Merritt’s Market Update

Monterey Peninsula

June, 2012

©2012 Merritt Ringer

No update last month since my wife & I went to France . . .

Of course, I saw some homes:

Pointing upward, but poorly designed, this failing house might symbolize the Euro zone.

Table of Contents

The Big Picture…………………….…….………... 3

Distressed Properties……………….…….………... 4

Prices…………………………………….………… 5

Financing………………………………….……….. 6

Carmel………………………………...….….…… 7-8

Carmel Valley…………………………..….……… 9-10

Pebble Beach………………………...……….…… 10-11

Pacific Grove…………………………….…….…..12-13

Monterey…………………………………....….…..14-15

Monterey-Salinas Corridor………………...……. 16-17

Seaside & Marina ………………………...……… 18-19

An Agents Life …………………...….…...…….…..20

End Note …………………………………………....21

Caveat: I’m no economist (despite the performance of most, this is not a boast). I also lack the gift of prophecy; from the evidence, I’m not alone. But our real estate market is buffeted and buoyed by all manner of larger forces, so I do watch the horizons. I also dig into our local market. The information here is as reliable as I can make it, but nothing like comprehensive.

THE BIG PICTURE

Storm clouds are several as Europe sinks while China & India slow and we face our own uncertain recovery combined with fiscal dangers ahead. Still, the national real estate market continues slowly to mend.

New home sales are normally a major engine driving recovery. Not so much this time:

DISTRESSED PROPERTIES

Calculated Risk

Delinquencies have fallen from a peak of almost 11% of loans to 7.12%. This still leaves us around 50% higher than in healthier times.

The current best breakdown of distress:

1,927,000 loans delinquent under 90 days (some will cure)

1,595,000 loans 90+ days delinquent

2,048,000 loans in foreclosure

5,570,000 distressed loans, down from 6.388M in April, 2011

Zillow reports about 15.7M homeowners underwater; about 2.4M owe over twice what their homes are worth!.

Short sales are up around 25% over a year ago.

PRICES

As nominal prices stabilize nationally and even rise in some areas, it’s worth noting that, adjusted for inflation, real prices (above) will likely drift sideways on the national level for some time.

An exception may be those special areas that are already booming, places like Silicon Valley, San Francisco, and Beverly Hills, where tight inventory and high demand are generating multiple offers and higher sales prices.

Locally, our inventories are also down and our sales volume is up. It is possible that we, too, will join this select group. Despite a few multiple offer situations, though, we are not quite there yet.

Falling inventory is a national trend; it is quite pronounced in some local markets. A combination of rising sales and of sellers awaiting a better market (which they sense is nearer) are factors. As the market improves, we may see inventory increase as these sellers enter the fray, sopping up some of the new demand and restraining price rises for awhile.

FINANCING

Rates

Rates fluctuate by the second and different lenders offer various packages, so the numbers below are just a snapshot.

The rates below are for loans without points.

Up to $417,000

30 year fixed: 3.5%

5/1 ARM: 2.5%

Jumbo (over $483,000 here)

30 year fixed: 4.250%

5/1 ARM: 3.25%

The addition of a point reduces the rate .125-.250%.

CARMEL

Carmel saw 23 new escrows in May. List prices ranged from $439K for a High Meadow townhome to $5.997M for a home on San Antonio. Just over half of the new sales were asking over a million. Five were foreclosure sales, including one priced at $2.750M. There were two short sales.

The chart below shows single family home activity, excluding condos.

During the depth of the slump, we averaged 15 escrows per month and half were distressed sales. You can see the improvement.

CARMEL CLOSED HIGH & LOW

Right on the corner of San Antonio & Ocean, this little 3/2 gem closed for $3.2M.

This home had an odd, wandering floor plan but was otherwise rather sharp. Near Santa Fe & 1st, it had 3BR, 2BA, and 1455 sf. It sold for $690K.

CARMEL VALLEY

19 properties entered escrow in May, ranging in list price from $139K for a 1 bed-room home in the Village to $4.250M in Quail Meadows. 4 of the new sales were bank-owned and 1 was a short sale.

The chart below shows single family home activity, excluding condos.

The big change between now and the worst time of the market is inventory. Consider that in May 2009, the inventory of unsold homes was 170; a year later, it was 159; today, 111. Sales swooned to 10 in May ‘09 but were 22 the next May, actually higher than now.

