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Š2014 Merritt Ringer


Read, Seen, or Heard

“At this stage, we can’t rule anything out: not crew interference with the transponders, not a catastrophic electrical failure, not the emergence of a complex topological feature of space-time such as an Einstein-Rosen bridge that could have deposited the flight at any location in the universe or a different time period altogether.” ~ Malaysia’s civil aviation chief Abdul Rahman (source: The Onion)

“Once the game is over, the king and the pawn go back in the same box.” ~ Italian Proverb

“Ironically, in a changing world, playing it safe is one of the riskiest things you can do.” ~ Reid Hoffman


Table of Contents

The Big Picture: cash-out refis…….…….………... 3 The Big Picture: new building……….….………...4 All-cash Sales…...……………………….…………5 Financing………………………………….………..6 Carmel………………………………...….….…… 7-8 Carmel Valley…………………………..….………9-10 Carmel Highlands………………………..…..……10-11 Pebble Beach…………………………….………...12-13 Pacific Grove…………………………..…....….….14-15 Monterey………………….……………….....…… 16-17 Monterey-Salinas Corridor……………………….18-19 Seaside & Marina ………………………….………20-21 An Agent’s Life …………………...….…….………..22 End Note ………………………………………….....23

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 Before & After the Fall Two big changes from the late boom years are the shriveling of cash-out refinances to support consumption and the low rate of new construction (which has been very important in previous recoveries). The chart below shows how few cash-out refinances there have been lately.

This change is healthy in the long run but it does curtail consumption, hence growth, now.


THE BIG PICTURE Before & After the Fall You wouldn’t know it in Carmel, but new construction has been weak in much of the country. One reason is the inability of first timers to buy. Many have student debt and no, or low-wage, jobs.

Population and GDP growth insure that new units will built. But will they house more owners or more renters?


ALL-CASH VS FINANCED SALES

Since the start of the year, our Peninsula has seen 127 closings for a million or more dollars. More than half of these have been all-cash, as the chart below illustrates. We’ve also seen numerous all-cash sales in the lower price ranges.


FINANCING Rates are low. But lenders are tight.

The Wall Street Journal recently reported that “lenders have started to accept lower credit scores and to reduce the down-payment requirements.” But as my friend, Lou Barnes, a lender often quoted in the national press, says, “tiny fractions of borrowers can do things that they could not a year ago.”


CARMEL: NEW ESCROWS OFF . . . THE . . . CHARTS: that is what April was for new escrows in Carmel. 22 of the new escrows were asking over a million and ten of those were over two million. All other price levels did well and we seem to be nearing the date when there will be no homes under $700K in Carmel. One foreclosed home and one short sale reminded us of the late unpleasantness but, otherwise, it was like a market born anew.


CARMEL CLOSED SAMPLES

Near Carmel Point, but not on it, we listed this home and sold it in 3 days just over the asking price. With 4BR/3.5 BA in 2676 sf, it was good sized; built in 2006, it was almost new. It sold in 2008 for $2.7M. This time, in a sign of how things have changed, it closed, all-cash, for $3.3M.

This is about where the bottom of the market is now. This fixer was on Guadalupe a bit south of Serra. 2BR/2BA in just over 1000 sf, it needed general updating. The listor clumsily marketed it as a probable short sale which limited its appeal. It was not a short sale, though, and it sold with an ordinary new loan full-price for $725K.


CARMEL VALLEY: NEW ESCROWS The Valley had a solid month, although a bit below March. Was a time, not so long ago, when months passed with million-plus sales numbering one or none. We racked up six in April. Not a single transaction was a distressed sale.


CARMEL VALLEY CLOSED SAMPLES

Quail Meadows, as so often, took the top sales price in the Valley last month. This 4BR/4BA 4654sf home sat amidst 3.9 acres. In 2010, all these virtues were only able to fetch a sale price of $2.775M. But times have changed. It took 7 months, but this time they got $3.825M. All-cash, of course.

Don’t often mention condos here but they are an important part of our Valley market. This 2BR/2BA 1469sf home in the age-55+ Del Mesa community had been remodeled in 2005. It sold in a couple months, all-cash and full-price for $789K.


