It’s Your Money: Public investment in schools sends SV property values skyrocketing

“Are you pleasingly plump? Are you fat? When you go to the zoo, do the elephants throw YOU peanuts?” 
— Rodney Dangerfield in the 1986 movie “Back to School”
Fat is what Scotts Valley homeowners are getting these days, financially speaking, as their home prices climbed 17.8 percent in 2014.
I’m feeling a little bloated myself after the multiple trips I made to the buffet table at the recent Pasta Palooza for Scotts Valley Middle School.
But back to business. This is my annual column about home prices in Scotts Valley and San Lorenzo Valley.
From 2011 through 2013, it was Felton area homeowners who saw their prices rocket higher by 66 percent from depressed levels. But in 2014, Scotts Valley was the star.
It’s a commuter’s heaven. The jobs are in Silicon Valley, but everyone wants to live near the beach, so they settle for Scotts Valley.
“They’re on and off the freeway, not traveling any farther than they have to, but they can say they live in Santa Cruz,” said Wayne Shaffer, a realty broker in Santa Cruz for 42 years.  “They don’t have to deal with Highway 1 traffic or the Fishhook.”
Then there are the schools.
Scotts Valley voters approved a measure to tax themselves hundreds of dollars a year on average per property owner to build a new middle school. Support for public schools has helped the district post high test scores, and that attracts families who want to live where they don’t have to spend a fortune on private schools.
The median price for single-family homes sold in Scotts Valley in the fourth quarter of 2014 was $792,000 on 33 sales, according to Karen Church (Kufchak), a Scotts Valley Realtor. That’s up 17.8 percent from the same October-through-December period of 2013, when the median sales price was $672,500 on 28 sales.
In Felton, she said, the median sales price in the fourth quarter was $445,000 on 23 sales, compared with $415,000 on 17 sales in the fourth quarter of 2013. That’s an increase of 7.2 percent, also a good year.
But Scotts Valley is sizzling. Church said homes in the Vineyard neighborhood are fetching prices of over $1 million, and Skypark home prices are approaching $800,000. She said that at press time Scotts Valley had 20 listings of homes for sale, and 14 of those were in escrow, so the inventory of homes for sale in Scotts Valley was down to 6.
Santa Cruz Realtor Neal Langholz agreed that inventory is tight but said more homes will likely be listed for sale in the spring.
He said the Santa Cruz market is also strong. He listed a two-bedroom, 1¼-bathroom house on a busy street in West Santa Cruz for $685,000. The seller received seven offers and the home is in escrow for over $700,000.
Mortgage interest rates play a key role in home prices, and Federal Reserve officials say they plan to start raising rates around midyear. Langholz said a small rise in rates could cause home prices to heat up more, as buyers jump in before rates get too high. But a 1 percent rise in rates from the current level of 3.75 percent for a 30-year fixed mortgage would cause much higher monthly payments and hurt home prices, he said.
Scotts Valley homeowners can thank the community’s focus on education for helping to fatten up their home equity. Personally, I would like to thank Santa Cruz Pasta Factory for donating all of the food for the Palooza.
– Mark Rosenberg is a financial adviser with Financial West Group in Scotts Valley, a member of FINRA and SIPC. He can be reached at 831-439-9910 or mr********@fw*.com.