Realtor Shane Scott (center) with Keller Williams Realty of Santa Cruz takes notes about a condominium in the Vista del Sol complex on Sunny Hills Drive Saturday during a tour of local foreclosed properties. With her are Mike Young (from left) and Seb Frey, realtors with Thunderbird Real Estate of Capitola and Wally Berry, an investor from Scotts Valley. David Carkhuff/Register-Pajaronian

Members of the Santa Cruz Real Estate Investment Club took a whirlwind tour Saturday through Watsonville, looking at six properties placed on the market as a result of foreclosure.

These lender-owned properties ranged from a 54-year-old single-level home on Holm Road listed at $324,000 to a 35-year-old condominium, a few blocks away at Vista del Sol, listed at $244,750.

“I personally look at Watsonville as the deal of the last 30 years in the county,” said Seb Frey of Capitola, a Realtor with Thunderbird Real Estate who organized the tour. “Basically there’s really not been a time in recent memory where you could buy a house in Santa Cruz County and put 20 percent down and have the renters pay for the balance of the mortgage. It’s been a long, long time since that’s been the case. Prices in Watsonville are down to year 2000 levels essentially, and it’s just a temporary blip.”

Investors hope to find a brief window of opportunity between the surge in foreclosures and what will likely be a recovery, possibly aided by legislative remedies, Frey said.

Loan programs or new down payments may spur the market and lessen the glut of property listed as “Real Estate Owned,” meaning owned by a lender such as a bank.

“Something will step in to fill the void,” Frey predicted. “Once that happens, people will be buying these houses again, and the prices will go back up, and they will be less attractive for investors. Right now, there’s a lot of interest from investors in Watsonville.”

Already, the U.S. Congress and California Legislature have started drafting bills to help those citizens who lost their homes to foreclosure. Don Perata, president pro tem of the California Senate, calls it “an unprecedented crisis in home foreclosures,” noting that seven of the nation’s 16 metropolitan areas with the highest rates of foreclosure are in California.

Members of the Santa Cruz Real Estate Investment Club looked at “investment-grade real estate,” meaning it’s priced for someone interested in yielding a return.

“We are going to see about a half-dozen different REO properties that are presently for sale, all of which represent good opportunities for investors,” Frey wrote on a Web log. “I just spent the last hour or so going through every house and condo listing from Larkin Valley down through Watsonville, and I found that there are 70 listed REOs in that area.

“Most of these REOs are not what I’d call investor grade — most of them are consumer grade, which is to say, they are priced for owner-occupants, not for investors. Investors need to pay less than retail consumers, because a true investor is looking for cash flow with a relatively small down payment — that is, he’s looking to actually get a return on his investment month to month, just as if he had it invested in an IRA. ...”

Frey gleaned a shorter list of investor properties and took the investor group on a tour from Holm Road to Rodriguez Street and points in between.

Wally Berry, an investor from Scotts Valley, said the investment group usually brings in speakers, but this marked their first tour of properties.

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(Published in 3/3/08)

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