CARMEL HIGHLANDS: NEW ESCROWS

In the face of the onslaught of buying on the Peninsula, the Highlands preserved its reputation for quiet. There was one new escrow. Of course, it was asking almost $3,000,000, so the Highlands also preserved its reputation for expensive.


CARMEL HIGHLANDS CLOSED SAMPLES

Right on the rocks over Wildcat Cove, 3100sf 3/3 went through a rapid cascade of price reductions to close for $5.750M.

Sort of rustic but with views of the sea, this 3340sf 4/3.5 home included a detached guest house. It sold for $2.140M in 2005, presumably on the last day of the bull market. Our market today rewards first class homes but a lot others still have a ways to go. This time, it sold for $1.487M.


PEBBLE BEACH: NEW ESCROWS 14 new escrows made April a solid month for Pebble, the same volume as March. 9 of the sales were asking over a million, though none were over $3M. A single short sale gave opportunity to those who would profit from distress.


PEBBLE BEACH CLOSED SAMPLES

Big ocean views distinguished this home on 17 Mile Drive (a semi-busy street) near Spanish Bay. The interior was actually fairly generic. But it sold in a couple of weeks all-cash and full-price for $2.895M.

This 2822sf 3/3.5 home in the Upper Forest had a good-sized guest house with its own kitchen in an attractive setting. Still, it took 287 days and a drop of over $400K to clear the market at 1.075M. All-cash, naturally.


PACIFIC GROVE: NEW ESCROWS PG enjoyed a very brisk month with 25 new escrows, not a single one of which was a distressed sale. Five of the sales were asking over a million and one was well above two million. The bulk of the market was in the sixes and sevens (hundreds of thousands, of course).


PACIFIC GROVE CLOSED SAMPLES

Despite rather undistinguished marketing, the many virtues of this home trumped all. With 2690sf and 4/3 on a double lot by the golf course, this home sold for $1.425M. All-cash, need I add? It was one of four PG closings over a million last month.

On Gibson, charming but small, this 2/1 had only 731sf. That didn’t stop it selling in 3 days for $642K. Demand for cute vintage homes in PG remains quite high.


MONTEREY: NEW ESCROWS Monterey had its usual high-volume month, though it lost its top perch to Carmel. Although there were 29 new escrows, not a single one cracked the million mark. On the good news front, only two of the new sales were distressed.


MONTEREY CLOSED SAMPLES

In 2005, this home in Alta Mesa was listed for $1.850M. That didn’t work and neither did several subsequent attempts. This time, the 2822sf 4/2.5 home was a short sale and sold pretty fast for $915K. All-cash.

Lots of folks responded to ads about this home, with the picture above and the price tag in the low $400s, until they learned more about it. A major fixer it finally sold, after 602 days on the market, all-cash, for the original list price of $425K.


MONTEREY-SALINAS CORRIDOR: NEW ESCROWS (east to San Benancio) 12 new escrows made for a fairly good month. 7 of them were over a million and 3 of those were over two million (divided between Monterra, Pasadera, and the Corral de Tierra area). More than our other markets, the corridor continues to be burdened by the past: three of the new escrows were short sales and one was a foreclosure.


MONTEREY-SALINAS CLOSED SAMPLES

Pasadera, one of the golf villas. It took over 200 days but they finally closed for 1.025M.

Fair amount of home for not much. In the San Benancio area, this 2095sf 3/2.5 home sat on over an acre. It sold for $615K.


SEASIDE & MARINA: NEW ESCROWS Marina had a brisk 19 new escrows, including 3 short sales & one foreclosure.

Seaside saw a new escrow every other day. Only one was a short sale & none were bank-owned.


MARINA CLOSED SAMPLES

Seaside Highlands. This home backed up on greenbelt and sold over the asking price in 3 days for $720K.

Pleasantly clean and updated, this 1546sf 4/2 home on Flores sold for 484K.


An Agent’s Life

It’s not all work: dinner at Stillwater, Pebble Beach.


Thank your for taking a few minutes with 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.

© Merritt Ringer 2013


Š2014 Merritt Ringer

Merrritt's Market Update: May, 2014  

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