The Capitola housing market has been generally tepid since reaching a low point during the economic recession. Commercial property has started to recovery from the downturn, although the median price of Capitola homes for sale has remained mostly unchanged over the last few months. According to a September 13, 2010 report from the Santa Cruz Sentinel, “Four months of courting Target Corp. paid off Monday for City Manager Jamie Goldstein, who announced the retail giant has applied to renovate a 100,000-square foot space vacated by Gottschalks at the Capitola Mall. “This is a real piece of good news,” Goldstein said, noting the arrival of Target, the nation’s second largest discount retailer, on busy 41st Avenue could mean a “significant number” of jobs, construction work and fill a shopping space that’s been empty for more than a year with affordable products…Capitola resident Christine Buechting, a financial advisor with Edward Jones and a member of the city’s financial advisory committee, welcomed the news….It could mean a half million dollars a year in sales tax revenue, based on an economic study done for Scotts Valley.”

The median price of a Capitola home for sale recovered temporarily during the summer months, but has again retreated, according to a September 15, 2010 article also in the Santa Cruz Sentinel. This report noted that “The median price was $510,000, little changed from $500,000 a year ago, according to agents, who tracks the numbers, but down from three years ago when it hit $770,000. Listings have grown and interest rates are at historic lows, but buyers are not biting. There were 152 single-family home sales, little changed from 154 a year ago. Homes under $500,000 made up 46 percent of sales, with those selling for more than a $1 million comprising 8 percent. About 1,200 homes in the county are in foreclosure, compared to less than 1,000 a year ago. Most of them end up either in a short sale or owned by a bank, which puts more downward pressure on prices. Even million-dollar homes have been lost to foreclosure. "I've never had a market with such a large loss of equity," said Paul Bailey, co-owner of Bailey Properties and a real estate agent since 1975. Banks are demanding loan applicants provide proof they can pay the money back.”

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