Realtor Robert Aldana of Keller Williams Realty recalls with clarity the moment the tide changed for Scotts Valley’s real estate market.
Earlier this year, Aldana finalized the sale of a home near Skypark for about $1.4 million—signaling a major shift in the industry for the small mountain community.
“That was a redefining moment in property sales in Scotts Valley,” Aldana says. “The pandemic has really changed the dynamic of our market. More homes are selling than ever before. Million-dollar offers used to raise eyebrows. Now, people aren’t flinching at even $2 million dollars.”
Scotts Valley, Aldana says, is closely affected by the market in nearby Silicon Valley. He described it as “barnacles on a whale;” wherever Silicon Valley goes, so does Scotts Valley. Still, comparatively it remains “loosely affordable” and incredibly appealing to those working from home during the pandemic.
“Scotts Valley has become a major destination,” Aldana says. “It has some of the best schools in the state, low crime rates, and is close to state parks and beaches… It’s been discovered. The pandemic brought it into the spotlight.”
Property values in Scotts Valley have increased about 20%, Aldana says, and inventory continues to be tight. Consequently, homes are spending less time on the active market. According to the Santa Cruz County Association of Realtors (SCCAR), in April 2021, the average time on the market for a single-family residence in Scotts Valley was about 12 days.
But with rising demand and property values also comes an exodus for those who either cannot or do not want to pay so much. Aldana says he has seen plenty of residents leaving California altogether, heading to Oregon, Idaho, Texas, even as far as North Carolina. Many of them are cashing out—selling their million-dollar homes and buying another property in a cheaper state for $800,000 and paying off things like mortgages.
“To me, it’s pretty sad,” Aldana admits. “I might sell more real estate for more money… but it really doesn’t make me happy that so many people can’t afford to live here anymore.”
President of SCCAR Pete Cullen says that mountain communities especially are dealing with additional challenges. In the San Lorenzo Valley, many homes were either lost or severely impacted by the CZU Lightning Complex Fires last year. This forced homebuyers to either rebuild, or move away.
“We’re still feeling the effects of the fires,” Cullen says. “And rebuilding is complicated. Fire and septic codes are scrutinized at a higher level. Criteria has changed.”
Historically, San Lorenzo Valley is a more affordable area of Santa Cruz County, especially compared to neighbor Scotts Valley. But demand has steadily increased all over the county, and that includes places like Felton and Boulder Creek. Cullen said they have seen an increase in multiple-offer situations, as well as non-contingent offers.
For buyers, non-contingent offers can be tough as they do not have the opportunity to evaluate the property, Cullen says. They are common in places like Silicon Valley, which is why it isn’t surprising that they are gaining popularity in the Santa Cruz Mountains.
“I don’t necessarily think that’s healthy,” Cullen says. “They might find out things about the property after the fact… they might not have made the purchase if they’d known. I have a feeling we’re going to see some more litigation come about as a result of these offers.”
Cullen hopes that the summer months will bring more listings to the market. However, he doesn’t see much changing in regards to the record low interest rates and high housing demand.
“As a listing agent, some offers are far exceeding our expectations,” Cullen says. “We try to be realistic about pricing, but things can escalate, even surprising us. It’s a challenging time for sellers and buyers.”
Aldana guesses that eventually, there will be a light “cooling” of the market, meaning values will not necessarily decline, but level out.
“I think you can sustain this kind of trend only for a while,” he says. “Buyers are going to start saying, ‘There’s too much of a gap, to where people can no longer afford.’ We’ll start to see things settle down.”
Aldana has one main piece of advice for sellers: Price your property correctly. Price it to current values, let the market itself take you to a higher price point, and let buyers dictate the final sale. But don’t underprice, either, or else you’ll have more people looking at your property who aren’t qualified.
“If you don’t price it right, you’ll have a plethora of unqualified buyers,” Aldana says. “It can be disheartening to them. They’ll have their hearts set on something, but then costs suddenly rise. Make sure you have a strong marketing plan.”
As for buyers, Cullen said it is imperative to find a good local realtor to work with.
“Find someone who is knowledgeable and experienced with the local market,” he says. “And ask for recommendations and referrals from people who have been through the process recently. The more you know, the better.”