June Shows Signs of Recovery in Monterey Peninsula, California and Surounding areas

Greetings from the beautiful Monterey Peninsula, CA (Carmel, Pebble Beach, Pacific Grove, Monterey, Seaside, Marina) . Here is our Market Flash for June of 2009.

The market continues to show signs of either being at the bottom or being very close to it depending on what price range you are looking at. Lynda and I continue to work very hard, particularly on the lower end properties (under $350,000) where it has now become a "seller's" market based on a lack of inventory and a bunch of prequalified buyers. If you have good credit, purchasing a property in this price range is finally comparable to renting with interest rates as low as they are. We are still seeing multiple offers on just about every home priced under $350,000! Most end up selling for right around full price and we are even starting to see prices increase slightly. I don't believe this is a trend yet as there are supposedly a glut of foreclosures on the way that the bank has been holding onto.

Our seasonal increase in sales activity materialized this summer, especially in the middle price ranges with the second home buyers, although sales are still way below normal levels in the middle price ranges. The high end is still pretty slow although there has been a flurry of activity over the last 30 days centered in Pebble Beach, Carmel and Pacific Grove. There were even reports of multiple offers on a $10+ million property in Pebble Beach!

We have also been working hard to market our listings and have been getting incredible amounts of exposure for our client's homes utilizing both traditional print advertising and the internet. We have seen a flurry of offers over the past 60 days, but they are very difficult to keep together as buyers are very particular and buyer's remorse seems to be playing a key role. Seller's need to hang in there and remember it is a buyer's market unless you are priced like a distress property. Two of our current listings are in escrow with all conditions removed and we have offers on three others! It has been busy!

Thank you to those of you who have referred your friends and family to us for their real estate needs! We are extremely lucky to have so many great clients who refer us business all year! You are truly the lifeblood of our business and we appreciate you putting your trust in us!

Let's talk about what is going on here.

First, let me define what I mean by a "sale." These are any properties that have an accepted offer and go pending during the specific month. Some of these will fall out of escrow, but most will eventually close. The reason I am using "pendings" as a barometer is that is gives a good snap shot of how many buyers are actually finding properties that they are willing to make an offer on and since most agents are requiring a pre-approval letter with the offer, they are "qualified buyers" as well.

Like the last report, Monterey County is STILL a story of three price points. There are the high end properties, let's call it over $2,000,000, the lower end, say under $400,000, and everything in the middle.

The high end actually slowed a bit in June when compared to May. However, we seem to be seeing things pick up a bit over the last week or so of June and into July. I think the July numbers will show a little uptick.

The story in the middle is much the same as it was in May. If anything there is a lack of quality inventory to choose from and sales have slid just a bit. The middle is a wide range of prices from $400,000 all the way up to $1,999,999 and normally would represent several different market segments. However, this entire range was suffering from the same set of issues which is a lack of loan programs to service a large portion of this price range and a lack of step up buyers due to their inability to sell there property for a profit. Bank of America has come out with a pretty good jumbo loan program and the Feds have allowed the conforming loan limit to increase to $729,750. With these two new programs hitting in March, we saw a flicker of activity here. It seems to have cooled a bit in June again due to a lack of step up buyers in this range.

The overwhelming majority of the sales activity is in the lower price ranges, under $400k. In February and March there was an average of 300 sales per month compared to 646 in April!!! Things have cooled a bit due to a shortage of inventory to only 460 sales in June. Things are still in high gear in this price range. There are a lot of buyers waiting on inventory. Once the banks release the foreclosures they are sitting on, things will pick up here again. The biggest issue Lynda and I are having now is a lack of quality inventory in this price range. Anything nice has multiple offers and is going into escrow almost immediately. It is not uncommon for our buyers to offer on 5-6 homes before getting an offer accepted! Active inventory levels are down to under 2 months supply based on the current rate of sales! Patience is key for our entry level buyers!

The sheer number of properties selling in this lower price range combined with the lack in high end sales is the driving force behind the Monterey County average price and median price steep decline. We are starting to see the average price come up a bit, but with this type of volume in the lower price range it will be awhile before we see any significant changes in either statistics. Just remember the middle price ranges are steady, which can be an indicator of the market getting close to the bottom there as well.

The Monterey County Sales for June broke down as follows:

$4M+ - Zero sales
$3.99M-$3M - 1 sales (Carmel Highlands)
$2.99M-$2M - 6 sales (1 in PB, 4 in CAR & 1 in CV)
$1.99M-$1M - 13 sales (7 in CAR, 3 in PB, 1 in CV,1 in MRY & 1 in SS)
$999k-$900k - 5 sales (2 in MSH, 1 in MRY, 1 in CAR & 1 in PB)
$899k-$800k - 6 sales (2 in CAR, 2 in MRY, 1 in CV, 1 in PG, 1 MSH, 1 PB)
$799k-$700k - 13 sales (3 in CAR, 2 in MSH, 2 in CV, 1 in PG, 1 in MRY, 1 in SS, 1 in SAL)
$699k-$600k - 14 sales - (4 in PG, 3 in MRY, 3 in SS, 2 in NMC, 1 in CV, 1 in CAR)

$599k-$500k - 15 sales (5 in NMC, 4 in PG, 3 in MRY, 1 in MSH, 1 in SAL, 1 in SS)
$499k-$400k - 24 sales (7 in SAL, 6 MAR, 3 in SMH, 2 in PG, 2 in NMC, 1 in MRY, 1 in DRO, 1 in CV & 1 in Big Sur)
$399k-$300k - 72 sales (28 SAL, 21 NMC, 7 MAR, 9 SS, 3 SMC, 2 MSH, 1 PG & 1 DRO)
$299k-$200k - 137 sales (74 SAL, 27 SMC,18 NMC, 9 SS, 4 MAR, 1 MRY)
$199k-$100k - 208 sales (117 SAL, 75, SMC, 10 NMC, 5 SS & 1 MSH)
<$99k - 43 sales - (18 SMC, 24 SAL, 1 NMC)

It's a great time to be a first time buyer! Programs are great, interest rates are at historical lows...Many who thought they would never be able to buy a home here are able to purchase one right now! Both Lynda and I have been working with a lot of first time buyers who can now afford to own a piece of real estate here on the Peninsula! The only thing you need to remember is it is now getting very competitive in the lower priced markets. Multiple offers are becoming the norm again! Who would have thought that was possible so quickly?

It is also a great time to purchase investment property here. For the first time in longer than most can remember, there are investment properties that pencil out and either break even or even make a couple of bucks! Give us a call to discuss opportunities.

The real estate market is very hard to generalize. It is a market made up of many micro markets. For detailed history of a particular cities statistics, visit our website's Monterey County RE Stats page. For complete information on a particular neighborhood or property, give us a call.

Both Lynda and I hope this was informative and that you enjoy receiving these monthly updates. If you know of anyone who could benefit from this information or who would just be interested in reading it, please feel free to forward it on or send me their name and email address and I can add them to our list of recipients.

Take care,

Mark Bruno

www.MontereyPeninsulaHomeTeam.com

Oh by the way, if you or anyone you know is interested in buying or selling a home, we are never too busy for any of your referrals!