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Read, Seen, or Heard
I heard a great story recently -- I love telling it -- of a little
girl who was in a drawing lesson. She was six and she was at
the back, drawing, and the teacher said this little girl hardly
ever paid attention, and in this drawing lesson she did. The
teacher was fascinated and she went over to her and she said,
"What are you drawing?" And the girl said, "I'm drawing a
picture of God." And the teacher said, "But nobody knows
what God looks like." And the girl said, "They will in a
minute."
~ Ken Robinson
We are all in the gutter; but some of us are looking at the
stars.
~ Oscar Wilde
Table of Contents
MLS Mess…...…….……………….…….………... 3
Interest Rates……….……………….…….………...4
Carmel………………………………...….….….… 5-6
Carmel Valley…………………………..….….……7-8
Carmel Highlands………………………..…...……9-10
Pebble Beach…………………………….…….…...11-12
Pacific Grove…………………………..….....….….13-14
Monterey………………….……………….....…… 15-16
Monterey-Salinas Corridor……………………….17-18
Seaside & Marina ………………………….………19-20
An Agent’s Life …………………...….…….…….....21
End Note ………………………………………….....22
Caveat: I’m no economist (despite the per formance
of most, this is no 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 opinions
expressed are always my own.
CAVE-IN AT THE DATA MINE
A couple months ago, our MLS—the online platform agents use to market homes
and curate statistics—underwent an “upgrade”. We saw a display of skill not
matched since the launch of Obamacare; many bugs linger.
An example is below. This MLS chart tracks the price / sq. ft. in Carmel Valley. It
says the market was really high in 2012, then suffered a historic collapse and has
been flat since. Reality is the market bottomed mid-2012 and has slowly climbed
since.
While these tech-conditions persist, my e-magazine will be more informal and
anecdotal. After some tinkering, I can still present time-series graphs on local
markets.
INTEREST RATE OUTLOOK
Here are some excerpts from the minutes of the Federal Reserve Open Market
Committee meeting at the end of January (my emphases):
“In connection with the risks associated with an early start to policy normalization,
many participants observed that a premature increase in rates might damp
the apparent solid recovery in real activity and labor market conditions . . .”
“Many participants indicated that their assessment of the balance of risks
associated with the timing of the beginning of policy normalization had
inclined them toward keeping the federal funds rate at its effective lower
bound for a longer time.”
“A number of participants emphasized that they would need to see either an
increase in market-based measures of inflation compensation or evidence that
continued low readings on these measures did not constitute grounds for concern.”
In a nut: rates may stay low a bit longer than some expected.
Moreover, as an economist at Freddie Mac observed: “We . . . do not foresee a
major turnaround in the global growth picture and therefore recent trends in
foreign buying of long-term U.S. securities activity should continue. That means
continued downward pressure on long-term interest rates here in the U.S. Even
if the Federal Reserve begins raising short-term rates later this year, don't expect to
see long-term rates -- including mortgage rates -- increase much.”
TWO RECENT CARMEL SALES TELL SOME TALES . . .
MISSION/12TH, SW CORNER, CARMEL
We often hear how important location is and it’s true; but the impact of size and
market history is illustrated by two almost simultaneous sales of remodeled homes
facing one another on opposite street corners.
This little (861 sf, 2BR/2BA) home offers evidence of the course of our market
and a cautionary tale about speculation. It also is a stark warning about relying on
the “upgraded” MLS: the MLS claims this home sold after being on the market a
mere 9 days.
Actually . . . this home previously sold in late 2008 for $900k. It was remodeled
and listed with the biggest selling agent in town until he lost the listing after 683
days (sic); it was then listed with another agent for 71 days, canceled, and later
relisted with her, when it sold after 9 days and $195K below their asking price; it
closed for $900k, which is what they paid in 2008 before remodeling.
MISSION/12TH, NW CORNER , CARMEL
Without much effort this home sold in 122 days. The sellers did come down
$245K from their initial ask, closing for $2.250M.
Remodeled in 2005, this 2125 sf, 3BR/2.5BA home sat on a an oversized lot. It
had 1,264 more square feet than its neighbor, an additional bedroom, an extra half
bath, and a lot larger by 871 square feet.
With no real difference in location and little in the quality of the remodel, the size
difference largely explains the price difference. However, the $14/ sq. ft. premium
this home had over its neighbor strongly suggests that the smaller home was hurt
by its lengthy time on the market which, in turn, was due to it being overpriced for
a long time. Every day, someone buys every home on the market and most days
it’s the owners who, effectively, outbid all comers.
CARMEL: NEW ESCROWS
Carmel got off to a pretty brisk start this year with 20 new escrows. Just 7 sales
were asking under a million and two were over $4.250M. There was a single short
sale.
A home out on Aguajito (Jack’s Peak area, but long considered part of the greater
Carmel market) finally went into escrow after trying, more or less continuously,
since August of 2008. We are still seeing some of these stragglers closing.
Of the 86 single-family homes still available, half are asking over $1.770M. There
are 8 available condos, all but one asking less than $750K.
CARMEL CLOSED SAMPLES
Carmel Point, 11 years old, ocean views, 4BR/3.5BA. It took about 6 months and
one price adjustment but it sold for $4.250M. The Point, no surprise, continues to
do well.
Another data casualty of the new MLS. This home supposedly came on the market
for the first time and sold in 32 days. Actually, it was on the market 4 previous
times since 2006 for a total of 914 days. On Dolores/10th, it had 3BR/2.5BA in
1158sf. It closed, finally, for $1.250M.
