Commercial real estate in Capitola was still facing the residual effects of the economic downturn, although it lagged somewhat behind Capitola homes for sale. According to a July 7, 2010 report from the Santa Cruz Sentinel, “Unable to find a replacement tenant for Gottschalks at the Capitola Mall, developer and philanthropist Jack Baskin has defaulted on an $11.95 million loan and turned the two-story, salmon-colored building that housed the department store back to the lender. It's a sign of how the recession has taken a bite out of regional shopping malls. The building at 1825 41st Ave. is scheduled for a foreclosure sale at First American Title Insurance for 10 a.m. Tuesday, a year after the department store closed its doors. The sale notice, taped to a door at the rear, lists a $13.3 million debt owed by Baskin Properties LLC. Baskin referred queries to Robert Ridino, president and chief executive officer of SAR Enterprises in Aptos, which manages portfolio of investment real estate worth more than $200 million, according to its website. "While the word foreclosure' or notice of default' may have a negative connotation, the pending process is a completely cooperative action between lender and ownership," Ridino said. The default stems from a loan in which rents were assigned to the lender, Countrywide Commercial Real Estate Finance, which replaced Borel Private Bank of San Mateo in 2006, according to the Santa Cruz County Recorder's Office. That worked while Gottschalks was in business, but the 104-year-old department store chain filed for bankruptcy in January 2009, then closed six months later.”
The number of home sales in the Capitola real estate market increased substantially in the most recent tracking period available. Capitola, part of the larger Santa Cruz County market, saw a significant increase in home sales compared to year-ago levels. One hundred and sixty houses were sold in the month of May 2010, compared with one hundred in May 2009. The median price in the region declined over the same tracking period compared to month ago levels, although it rallied substantially compared to May 2009. The median price and the rate of home sales were still quite low compared to the peak of the market, and the recovery may be partially driven by the federal tax credit.