Andy Manzi is looking to buy a bigger home, one with space for his 4-year-old daughter's toys and room for the grandparents to visit — ideally in Boulder Creek, where his family lives now.

Manzi, 52, a hardware engineer, said $750,000 is realistically what he expects to pay but so far, nothing meets the family's criteria.

"Definitely the market's a little thin," he said Friday.

Check in the $600,000 to $800,000 range for Boulder Creek and only 10 homes are available.

Real estate information company Trulia calls it "homebuyer gridlock," a nationwide phenomenon resulting from higher prices squeezing out move-up buyers, first-time buyers seeing nothing in their price range and cash buyers holding onto lucrative rental properties.

The number of homes for sale in Santa Cruz County is historically low.

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As of the first week in February, there were 247 single-family homes listed for sale, the fewest for that month in 22 years, according to Gary Gangnes of Real Options Realty in Aptos, who tracks the numbers.

The median price for January, the midpoint of 114 sales, was $787,000 — dipping below $800,000 for the first time in 15 months.

The percentage of sales for homes more than $1 million was 28 percent, the lowest since April, and the percentage of sales in San Lorenzo Valley and Watsonville was 34 percent, the second highest in 14 months, according to Gangnes.

The median price for condos jumped to $634,500, an all-time high, on 33 sales in January, and just 58 condos were listed for sale the first week of February, the fewest for that months in 22 years.

Living in the mountains, Manzi knows some roads are better than others. Some roads are awaiting repair after Boulder Creek was hard hit by winter storms a year ago. Manzi also noticed some homes have square footage not listed in the ads, which can be due to unpermitted additions.

Santa Cruz County is among the counties in the nation hardest hit by the tax law change approved in December to limit mortgage interest deductions to the $750,000 in home loans, down from $1 million, according to Apartment List, an online company listing rentals nationwide.

Apartment List projected the median cut in deductions to be $4,300 a year for Santa Cruz County, adding up to $129,000 over a 30-year mortgage, San Francisco-Oakland, losing $5,400 a year in deductions and San Jose-Santa Clara-Sunnyvale losing $5,400, while the impact in Houston, Phoenix and Las Vegas was expected to be $0.

Seb Frey of Realty World Virtuoso in Capitola sees an impact locally,

"It is definitely giving buyers pause, especially those looking at higher-end properties at $750,000 or over," he said. "I find people are more skittish this year than they were a year ago."

He added, "It's not just the tax consequences but mortgage rates are also higher. I feel there is more pullback from buyers and less of a feeling they should be super-aggressive when it comes to how much they'll offer."

Santa Cruz attorney Nicole Adkison, who has a graduate degree in taxation, sees major disincentives for homeowners to sell.

If you bought your house 10 to 20 years ago, you are locked into property taxes based on the purchase price plus a two percent increase because of Proposition 13, she pointed out, adding, "Your real estate taxes will go up when you buy a new place because it gets reassessed."

So instead of paying $5,000 in property taxes, you could be paying $15,000, and one of the tax law changes capped the deduction for state and local taxes at $10,000.

"That is a huge hit," she said.

Manzi said he will try to save more money so he can make a bigger down payment, which could downsize monthly payments to compensate for higher interest rates.

He could sell his current home to put toward the new one, but he's thinking of using it as a rental.

"That would be the preferred strategy," he said.

Tribune Content Agency