CARMEL VALLEY: NEW ESCROWS
12 of the 21 new escrows in the Valley last month were condos. Of all new
escrows, only two were asking over a million and both were less than $1.5M. The
Valley continues to show lingering signs of the recent troubles: two of the newest
escrows were bank-owned and two were short sales.
There remain 71 available single-family homes; half are over $1.5M, the asking
price of the highest recent sale.
CARMEL VALLEY CLOSED SAMPLES
In the Miramonte area, on ten acres, this pleasant gated home had views, 3144 sf,
and 3BR/3.5BA. It took 352 days to sell for $1.450M. If you think that seems
low, I agree. I suspect what happened is that agents avoided them because they
offered an exceptionally low commission. Agents are business people and you
don’t win them with the insult of a 33% pay cut.
We so seldom see house prices this low, I couldn’t resist (love the marketing, too).
On Soutbank, 1BR/1BA and all of 554sf, this bungalow sold for $170K.
CARMEL HIGHLANDS: NEW ESCROWS
The chart below shows 3 new escrows in the Highlands last month but my more
detailed search only turned up one, a mountainside home with views asking
$1.275M. MLS problem? Maybe.
Ten homes remain available from $1.995M to $10.7M.
CARMEL HIGHLANDS CLOSED SAMPLES
The sole closing last month was one in which the agents double-ended the
transaction without it ever hitting the market. There are no pictures. It was a
3500+ sf home on almost an acre up the hill that closed for $1.650M.
PEBBLE BEACH: NEW ESCROWS
Pebble saw 9 new escrows last month, just one of them a condo. All the single-
family homes that entered escrow were asking over $1.1M and four were over
$2M. None of these sales was distressed.
Like Carmel Valley, Pebble has 71 single-family homes still available, 42 of which
are asking $2M or more (and three are asking over $20M).
PEBBLE BEACH CLOSED SAMPLES
I’d quibble with a lead photo that focused on a cement wall (the photographer
couldn’t walk a few steps closer for the view?) but this was last month’s highest
sale. A very swank townhome at the Lodge, 4BR/4+ two half baths in 4219sf.
They came down $550k from their asking price to sell for $3.650M. I don’t know
if they could have gotten more with sharper marketing, but it would have been
worth a try.
An interesting sale close to MPCC because it’s a rare case of a sharp home
reselling in a short time with no changes; so, it gives us a read on the market.
In October, 2013, it sold for $2M, 15 months later, it resold for $2.1M. About
4% appreciation.
PACIFIC GROVE: NEW ESCROWS
PG is off to a better start than last year, a year that saw rapidly rising volume and
prices. It will be fascinating to see if America’s Last Hometown can maintain the
torrid pace it kept up in 2014. Only one of the escrows in January were asking
over $1M but half were asking at least $899K. There were no distressed sales.
PACIFIC GROVE CLOSED SAMPLES
PG’s top sale last month was also on the market for a couple months last year,
asking $2.695M. On aptly named Ocean View Boulevard, this sleek modern
home had just 2 bedrooms and 2.5 baths in 1700 sf. It did not sell at that time.
But this year, the listing agent went back with a buyer and it closed for $2.450M.
Interestingly, the buyer paid the agent’s fee.
Last month’s median priced sale, a somewhat sterile 3/2 in 1530 sf on a cul de sac.
The agent apparently thought the driveway and garage to be the most attractive
features; in this case, he may even have been right. The home closed for $681K.
MONTEREY: NEW ESCROWS
25 new escrows in January as Monterey holds its typical position atop the volume
charts. Half the homes were asking $649K, or more, and five were over a million.
Interesting, of two bank-owned sales, one was the most expensive to find escrow
last month, asking $3.495M.
MONTEREY CLOSED SAMPLES
In the Skyline area, this 10-year old home made architectural allusion to the
Monterey Colonial style but with some twists. It had only forest views and a
feeling of privacy. It was a 3/2.5 in almost 2400 sf and closed for 4975K.
Who says you can’t get an ocean view under a million on our Peninsula? This
pleasant home on Sierra Vista was 4/2 with over 2400 sf on two levels. It closed
for $929,709 after what looks like negotiations down to the last dollar.
PASADERA & MONTERRA & ENVIRONS: NEW ESCROWS
The only distressed sale was the most expensive, asking $3.495M in Monterra. The
other 4 escrows were spread all over the map in terms of location and price.
PASADERA & MONTERRA & ENVIRONS: CLOSED SAMPLES
Nice Pasadera home with views (not sure why the lead photos was of the dining set
instead of the view). It sold in 2013 for $1.650M and now, 16 months later, for
$1.695M, an appreciation rate roughly equal to inflation.
One of the Pasadera Villas sold after a long journey. The home sold in 2002 for
$1.850M; those owners let it go in a short sale for $995K; and this time, it was sold
by an agent off-market for $1.275M.
SEASIDE & MARINA: NEW ESCROWS
Between them, Seaside and Marina racked up 50 new escrows last month. There
were 2 bank-owned and 7 short sales.
What $450K looks like now in each town.
4BR/2.5BA on Crescent in Marina sold for $450K.
2BR/2BA on Trinity in Seaside sold for $450K.
MARINA & SEASIDE CLOSED SAMPLES
An Agent’s Life
Fire balloons sent aloft over Carmel beach.
One night, in a small northern Thai village, I watched over 80 such
linen balloons released into the sky to celebrate of the Buddha’s
birthday. They formed a long, uneven string of lamps floating toward
the dark Burmese mountains.
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