All Forum Posts by: Dax Nollenberger

For savvy investors, understanding schools is a great way to find hidden value that’ll improve demand for your rental. How are the schools? As a Realtor, this is a question I get almost daily. The state of California as well as many internet startups have been trying to answer this question for years. Historically, schools were ranked purely off of their API (Academic Performance Index) scores. Ranking school performance strictly off of two standardized tests was not only a flawed system for determining the quality of the school, but it was also a disservice to the students it was supposed to serve. In 2018-19, California did away with the API testing for grading schools for a more comprehensive system that provides information on many aspects of education including graduation rates, suspension rates, college/career preparedness, and more.

To provide the most update-to-date data, I pulled the data from the state’s data website myself. I’ll be comparing graduation rates, percentage of graduates who meet UC/CSU entrance requirements, total students, students per teacher, college-going rates, test scores, and overall website grades. Reach out for the blog link complete with charts or google BrezsnyAssociates/blog.

The county as a whole performs well above state averages in just about every meaningful category. Not all the Santa Cruz County public schools are created equal, however. I’ll dive into each momentarily but, first I want to briefly mention some high-quality private schools that may be worth considering as well. Monte Vista Christian, Saint Francis Catholic, Kirby School, and Pacific Collegiate (Rated 10/10 and A+ by Greatschools.org and Niche, respectively. 89% English pass rate and 77% Math pass rate).

Harbor

At 1043 students, Harbor is the fourth-smallest public high school in the county. It performs well above the state average in terms of graduation and 60.5% of its graduates meet the state’s college admission requirements. From a student-to-teacher ratio, Harbor is tied for the best ratio with Scotts Valley. Harbor’s rates for college enrollment are actually the worst in the county. Its test scores also underperform the county as a whole (minus Watsonville and Pajaro Valley). Greatschools.org graded Harbor a 7/10, dinging the school for its performance on tests and its equity performance.

Santa Cruz

Santa Cruz is the fourth-largest public school in the county with 1131 students. It performs very well in terms of graduating rate at 94.5%, behind only Scotts Valley and SLV. Santa Cruz gets the best in county award for graduates meeting state college admission requirements. This, despite having the worst student-to-teacher ratio in the county. 78.8% of Santa Cruz High graduates enroll in college, ranking 2nd in the county behind Scotts Valley. Santa Cruz High performed exceptionally well in testing, ranking 1st in Math and 2nd in English. Greatschools.org graded Santa Cruz an 8/10, giving the only 10/10 in the county for college readiness.

Soquel

Soquel has the third smallest student body in the county behind only Scotts Valley and SLV. Soquel performs well above the state graduation percentage and 60.2% of its graduates meet college admission standards. Soquel’s student-to-teacher ratio is 24/1. Soquel’s rate for college enrollment is the second-worst in the county but their test scores are really strong, ranking first in English and second in Math. Greatschools.org graded Soquel a 7/10 with equity performance dragging down the overall score.

Scotts Valley

Scotts Valley has the second smallest student body behind only its valley neighbor, SLV. Its graduation rate is stellar at 98.4% while grads meeting state college admission requirements is nearly 70% of graduates. Scotts Valley’s student-to-teacher ratio is tied for best in the county at 21/1. 85% of Scotts Valley students enroll in college within 12 months of graduation, by far the best rate in the county. Scotts Valley’s test scores are third in the county in both English and Math. Greatschools.org graded Scotts Valley an 8/10 getting 9/10 in both Testing and College Readiness.

San Lorenzo Valley

San Lorenzo Valley has the smallest student body in the county. Its graduation rate is second in the county at 94.6%. Grad’s meeting UC/CSU requirements is 68.1%, third in the county. Despite a small student body, SLV’s student-to-teacher ratio is 24/1. 74.1% of graduating students enroll in college within 12 months. SLV’s test scores rank 4th in both English and Math. Greatschools.org graded SLV an 8/10 and got the best equity grade in the county.

Aptos

Aptos has the third-largest student body in the county behind only Watsonville and Pajaro Valley. Its graduation rate is 92%, well above the state average but third-worst in the county. 56.9% of Aptos graduates meet UC/CSU requirements. Aptos’s student-to-teacher ratio is 23/1. 75.4% of graduates enroll in college, 3rd in the county. PVUSD received a waiver and did not test in 2021. As for 2019 results, 66.56% of students met the standards for English and 39.32% met the standards for Math. Greatschool.org graded Aptos a 7/10.

