Median home price, jobless rate set records in 2018December 28, 2018
SANTA CRUZ — By many measures, the Santa Cruz County economy enjoyed a record-breaking year.
The median home price, the midpoint of what sold, set a record — $935,100 — in March. By November, it slipped to $911,250 on 134 sales, down 27 percent, according to Gary Gangnes of Real Options Realty, who tracks the numbers.
In June, the number of jobs set a record — 119,700 — the most in 28 years.
In September, unemployment dropped to 3.5 percent, the lowest in 28 years.
Hotel occupancy reached a record 85.6 percent in July, and average room rates set a record $172 per night through November, according to STR. which tracks the industry.
“Very strong” is how David Heald, president and CEO of Santa Cruz County Bank since 2006, said he sees it.
“We are looking positive in ’19,” he said.
Santa Cruz County Bank posted record profits after business tax cuts passed by Congress and signed by President Trump took effect Jan. 1.
Heald said he sees the impact for local businesses is more cash flow — enough to finance equipment and other improvements.
He sees locally grown startups and existing businesses looking to expand.
One example, he said, is a fruit business seeking to expand production and needing warehouse space in Santa Cruz to store products.
When Santa Cruz County Bank invested $2 million in 75 River St., turning a vacant building into its headquarters and exiting its Front Street space, a lease was quickly signed by the real estate company Sereno Group.
Space in the Galleria downtown that had sat idle for a few years is mostly full.
The historic Brookdale Lodge reopened in the summer after years of renovation.
Santa Cruz New Tech MeetUp, founded by Doug Erickson, celebrated 10 years in February, with membership exceeding 4,300 this year.
Future Motion, a 4-year-old startup that created the OneWheel battery-powered skateboard, moved 30 employees into the vacant Raytek Building in October, and plans to double the employee count in the next 18 months;10 work in production at a factory in San Jose.
Analytics company Looker, with 300 employees in Santa Cruz and 600 worldwide, expanded into another floor at the Rittenhouse Building in November and got $103 million from investors in December.
Construction began at East Lake Village Shopping Center in Watsonville for Staff of Life, the city’s first organic and natural foods grocery.
David Burgason and Tallula Preston, founders of Fruition Brewing, raised $39,812 on Indiegogo to furnish their tasting room slated to open at East Lake Village in the spring.
Olive Garden Italian Kitchen, a chain pushing to expand, put up a $1.5 million building in Capitola and opened its first location in Santa Cruz County, hiriing 155 people.
New Leaf Community Markets and its parent company New Seasons announced starting pay will rise to $15 per hour on Feb. 1, with accompanying increases for most employees.
After three years of construction, the 128-room Four Points Sheraton and its 5030 Restaurant and Lounge opened in Scotts Valley. Lotus Management of San Jose bought the property in February for $22.7 million after construction stalled.
“We revived that one,” said Heald, noting the new owners sought financing at Santa Cruz County Bank.”We picked it up, and got it done for them.”
Two big chain retailers, Sears and Orchard Supply Hardware, closed. Progress was made on the Aptos Village project, where New Leaf will be an anchor store, but whether the Capitola Mall gets a makeover or Scotts Valley gets its town center remains to be seen.
Santa Cruz County Bank is financing two town home projects under construction, one behind the Pinnacle Pass shopping center, and the other on Scotts Valley Drive, and is working with Owen Lawlor on the 205-rental development approved for Front Street and Pacific Avenue in downtown Santa Cruz.
“The economy is much more robust when you have the trade industry working,” Heald said.
The only sector he saw with a slower year was agriculture, due to berry production off and prices not as strong.
Heald said the local economy is tied to what happens 30 miles away in Silicon Valley, which attracts more 25,000 commuters from Santa Cruz County. He considers the Silicon Valley economy “robust.”
The only cloud he sees on the horizon is the prospect of tariffs.
Early in 2018, Trump imposed tariffs on solar panels and washing machines, later on steel and aluminum, and then on many products imported from China.
On Dec. 1, China and the U.S. agreed to a 90-day halt on new tariffs. That was followed by China announcing talk on the issue would take place in January in Beijing.
“We’re reaching out to clients who have products produced in China,” Heald said. “There’s a lot.”
It could affect clothing importers and Allterra Solar in Santa Cruz.
Locals hope the presidents will be able to work something out, but if not, customers may see prices on items affected by tariffs rise in 2019.
How median home price rose
December 2017: $828,000
November 2017: $865,000
Source: Real Options Realty
Total sales: 34 (1 year ago = 35, about the same)
REO sales: 0
Short sales: 0
Median price: $637,000
Average price: $636,100
Total listings: 131 (1 year ago = 75, so up 75%)
Contingent listings (under contract): 23
Active listings: 108
Unsold inventory index: 3.9 months (1 year ago = 2.1 months)