Transcript
Read, Seen, or Heard
A quant’s view of the Department of Motor Vehicles:
(this Venn diagram has many applications in modern life)
“There are two kinds of people, those who do the work
and those who take the credit. Try to be in the first
group; there is less competition there.”
- Indira Gandhi
Table of Contents
The Big Picture…………………….…….………... 3
More Big Picture…..……………….…….………... 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
We are in an environment of fiscal and monetary tightening. State & local
governments have done a lot of tightening since the financial crisis began, trying to
balance budgets with shrinking revenue. The federal government has begun fiscal
tightening via the sequester. Now, the Fed is adding monetary tightening.
The Fed is sufficiently confident about our economic progress that gentle Ben
recently raised the prospect of soon tapering their bond buying program, aka
“quantitative easing”. The Fed was never entirely comfortable with this program
and now seems eager to exit it.
A different view of our economic progress is offered by the graph below. This
shows the percentage of Americans employed, in some ways, a more telling
measure than the unemployment rate (which “improves” when people drop out).
MORE BIG PICTURE
Monetary tightening aims to smother inflation. Because very low inflation always
threatens to sink into deflation and its train of woes (vide the Great Depression,
Japan), the Fed would like to see about 2% inflation annually. Below is a graph of
recent annual percentage changes in the consumer price index.
While sometimes heroic, the Fed forecasting abilities have not been impressive the
past dozen years. Maybe they have this right, but it is not obvious that fiscal and
monetary tightening (i.e., firing people and raising interest rates) is the wisest
response to such employment and inflation numbers.
PRICES
Zillow’s chief economist, Stan Humphries, recently opined, “The housing market
worm has turned over the past few weeks – inventory levels are beginning to show
signs of easing, and mortgage interest rates are creeping (sic) up. Going forward,
both of these factors will help mitigate extreme price spikes caused by very strong
housing demand and very low housing supply. Runaway appreciation in many of
the large, coastal metros that form the backbone of the Case-Shiller indices will
begin to moderate.” He is referring to the double-digit increases recently reported
by the Case-Shiller index & broadcast in the press.
Our housing market will continue to do well. Despite rising inventories, climbing
interest rates, and some restraint by investors, effective demand remains strong.
But the very high appreciation we’ve seen in national indices will moderate.
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 Jumbo (over $483,000 here)
30 year fixed: 4.5% 30 year fixed: 5.5%
5/1 ARM: 3.675% 5/1 ARM: 3.5%
The graph shows what has happened to mortgage rates since the Fed gave voice to
its optimism.
CARMEL: NEW ESCROWS
Carmel saw 20 new escrows last month, a 25% drop from the previous month,
which was already down slightly from a series of better months. Roughly half the
new escrows were asking over a million, though all but three were below $1.4M.
There were zero short sales and zero bank-owned.
* Sometimes these charts reflect different numbers from previous months than I
have reported. This is due to transactions failing.
CARMEL CLOSED HIGH & LOW
It took 656 days. But this 1786sf, 2BR/2BA home on Scenic just south of 8th
finally sold. At they start, they asked $5.475M. By degrees, they made their way
to $3.950M. They closed at $3.750M.
A condo sold for slightly less, but this Mission Fields home was the lowest house
sale last month. A candidate for my Annals of Marketing file with its highly
evocative photo of a garage door, it nonetheless sold in 4 days for a little over the
asking price, closing at $592.5K.
CARMEL VALLEY: NEW ESCROWS
The Valley saw 22 new escrows last month, a climb from the previous month*.
Four of the new sales were asking over a million; but over half of all the sales fell
in the $500-800K range. One new escrow was a short sale and one was bank-
owned. Valley inventories never fell as much as some other local markets; alt-
hough we are now seeing higher inventories, as we usually do in the summer; but
notice how much lower they are than last year in the graph below.
* Sometimes these charts reflect different numbers from previous months than I
have reported. This is due to transactions failing.
CARMEL VALLEY CLOSED HIGH & LOW
Sleepy Hollow, with nice views, over 4800sf, 4BR/4.5BA, and good marketing,
what’s not to like? The market agreed and, in 23 days, this sold for $2.409M.
Inviting marketing obviously was not the key to this successful sale. Listed at
$223K, this Hacienda Carmel 2BR/1BA condo went into escrow in 4 days. Then,
the trouble began. It was a short sale and it took 307 days to close escrow and the
price went up to $326K.