Watsonville

Watsonville has the largest student body in the county. Its Cohort graduation rate is 86.1%, the worst in the county and below the state average. 34.1% of Watsonville’s graduates met state college admission standards, well below the state average. Watsonville’s student-to-teacher ratio is 24/1. 71% of college graduates, well above the state average of 64%, enrolled in college after graduation. PVUSD received a waiver and did not test in 2021. As for 2019 results, 47.6% of students met standards for English and 17.12% met standards for Math. Greatschools.org graded Watsonville a 4/10, knocking the school for its Testing and College Readiness.

Pajaro Valley

Pajaro Valley has the second largest student body in the county. Its graduation rate is 87.1%, the second-worst in the county and slightly below state averages. 47% of graduates meet UC/CSU standards. PVUSD received a waiver and did not test in 2021. As for 2019 results, 37.8% of students met standards for English and 13.42% met standards for Math. Greatschools.org graded Pajaro Valley a 3/10, knocking the school for its Testing and Readiness.

If you’d like to read my whole blog report, are in need of a Santa Cruz Realtor, or have any questions about Santa Cruz real estate, please reach out!

 Thanks for reading Brian!

From all-time real estate highs to a significant regression and fears of a recession, what a wild year 2022 has been. The market has certainly changed the past six months. In my latest Dax’s Data (reach out for blog link complete with charts or google BrezsnyAssociates/blog), I dove into the changes so far in 2022 and came across some unforeseen nuggets that may help predict the next 6 months.

The market peaked in March when the median home price for Santa Cruz County SFH hit $1.6M. June '22 was $1.325M, 17.18% lower than the year's high. At face value, this indicates a significant dip in our market but zooming out provides perspective. March was an outlier. The jump from February to March was the third largest jump in a month since 2010. Historically, major jumps like this are either preceded or succeeded by consecutive months of decreasing pricing. In this case, the downward price trend succeeded the March high.

Active listings have been on a continuous climb since January. That, by itself, is expected as Santa Cruz is a seasonal market. The pace of increased active listings is not expected. Interest rates have had a significant impact on demand in our market and that has been reflected in the price-to-list ratio dropping close to 100% after hitting nearly 110% in April. The decrease in demand is also evident in the months of inventory. 2.1 months of inventory is the highest since May of 2020.

The decrease in demand is understandable after you dive into the impact that interest rates have on the overall cost. On a million-dollar loan, an interest rate increase of 1% adds $558 to the monthly payment and $200,921 in additional interest cost over the life of the loan. A 2% increase adds $1152 to the monthly payment and $414,783 in additional interest cost over the life of the loan. That is what occurred in a matter of months.

The increase in interest rates does not explain the decrease in new listings. At 207 new listings, June ’22 had the lowest number of new listings for June in 12+ years. This is noteworthy because it means that not only are there fewer buyers in the market, there are fewer sellers. For the homeowners that weren’t incentivized to sell when we were experiencing the greatest sellers’ market ever, they certainly aren’t motivated to sell now. The potential residual impact is TBD. It’s certainly something to keep an eye on.

If you’d like to read my whole blog report, are in need of a Santa Cruz Realtor, or have any questions about Santa Cruz real estate, please reach out!

You may have heard that the market is changing. That is particularly true here in Santa Cruz. The fed's interest rate hikes are having their intended effect of slowing the market and decreasing demand. 

March 2022 was a month of records for Santa Cruz real estate. Since then, we realized it was also the peak (at least in the short term). Median and Average Price, Price per/sqft, and Percentage over List Price are all down while New Inventory and Active Inventory are up. The median home price is down 17.2% from it's $1.6M peak in March '22. Meanwhile, price per sq/ft is $884, the lowest since January. The percentage over asking price is 8%, down from an all-time high of 9.8% in April. 

Active and new inventory are up and have been going up, for 6 consecutive months. That by itself tells us very little. Santa Cruz is a seasonal market; inventory goes up as we head toward summer and goes down as we head toward winter. What does tell us something is the new inventory. The best way to determine whether new inventory is seasonal is to compare it to previous years. Unlike other markets with new construction creating year-over-year growth in new inventory, Santa Cruz has stayed relatively flat. When compared to historical averages in new inventory for the month of May, this month was nearly identical to years past. This means that the recent shift in the market is almost exclusively related to how decreasing demand is impacting ACTIVE inventory.

To really determine how much demand has decreased since March, we need to look at months of inventory. Months of inventory for May is 1.8, up 68% from April! This means more available homes for buyers and less competition. While this is all good news for buyers, we still have a ways to go to reach equilibrium (a balanced market is 4-5 months). 

