bath home within a few blocks of Westcliff and the beach.

4 bedroom, 3 bath Upper Westside Thatcher and Thompson home with ocean view close to the University.

Million Plus

Larger 4 bedroom, 2.5 bath, completely remodeled Victorian near the beach.

Anything along Westcliff Drive looking out over the ocean towards Monterey.

Santa Cruz County East

Under $300,000

Nothing. Try condo market in Capitola Shores or head toward Watsonville.

$380,000 to $630,000

2 or 3 bedroom, 2 bath condo in Harbor Knolls overlooking the back of the Yacht Harbor.

2 bedroom, 1 bath in the Emiline area close to freeway and downtown.

2 bedroom, 1 bath cottage style bungalow close to the beach in middle Seabright area.

$630,00 to $800,000

2 bedroom, 2 bath home near De Lavega Park in Prospect Heights.

Historic 3 bedroom, 2 bath home on Berkeley Way in Branciforte area.

4 bedroom, 2 bath ranch style home in Prospect Heights.

$800,000 to a Million

Spectacular 3 bedroom, 2 bath Cape Cod condo in yacht Harbor Cove. Yacht Harber and Ocean views with all the amenities.

Custom 3 bedroom, 2 bath home in beautiful Seabright.

Immaculate 4 bedroom, 3 bath home in Carbonera Estates.

One Million to Two Million

Ocean view, 3 bedroom, 2 bath home on the bluff on Eastcliff Drive.

4 bedroom, 3.5 bath Glen Canyon horse property estate.

Two Million Plus

Anything: the beach, large estates, the opportunities are endless.

Displaying blog entries 1-5 of 5

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Contact Information

Photo of Patti Lyles Real Estate
Patti Lyles
Century 21 Showcase, REALTORS
P.O. Box 67275
Scotts Valley CA 95067

DRE #01385517