Insights from the 2024 Santa Cruz Assessor Report and What It Means for Homeowners

The 2024 Santa Cruz County Assessor-Recorder Report offers a comprehensive analysis of property assessments and market trends, providing valuable insights for homeowners. Whether you’re thinking about selling your home in the next few years or simply interested in the local real estate landscape, understanding these trends can help you make informed decisions.

In this blog post, we’ll break down key points from the report and discuss what these trends mean for homeowners considering selling their property in the future.

Growth in Property Values: A Record High for Santa Cruz County

One of the most notable highlights from the report is the 4.4% increase in the assessment roll for 2024, pushing the total value of real, business, and personal property to a record high of $61.1 billion. While overall growth is a positive indicator of a healthy market, most properties experienced a modest 2% increase in assessed value due to the protections offered by Proposition 13. This proposition continues to provide stability for long-term homeowners by capping annual increases in property tax assessments.

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As the county’s total assessed value continues to grow, it reflects ongoing demand for property in the area. For homeowners considering selling, this upward trend suggests the potential for favorable market conditions in the coming years. However, Proposition 13’s limits mean that the actual taxable value of homes remains below market value, especially for long-term owners. This disparity between assessed and market values can be advantageous for sellers, as they may attract buyers looking to capitalize on properties with lower tax obligations.

Proposition 13 and Proposition 19: What They Mean for Sellers

California’s Proposition 13 remains a cornerstone of property tax policy, limiting increases in assessed values to 2% per year. This has created significant disparities between the market value of homes and their assessed values, particularly for long-term homeowners. In contrast, Proposition 19 has provided more flexibility for senior and disabled homeowners, allowing them to transfer their property’s assessed value to a new home anywhere in the state.

For those considering a sale, Proposition 19 offers an opportunity to relocate without facing a substantial tax increase. This could be especially appealing if you’re planning to downsize or move closer to family.

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The ability to transfer base year values under Proposition 19 may encourage older homeowners to sell their properties and move, potentially increasing the inventory of homes on the market in the coming years. For sellers, this could mean a more competitive environment, so timing will be key.

Home Values in Different Areas: Affordability and Growth

The report highlights stark differences in assessed home values across various regions of Santa Cruz County. For example, areas like Watsonville and the San Lorenzo Valley are noted as being more affordable, with lower assessed values, while regions such as Scotts Valley have seen higher turnover and new development, leading to greater growth in assessed values.

The average market value of a single-family home in Santa Cruz County is $1.3 million, but due to Proposition 13, the average assessed value is significantly lower at $662,287. This gap between assessed and market values is a reflection of long-term ownership and the benefits of Proposition 13.

Trend to Watch

If you’re considering selling a home in a higher turnover area like Scotts Valley, you may benefit from increased demand as buyers are drawn to new developments and more modern properties. Conversely, homeowners in areas with lower assessed values may see slower market activity but can still attract buyers seeking affordability in the broader Santa Cruz market.

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Roll Growth: New Construction and Ownership Changes

The county’s assessment roll experienced significant growth in 2024, with new construction adding over $441 million to the total. Ownership changes were the largest contributor to this growth, as homes change hands and their assessed values are reset to reflect current market rates.

Trend to Watch

For homeowners considering selling in the next few years, the data shows that properties experiencing new construction or major updates are likely to see a significant boost in value. If you plan to make improvements to your property before selling, you may be able to capitalize on higher market values. However, be aware that substantial upgrades could trigger reassessment, leading to higher property taxes for the new owner.

Impacts of Proposition 8: Decline in Value Adjustments

Although Santa Cruz County has seen strong growth, Proposition 8 allows for temporary reductions in assessed values when market values decline below the property’s base year value. As of 2024, only 313 properties in the county were receiving Proposition 8 reductions, down from a peak of 24,656 properties in 2012-2013 during the housing market downturn.

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While the county is not currently initiating automatic Proposition 8 reductions, homeowners can still request a reassessment if they believe their property’s market value has fallen below its assessed value. This could be particularly important for those in areas where market fluctuations are more pronounced, such as coastal properties vulnerable to environmental changes.

Property Tax Revenue Distribution: Challenges for Local Governments

One of the challenges highlighted in the report is the underfunding of local governments compared to other counties in California. Due to Proposition 13’s fixed allocation ratios, Santa Cruz County’s property tax revenues have not kept pace with its growing population and infrastructure needs. This means that while property owners benefit from stable taxes, local services and schools may face funding shortfalls.

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Homeowners considering selling should be aware of potential changes in local services and infrastructure funding, which could impact property values in the long term. As the county grapples with funding challenges, there may be efforts to increase special assessments or other local taxes to compensate for the shortfall.

New Construction Exemptions: Opportunities for Property Improvements

If you’re planning to make improvements to your home before selling, it’s worth exploring the new construction exemptions available under state law. Certain improvements, such as installing solar panels or seismic retrofitting, may be exempt from reassessment, allowing you to add value to your home without triggering higher property taxes.

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As buyers become more environmentally conscious, features like solar energy systems and energy-efficient upgrades can be major selling points. By taking advantage of these exemptions, you can enhance your property’s appeal to potential buyers while keeping your tax obligations in check.

Conclusion: What This Means for Santa Cruz Homeowners

The 2024 Assessor-Recorder Report provides valuable insights into the Santa Cruz County property market, highlighting both growth opportunities and potential challenges for homeowners. If you’re considering selling your home in the next few years, there are several key takeaways:

1. Rising Property Values: While overall property values continue to rise, long-term owners benefit from Proposition 13’s protections, keeping their assessed values lower. This makes your home more attractive to buyers seeking lower tax liabilities.
2. New Construction and Ownership Turnover: Areas experiencing higher turnover or new construction, like Scotts Valley, may offer better opportunities for sellers to capitalize on growing demand.
3. Proposition 19: For seniors and disabled homeowners, the ability to transfer base year values under Proposition 19 may open up new possibilities for relocation without incurring substantial tax increases.
4. Home Improvements and Exemptions: Strategic upgrades like solar installations or seismic retrofitting can increase your home’s value without triggering reassessment, making your property more appealing to potential buyers.

By staying informed about these trends, Santa Cruz homeowners can make smarter decisions about when and how to sell their properties, ensuring they maximize their returns in a dynamic and ever-changing market.

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