Buyer psychology dictates that as the market goes up, buyers feel the need to jump in before it goes up further. When the market goes down, buyers are frozen into inaction. 

If buyers are willing to take the plunge, they'll realize they have more leverage and less competition than there has been in 2+ years.  

Reach out if you have any questions!

Historically, Santa Cruz County trails both San Mateo and Santa Clara County in nearly every major real estate metric. Since 2012, the yearly median growth is about 12% per county but the counties of San Mateo and Santa Clara had a higher starting median price and therefore have gotten exponentially more expensive. 

For one reason or another, Santa Cruz has managed to trail many California coastal markets over the years. Anyone analyzing the coast could have seen the intense value rise since the housing crash. Proximity to Silicon Valley is certainly a driver. That was only exaggerated once Covid-19 hit. The new work-from-home norms, the relative affordability, and the draw to the coast made Santa Cruz a really attractive option for Silicon Valley buyers. That's where the majority of our buyers over the last 2 years have come from. 

So, back to the comparing counties. While growth has been similar, the higher price points in San Mateo and Santa Clara counties meant that, from a dollar perspective, those counties continue to get more and more expensive relative to Santa Cruz. In 2012 the difference between the median home price in Santa Cruz County and San Mateo County was $185,000. Now it's $600,000. For Santa Clara County the difference was $50,000 and now it is $480,000. This is where buyer psychology comes into play. From a Silicon Valley buyer's perspective, Santa Cruz is considered relatively affordable. This has been a major cause of the ever-increasing price to list ratio here on the coast. 

Santa Cruz is catching up. From a percentage change perspective, Santa Cruz has seen the most growth each of the last four years. In 2019, the median home price in Santa Cruz was 40% less than San Mateo County, now it's 32%. 

So, from a growth perspective, it would be fair to anticipate a continued outperformance of Santa Cruz County real estate as compared to the Silicon Valley markets because work-from-home/telecommuting is here to stay and why not live near the beach FOR LESS? For many buyers in Silicon Valley, the choice has been an easy one. 

Thinking about making the move to the coast or just have questions about Santa Cruz real estate? Reach out!

As a real estate agent, I frequently get asked, can I rent this property short-term in Santa Cruz County? The answer: it depends. There are three regulating bodies in Santa Cruz County: the City of Capitola, the City of Santa Cruz, and the County of Santa Cruz. All of which have their own rules.

The city of Capitola has map, if the property falls within the map, the home qualifies as a short-term rental. 

The city of Santa Cruz no longer offers non-hosted permits. Non-hosted is defined as "an STR where the owner lives in the home for more than 6 months out of the year". The city Does have hosted permits available. Hosted is defined as "an STR where the owner doesn't live in the home or where the owner occupies the home for less than six months out of the year".

The county of Santa Cruz is more complicated. There are three designated areas in the county with permit caps. They are as follows:

“Live Oak Designated Area”- LODA

"Seacliff/Aptos/La Selva Designated Area"- SALSDA

"Davenport/Swanton Designated Area"- DASDA

Each one of the areas has above has a waitlist for both vacation rentals and hosted permits. 

The rest of the county is considered non-designated. There is no cap on vacation rental permits, only hosted permits. 

Per the county: A Hosted Rental is a short-term rental (less than 30 days) of one or two bedrooms in a home, where the property owner will stay on site during the rental. A Hosted Rental is different from a “Vacation Rental" which is a short-term rental of an entire house.

Reach out if you want to learn more about Short-Term Rentals in the County. 

Playing off of the topic discussed last month about how areas in Santa Cruz County compare, this time I got hyper-focused on the city of Santa Cruz since 2010. Broken down by six areas: Lower Westside, Upper Westside, Downtown/Beach Flats, Seabright, Banana Belt,  and Carbonera/Prospect Heights.

If you are interested in the full analysis with maps, charts, and data, reach out.

Quick Takeaways: The westside drives the Santa Cruz market. Not only are the Lower and Upper Westside #1 and #2 in size, but they are also #1 and #2 in median and average price. Seabright has performed well of late but falls behind when looking at median % change since 2010. The Banana Belt is last in price but is the quickest to sell and has the best price to list ratio.

Upper Westside: #2 in both median and average price since 2010. The Upper Westside has also seen the second-largest median % gain since 2010 at 131.2%.

