Merritt’s Market Update

Monterey Peninsula

February, 2012

©2012 Merritt Ringer

Read & Heard

After ecstasy, the laundry.

Zen proverb

Until I saw Chardin’s painting, I never realized how

much beauty lay around me in my parent’s house, in

the half-cleared table, in the corner of the tablecloth

left awry, in the knife beside the empty oyster shell.

Marcel Proust

Table of Contents

The Big Picture…………………….…….………... 3

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

Prices…………………………………….………… 5

Financing………………………………….……….. 6

Carmel………………………………...….….…… 7-8

Carmel Valley…………………………..….……… 8-9

Pebble Beach………………………...……….…… 9-10

Pacific Grove…………………………….…….…..11-12

Monterey…………………………………....….…..13-14

Monterey-Salinas Corridor………………...……. 15-16

Seaside & Marina ………………………...……… 17-18

An Agents Life …………………...….…...…….…..19

End Note …………………………………………....20

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

Our economy continues its slow uphill climb. Threats are several: we can act stupid; Europe could unravel; Israel & Iran might trigger oil market chaos, etc. As for Europe, one observer said the Continent has shifted from talking & dithering to dithering & talking, the Greek deal notwithstanding.

Our latest jobs report was very good. But don’t expect a ’V’ shaped recovery; that was a different kind of recession. Jared Bernstein offers a vivid picture of our trip from old-fashioned recessions to what we have now, as recoveries sag into a ‘U’ shape and then flatten further.

Distressed Properties

We have a ways to go.

California had a big month-over-month drop in initial foreclosure notices in December. Notices of default were down 38 percent from the previous month. But we still had the nation’s third highest foreclosure rate for all of 2011.

California was the big winner, compared to other states, from the mortgage servicer settlement announced last week. The settlement should result more modi-fications and short sales.

Prices

Home prices continued to fall nationally through November, based on the most useful index, the Case-Shiller report. While our Peninsula has often been an exception to national trends - for example, we went up a LOT more than most during the boom - we have generally tracked the national averages in percentage terms on the way down.

But price-to-rent ratios are nearing their historical range and not many homes have been built the last five years. Combined with other improvements, we may be nearing the bottom of nominal price declines. Real prices are another matter.

Financing

One restraint is down payments. Historically, people rolled their accumulated equity from a sale into a purchase. Now, with so much equity lost - way over a trillion dollars - that avenue is closed for many. Others have suffered portfolio losses and bonuses aren’t what they were. While we still have buyers with plenty of cash - I am closing an all-cash transaction this week, for example - the total demand is reduced by the loss of lots of folks who, rather recently, could have afforded to make a move here.

Rates

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

Below $417,000

30 year fixed - zero points: 3.875%

5/1 ARM - zero points: 2.875%

Jumbo (over $483,000 here)

30 year fixed - zero points: 4.99%

5/1 ARM - zero points: 4.125%

Paying a point lowers the rate .125-.250%

CARMEL

January saw 19 new escrows; for perspective, the previous January saw 20. But over half the new escrows were on homes over a million and only 3 were short sales.

Two long time holdouts finally made escrow. A Hatton home had been on the market for 6 ½ (!) years with little time off; their journey took them from asking $3.925M to $2.295M. Another, on Palou (in the “quiet rectangle”), trekked for 20 months, rested awhile, then marched on for 11 more, as their asking price melted from $3.450M to $1.795M. Neither has closed.

The chart below gives a 2 year look at the number of closed sales (not new escrows) in Carmel every month. Choppy seas, but getting a bit more solid.

CARMEL CLOSED HIGHS & LOWS

$1.562M was the price fetched by this pleasant 3bed/2bath home. In the MLS, the agent said it had zero square feet. It was on Lopez north of 4th.

$525k, was what this tiny shack on Mission & 11th brought. Lot value.

PEBBLE BEACH

Pebble saw 10 new escrows, with asking prices ranging from $598K to $2.5M., half over a million. Four were distress sales, half bank-owned, half short-sales. For perspective, though, consider that we also had 10 new escrows in January, 2011. And 7 were over a million, climbing all the way to $7.450M.

