After four straight months in which four out of 10 home buyers in Santa Cruz County, Calif., paid in excess of $1 million, more buyers in July closed deals in the less expensive areas of the county and the median price dipped from $927,500 to $885,000.
Purchases in Watsonville and San Lorenzo Valley comprised 35% of the 175 sales in July.
That was the highest percentage since February, when 35% of sales were in Watsonville and San Lorenzo Valley and the median price — the midpoint of what sold — was $800,000, according to Gary Gangnes of Real Options Realty, who tracks the numbers.
Sales in July were up a tad from a year ago, and listings slipped again, leaving 397 active listings with just 184 priced under $1 million.
Those seeking affordability find it at Pajaro Village, a community of 800 homes that has a clubhouse with a kitchen, exercise room, saunas, pool and jacuzzi on a property next to Salsipuedes Creek.
Three of the five most inexpensive home sales in the county in July were in this community, selling for $379,000, $395,000 and $425,000. The fee for clubhouse amenities is $260 a year.
What's the catch?
This community is not for the young but for the young at heart.
The buyer must be 55 or older, and others in the household must be at least 45.
The homes range in size from 800 to 1,300 square feet, "a nice downsize kind of house," said Renee Mello of Keller Williams, who has specialized in this area for four years and represented two sellers and one buyer in July.
"Some people are there for 30 years," Mello said. "It's a tight little community."
Sales generally take place when the owner dies or moves to assisted living or moves in with children, opening up a home at an affordable price point.
"Even in Watsonville, home prices are getting to $500,000 and $600,000," Mello said. "If a person is over 55, this is a great place for them to go."
For one sale, the buyer was an investor from San Jose.
For another, the buyer was a woman who had rented a home in the village and wanted to buy. She bought a two-bedroom, one-bath home on Delta Way for $395,000.
"When this came up, she jumped on it," said Mello of the buyer. "She's as happy as can be."
At that price, the 20 percent down would be $79,000, and repaying a loan at 5% interest would be about $1,700 a month.
One challenge for Pajaro Village homeowners is the location next to the levee holding back the creek, which means flood insurance is required, an additional $100 a month.
Mello recalled when the Federal Emergency Management Agency flood insurance program expired several years ago, flood insurance rates jumped to $3,000 to $5,000 a year.
"You couldn't get a loan," Mello said. "A huge amount of transactions were lost."
She was relieved when Congress passed an extension for FEMA flood insurance for 22,000 communities from July 31 to Nov. 30.
"That makes the flood insurance much more inexpensive," Mello said.
Peter Eubank, 28, an agent for two years working on the Madani Team, sees the potential for the Santa Cruz County housing market to be affected if the Silicon Valley market slows.
"We might have a slowdown but I don't think there's going to be a huge drop," he said.
Last month, he helped a young couple who rented in San Francisco — a man working in construction and a cardiac critical care nurse — become homeowners.
They got a loan at Chase at 4.3% interest for a home near Ocean Street in Santa Cruz, a home that has been owned by a family for three generations but the most recent tenants had stopped paying rent, according to Eubank.
The house was listed for $729,000, but needed work and sold for $670,000, Eubank said, noting homes with two bedrooms and one bathroom in good shape in the Eastside neighborhood are going for $875,000 to $895,000.
The Eastside neighborhood and Felton are two up-and-coming areas, according to Eubank, who hopes to buy on the Eastside himself.