CARMEL VALLEY CLOSED HIGH & LOW

Situated on 20 gated acres, this 6300 sf, 5 BR, 5.5BA home with a 800 sf guest house fetched $2.7M.. They bought it in 2004 for $3.1M and first offered it in 2007 at $5.2M.

Not far from the home above, this 2BR, 2BA bank-owned home sold for $180K.

PEBBLE BEACH

Pebble saw 8 new escrows last month, ranging in list price from a $675K home in the Country Club area to a $3.799M home on Portola. One sale was bank-owned. There were two short sales, including the home on Portola, which took a long road down from an initial asking price of $8.450M in 2010.

PEBBLE BEACH CLOSED HIGH & LOW

A 4,000 sf condo in Spanish Bay took the top spot at $1.825M. They started out asking $2.695M.

A 4BR, 3BA home in the Country Club area fetched $720K for the least expensive sale.

PACIFIC GROVE

PG had 17 new escrows in May, ranging in price from $249K for a modest Del Monte Park home to $899K near downtown. Only one home was bank-owned and two were short sales.

Note the steep fall in inventory.

PACIFIC GROVE CLOSED HIGH & LOW

A rather rough 2500 sf 3BR, 3BA home on Ocean View took top spot with a sale at $1.325M. It was originally listed at $2.1M in 2010.

A little 2BR, 1BA Del Monte Park home that was in escrow for 210 days defined the bottom of the market for May at $325K.

MONTEREY

Monterey busted the charts with 33 new escrows last month, ranging in list price from $140K for a wee home near Laguna Grande to $1.2M on Dunecrest. 5 sales were bank-owned; another 11 were short sales, including the one on Dunecrest.

MONTEREY CLOSED HIGH & LOW

This home from the ‘30s, with a 2700 sf main house and a 700 sf guest house, plus a garage for 4 cars, fetched $1.290M. It was originally listed in 2008 at $2.3M.

This home on English Avenue was the least expensive sale at $226,686 (negotiated to the last dollar). It was a short sale.

MONTEREY-SALINAS CORRIDOR

(east to San Benancio)

12 homes went in escrow in May, ranging in list price from a $450K home off Corral de Tierra to a $2.250M home on Saddle Road. Two of the new sales were bank-owned and three were short sales.

MONTEREY-SALINAS CLOSED HIGH & LOW

Saddle Road also provided the highest sale last month, at $2.125M. This home, on about an acre & a half, had 4,684 sf, 4BR and 6BA, and big views. It sold in one day.

There were only 3 closings last month, the one above & 2 at nearly the same price below:

$460K bought this 4BR, 4BA home on San Benancio Road.

SEASIDE & MARINA

Seaside and Marina are, of course, very different cities. But buyers for one always look at the other, as well. So, I’ll combine them here and offer varied snapshots each month.

Marina saw 15 new escrows in May, ranging in list price from a $179.9K condo on Seacrest to a $445K home on Vaughn. 5 of the new sales were bank-owned and 4 were short sales.

Seaside had 20 new escrows, ranging from a $174.9 house on Luxton to a $558K home in the Upper Kimball area. 4 sales were bank-owned and 7 were short sales.

The chart below is a new one, combining the Marina & Seaside markets. In terms of prospects, this area is becoming the hottest peninsula market: so much demand for so little supply is a recipe for price rises.

Seaside Highlands offered the highest sale last month at $550k, a short sale.

A 720 s.f. home with 2BR & 1BA, styled “a contractor’s dream house” sold on Harding for $140K.

SEASIDE CLOSED HIGH & LOW

A couple more French housing pictures because “why

not”?

Barge travel in the Loire Valley.

The ultimate 2nd home. Built for Francois I; in his entire life,

he only spent 7 weeks there. An agent would advise selling.

Thank your for taking a few minutes with my e-magazine. Your com-ments & questions are welcome. Let me know about issues you’d like to see addressed here or stories and facts you’d like others to know.

Know anyone thinking of buying or selling, someone who would benefit from informed & straight counsel? Please keep me in mind. Referrals like yours are the heart of my practice.

© Merritt Ringer 2012

Merritt’s Market Update

March, 2012

©2012 Merritt Ringer