The chart below gives a 2 year look at the number of closed sales (not new escrows) in Pebble every month. Quite choppy but noticeably higher the last two months.

PEBBLE BEACH CLOSED HIGHS & LOWS

$6.4M bought this beauty on Portola. As luxurious as you might imagine, it had no ocean view. They were asking $8.6M. Apparently, it pays to make offers.

$1.075M was the sales price of this octagonal home in Country Club West. Charming for multi-faceted folks.

PACIFIC GROVE

PG opened the year with 16 new escrows, the same number as last January. Back then, all but 2 were under a million and none was over $1.299M. This January, all but one was under a million, and none was over $1.299M.

The chart below gives a 2 year look at the number of closed sales (not new escrows) in PG every month.

PACIFIC GROVE CLOSED HIGHS & LOWS

This picture probably best captures January’s most expensive sale: a 3600 sq. ft. home with bay views on Acaia. They set out to sell in April, 2010, asking $1.975M and closed at $1.2M

A short sale on Shafter put the monthly bottom at $390K.

MONTEREY

25 Monterey properties entered escrow in January. 15 were distress sales, mostly short sales. 9 were condo sales. All but on had asking prices lower than $800k. Last January only saw 16 new sales, so volume has picked up a lot.

The chart below gives a 2 year look at the number of closed sales (not new escrows) in Monterey every month. It’s not a very steady march, but it’s tilted in the right direction.

MONTEREY CLOSED HIGH & LOW

Such was the ocean view that helped win a Fillmore home January’s highest sales price: $637,000. The house, over 2,000 sq. ft., had nice walnut floors, radiant heat, a 6-burner Viking stove, custom wood and iron work.

This is one view of Cypress Park, Casanova/Oak Knoll, where a condo, with 2 beds & 1 bath, sold for $200K.

MONTEREY-SALINAS CORRIDOR

In January, 24 homes entered escrow, all but one were under $800k.: 13 of the sales were short sales and 2 were bank-owned.

The chart below gives a 2 year look at the number of closed sales (not new escrows) in Monterey-Salinas Corridor every month. It’s not a very steady march, but it’s tilted in the right direction.

MONTEREY-SALINAS CLOSED HIGH & LOW

$1.015M was January’s highest sale. A 2-story Mediterranean villa in Bay Ridge with 4 beds, 5 baths, and a 3 car garage, pretty nice views and pleasant spaces, it sold in 2005 for $2.195M.

Inside a circle just east of the Corral de Tierra country club grounds, this short sale closed for $510k, marking the month’s low this side of San Benancio.

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.

Our markets continued to be quite active. As has so long been the case now, the majority of sales were distressed. Marina had 17 new escrows; only 2 were not either a short sale or bank-owned. Seaside had 25 new escrows, 6 of which were not distressed.

The chart below gives a 2 year look at the number of closed sales (not new escrows) in Marina & Seaside every month.

Seaside Highlands landed the highest priced sale in January at $562k. It was a bank sale, REO. It once had been listed at $1.3M.

A photo for the annals of marketing helped garner this Seaside home on Soto the lowest sales price last month: $147,00. It was a short sale.

SEASIDE & MARINA CLOSED HIGH & LOW

An Agent’s Life

Carmel in winter: cherry blossoms on the trees.

. . .

I constantly seek better technology. This e-magazine is an

example. I now do most transactions electronically; and

clients review documents online & sign digitally.

But suddenly I have two clients without computers & am in

escrow with a 91 year-old agent who has no fax, no computer,

and a cell phone without voicemail. Our transactions are

going so smoothly, I’m reminded that people are the key to

good real estate sales, not tools.

Thank your for taking a few minutes to review my e-magazine. Your comments & 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 & honest counsel? Please keep me in mind. Referrals like yours are the heart of my practice.

© Merritt Ringer 2012

Merritt’s Market Update

February, 2012

©2012 Merritt Ringer