PEBBLE BEACH: NEW ESCROWS
Pebble had 12 new escrows in June, a 20% rise from the previous month. Over
half the new sales were asking over a million but nothing over $4M went into
escrow. There was one short sale. Note how the inventory is rising.
* Sometimes these charts reflect different numbers from previous months than I
have reported. This is due to transactions failing.
PEBBLE BEACH CLOSED HIGH & LOW
On Bonifacio, with big ocean views and 2.75 acres with which to play, this
4BR/4.5BA, 3207sf home started with an asking price of $4.499M; after about 6
months, they went to $3.995M; 3 weeks later, they went into escrow. It closed for
$3.865M.
Despite views and high-end finishing, the agent opted to market the sign on this
2BR/2BA condo. But despite some price foolery, it was in the right range and
easy to show. They started at $479K, raised the price to $499K, and sold after 80
days for $469K.
PACIFIC GROVE: NEW ESCROWS
PG had 13 new escrows in June, continuing the 4 month slide in sales volume that
has carried us steadily down from a peak of 21. Only one sale was over a million.
There was not a single bank-owned or short sale. One welcome development is
that the inventory is increasing after months of being in a swoon.
* Sometimes these charts reflect different numbers from previous months than I
have reported. This is due to transactions failing.
PACIFIC GROVE CLOSED HIGH & LOW
Recently remodeled, below downtown, and with ocean views, this 4BR/2.5BA
home took just 4 days to sell. It had 3 offers and went just over the asking price,
closing for $1.515M.
On David Ave., the lower edge of Del Monte Park, this 3BR/2BA, 1848sf home
never had a price adjustment; the market finally rose up to it. It took them 302
days to sell and they closed, for $5K less than they asked, at $580K.
MONTEREY: NEW ESCROWS
As usual, Monterey tops the charts with volume, opening 24 new escrows last
month. Only one sale was asking over a million. There was one bank-owned and
six short sales.
* Sometimes these charts reflect different numbers from previous months than I
have reported. This is due to transactions failing.
MONTEREY CLOSED HIGH & LOW
This Alta Mesa home had some view of the bay, 5BR/4BA, 3,421sf, and a 2/3 acre
lot. It had not been on the market since 2002, when they attempted and failed to
get $$2.4M. This time, they asked $1.575M and it sold in 18 days for $1.450M.
On Glenwood Circle, this 1BR/1BA condo sold for $383K in 2006. This time, it
fetched 46% less, closing at $206K.
MONTEREY-SALINAS CORRIDOR: NEW ESCROWS
(east to San Benancio)
The corridor saw a mere 3 new escrows last month. Only one was over a million
and none were distressed sales.
* Sometimes these charts reflect different numbers from previous months than I
have reported. This is due to transactions failing.
MONTEREY-SALINAS CLOSED HIGH & LOW
On Bay Ridge, this 4BR/4BA, 3,464,sf home sat on 3 acres with big hillside views.
In 2002, several years before the meltdown, it sold for $1.4M. This time, it sold in
less than 3 weeks for $1.5M.
On Corral de Tierra, this 3BR/2.5BA home sat on a bit over an acre. It needed
some updating. They had been trying to sell it, on and off, since 2010. It finally
became a short sale and closed for $540K.
SEASIDE & MARINA: NEW ESCROWS
Marina saw six new escrows in June. NOT A SINGLE ONE WAS A SHORT
SALE OR BANK-OWNED.
Seaside had 20 new escrows in June. One was bank-owned and five were short
sales, an improving ratio from the bad old days.
Marina:
The only thing holding
down sales is lack of
inventory.
Seaside:
Lots of sales, barely
enough inventory.
This 10-year old home in Upper Marina had 4BR/2.5BA, and 2222 sf. In 2006, it
sold for $805K. This time, it sold fast, with multiple offers, for 42% less at
$465K.
On Lynscott Drive, this 2BR/1.5BA condo sold fast, just over the asking price,
closing at $174K.
MARINA CLOSED HIGH & LOW
An Agent’s Life
A foggy July in Carmel before the sun got up.
We are seeing more all-cash transactions. I had buyers,
with great credit, who offered the highest price for a
home, 71% down, an 18-day close . . . & lost to an all-
cash, 7-day close offer. Fortunately, we found another
home and are in now escrow.
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.
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 2013
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