Gonzales was a practical man, not a romantic one. He built an adobe house on the eastern side of the property near Pescadero Creek and a wood-frame house near Butano Creek for his vaqueros, but he never lived on the rancho himself. His large family of thirteen children remained near Mission Santa Cruz while hired hands tended the cattle that roamed the 3,282 acres stretching from Pomponio Creek on the north to Butano Creek on the south. By 1833, when he served as mayordomo of Mission Santa Cruz, the old mission system was already dying. The Mexican Congress had released millions of acres of mission lands to private ownership between 1834 and 1836 alone, redrawing the map of coastal California in a few strokes of the pen.

When California became American territory after the Mexican-American War, Gonzales found himself in the same legal maze that trapped every ranchero. He filed his claim with the Public Land Commission in 1852, requesting four square leagues -- the amount he believed he had been promised. The grant papers told a different story, specifying only one league along the coast by three-quarters of a league wide. Gonzales appealed to the U.S. Supreme Court in 1859 and lost. The patent issued in 1866 confirmed the smaller grant. Meanwhile, the land was already being subdivided. In 1852, Gonzales deeded portions to family members and sold 800 acres of valley floor to Alexander Moore, a Missourian who had come overland to California in 1847.

Alexander Moore built his house on the north side of Pescadero Creek in 1853, becoming one of the first American settlers in the valley. In 1860, the Bartlett Weeks family arrived from Maine, purchasing 157 acres of what is now downtown Pescadero. The transformation was swift and irreversible. Within a generation, the pastoral world of the rancheros gave way to a patchwork of American-style farms and small holdings. The Ohlone people, whose lands the missions had originally seized, were absent from these transactions entirely. The former mission cattle ranches at Pescadero and Ano Nuevo were divided into three separate Mexican-era grants -- Rancho Pescadero, Rancho Punta del Ano Nuevo, and Rancho Butano -- but the indigenous people who had worked those lands under the mission system received nothing in the redistribution.