Lower Westside: #1 in both median and average price since 2010. The Lower Westside is the second-largest market in the city and ranks 3rd in Days on Market. It has also seen the largest median % gain since 2010 at 162.0%.

Seabright: Ranks #4 and #3 in the median and average home price since 2010, respectively. Seabright has come on strong of late ranking 3rd in median home price in 2021 at $1.33MM. Central location and proximity to the Highway 1 are very attractive to the Silicon Valley commuter. Since 2010, the median % gain ranks 5 out of 6 with 104.8% gain. 

Downtown/Beach Flats: #5 in median price and #4 in average price. Downtown/Beach Flats is the smallest in terms of sales volume and ranks last in DOM and Price to List ratio but 3rd in median % gain at 131.1% since 2010. 

Banana Belt: Last in both median and average home price. The Banana Belt ranks 4th in median % gain since 2010 at 126.4%. It is first in DOM and Price to List ratio. 

Carbonera/Prospect Heights: Although they are neighbors, they are vastly different neighborhoods combined only to get an ample sample size. This combo of Carbonera and Prospect Heights ranks 3rd in median price and 5th in average price. It's last in percentage change since 2010 at 104.1%. It ranks 4th in both DOM and Price to List ratio. 

 Exactly. Compared to the county, Aptos takes longer to sell and for a lower price to list ratio than any other area, on average.

Motivated by my own curiosity and desire to see which townships in Santa Cruz are performing compared to their neighbors, I dove deep into Santa Cruz County real estate data since 2010. Broken down into 8 townships: Aptos, Ben Lomond, Boulder Creek, Capitola, Felton, Santa Cruz, Scotts Valley, Soquel, and Watsonville.

If you are interested in the full analysis with charts and data, reach out. 

Quick Takeaways: Aptos, Scotts Valley, Santa Cruz, Capitola, and Soquel all have an impact in bringing the median and average prices for the county upward. Capitola is the crown jewel of the county, ranking #1 in the median and average home price since 2010. The median home price hit $1.68MM in 2021.

Aptos: #2 in both median and average home price since 2010. It's the second-largest market in Santa Cruz County. Aptos has the worst Days on Market and Price to List ratio since 2010.

Ben Lomond: #6 in both median and average home price since 2010. Ben Lomond has the best Days on Market and Price to List ratio in the entire county.

Boulder Creek: Last in median average home price since 2010. Boulder Creek has seen the second-largest gain in median home price since 2010. It ranks 7th in DOM and Price to List ratio.

Capitola: #1 in both median and average home price since 2010. Capitola ranks 3rd in median percentage change at 149%. It's the smallest of the 9 markets evaluated.

Felton: #7 and #8 in the median and average home price, respectively. #8 in percentage gain since 2010. #2 in both DOM and Price to List ratio.

Santa Cruz: #4 and #3 in the median and average home price, respectively. #2 in the median home price in 2021. It's the largest market in Santa Cruz County. #3 in both DOM and Price to List ratio.

Scotts Valley: #3 and #5 in the median and average home price, respectively. Scotts Valley is last in the county in appreciation with a 101.4% gain since 2010. #4 in DOM and Price to List ratio.

Soquel: #5 and #4 in the median and average home price, respectively. #6 in % change since 2010. Soquel ranks 8th in DOM and price to list ratio.

Watsonville: #8 and #7 in the median and average home price, respectively. Watsonville has seen the most significant gain in median home price since 2010, at 167.7%. It's 6th in DOM and Price to List ratio.

What the crazy year 2021 was in the real estate market. Despite continued pandemic disruptions, the Santa Cruz County real estate market thrived. The median home price, for the first time, averaged over $1MM. In fact, the median home price for 2021 was $1.2MM. Up 23.08% from last year. For average home prices, the story was the same. In 2021, the average home price was $1.324MM, 17.89% higher than the year before. Days on Market was also a record low (23). Months of inventory, which is a measure of how quickly supply would run out if no more homes came on the market, was 1.14 months (another record low). 

What's even more shocking, there were a total of 2363 listings in 2021, a record low. For comparison, there were 10358 in 2011! As for demand, it's never been higher. The number of sales hit a 10 year high of 2086. 

In Layman's terms, record lack of supply and high demand! 

What happens in 2022? 

My opinion, much of the same. We have seen an 11+ year decline in supply and an increase in demand. There are too many barriers to new supply. Regulations, zoning, capital gains on appreciated homes, lack of land, lack of labor, increasing labor costs, and increasing material costs all contribute to a lack of supply. 

What do you think happens in 2022?