Context is the secret ingredient that can make sense out of the nonsensical, especially when it comes to buying and selling homes.
At first glance, the recent sale of 114 Mountain View Avenue in Santa Cruz appears baffling, possibly even absurd: Dubbed a “vintage bungalow”, this diminutive 1948 offering measured out to just 328 square feet, although these measurements did not include the garage, here advertised as a bonus room.
The little hideaway listed in September for a hair under $1 million and sold for a bit more than $1.02 million a month later. For comparison, the median price of a house in Santa Cruz County was around $1.19 million in September–but note that that comes out to about $681 per square foot, as opposed to the (wait for it) $3,125 per foot that 114 Mountain View netted.
Normally in cases like this, in which seemingly underdeveloped or even uninhabitable homes sell for outsized sums, the conventional wisdom is that the real value is in the land rather than the home itself.
But this lot was just 3,833 feet–less than a tenth of an acre. Right now there are 20 undeveloped lots for sale in Santa Cruz, with a median price of less than $524,000 for two full acres. For the year to date, 39 empty Santa Cruz parcels sold for a median price of $520,000.
So Santa Cruz land is valuable–but not THIS valuable. What drove all the bidding on this place then? The answer is actually stupefying in how simple it is:
This house is close to the beach.
Specifically, Seabright Beach, one of the most popular beach locales in the county, spanning the stretch between the harbor and the Boardwalk. It’s not extremely close–but it’s close enough.
In San Francisco it can actually be easy to overlook how big of a variable this kind of thing is: A huge swath of our residential inventory is just a few blocks from Ocean Beach, which doesn’t really seem to affect home values at all (Ocean Beach being one of California’s least user-friendly oceanfront destinations).
But in most cities, this is enough to drive prices haywire. Case in point, if you isolate land sales just in the Seabright area, they shoot up well into the seven figures routinely.
One factor nobody is talking about is the fact that the bungalow in question is really very charming, so hopefully it doesn’t end up a casualty in the future of whatever happens with this slightly beachy property. But sometimes it feels like renovations are like the tides: There’s no holding them back.
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