Merritt’s Market Update

Monterey Peninsula

January, 2013

©2012 Merritt Ringer

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Every time you shuffle a deck of playing cards, it's likely that you have come up with an ordering of cards that is unique in human history. How many possible configurations are there? 80,658,175,170,943,878,571,660,636,856,403,766,975,289,505,440,883,277,824,000,000,000,000.

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Table of Contents

The Big Picture…………………….…….………... 3

Truth in Journalism ……………….…….………... 4

Cameo of a Hot Market………………….………… 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

Avoiding the “fiscal cliff”, Congress took several steps helpful to housing. They

extended debt relief forgiveness so those doing short sales don’t owe taxes on their

unpaid mortgage balances (helpful since almost 20% of US sales are short sales

now), mortgage insurance premiums remain deductible for those with incomes

below $110K, and rules for the deductible of mortgage interest and property taxes

were unchanged. More Congressional drama lies ahead.

But fundamental rule the day for now. The nationwide market continues to heal

with the economy. Sales are rising almost everywhere and prices are perking up in

many places.

TRUTH IN JOURNALISM

Carmel Pine Cone edition

“Multimillion-dollar properties sell like hotcakes as capital gains tax increase

looms”, exclaimed the front page headline in the Pine Cone’s last 2012 issue. The

paper’s owner, Paul Miller, asserted that an impending rise in capital gains rates

had triggered, in his words, an “the end-of-the-year surge” in sales over a million.

Perhaps some people did sell for tax reasons, but is there evidence for Mr. Miller’s

“surge”? Since all markets are rising (see the previous page), we expect an upward

trend in the numbers. Below is a chart of sales over a million on the Monterey

Peninsula. Can you spot the year-end tax-driven surge?

CAMEO OF A HOT MARKET

Just for fun, the graph below shows what a white hot market looks like. This is

Cupertino. Note how new escrows (pended) and closing dwarf the available

inventory. In such a market, you see multiple offers on almost every home and

prices shooting upwards.

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

30 year fixed: 3.375%

5/1 ARM: 2.675%

Jumbo (over $483,000 here)

30 year fixed: 4%

5/1 ARM: 2.75%

The addition of a point reduces the rate .125-.250%.

We are likely to see some upward pressure on rates as the year unfolds.

CARMEL: NEW ESCROWS

Carmel saw 14 new escrows in December 11 of them asking a million or more,

continuing the trend toward strength at the upper end of our market. Only one of

the new escrows was a short sale. Although 14 is about the same number of es-

crows we saw in December a year ago, the composition of sales shows less distress

and higher numbers.

Have you ever noticed that, whenever someone from out-of-town comments on

our market, they always say there seem to be more homes on than ever? The tall

green bars below demonstrate how faulty such perceptions can be.

CARMEL CLOSED HIGH & LOW

This beautiful home on Carmel Point, with ocean views, a contemporary interior,

3,485sf, and 3BR/4.5BA, was on the market almost a year. The sellers bought it in

2008 for $4.6M. They started out asking $5.2M and ended up selling for $3.625M.

There was a Carmel sale for $420K but it was not arms-length, so this home on

Upper Trail took the title of lowest priced sale. With 1,750sf and 3BR/2BA, it had

been extensively remodeled and sold in under 3 weeks (however, before that, they

tried for 9 months with two other companies at higher prices). It closed for $570K.

CARMEL VALLEY: NEW ESCROWS

The Valley saw 15 new escrows in December, 3 more than the previous month and

just 3 less than December of the previous year. Four of the new escrows were

over a million. Only one sale was bank-owned and two were short sales as the

Valley continues to heal.

CARMEL VALLEY CLOSED HIGH & LOW

High atop Tierra Grande, this 3 year old home boasted 5,667sf, 3BR, 4 full & 4

half-baths, big valley views, and almost 13 acres. It took about 18 months, two

agencies, and a series of prices that cascaded down from $6.5M until they finally

closed at $4.7M.

I love this marketing photo: insulation included! The house had eleventy-seven

kinds of problems on half an acre. Originally listed for $149K, it sold for $20K.

Yes, twenty thousand.

PEBBLE BEACH: NEW ESCROWS

Pebble saw 10 new escrows last month, the same as the previous month and 2

more than December of 2011. Only 2 new sales were asking less than a million

and 4 were over $2 million, as the higher end of our market continues to strength-

en. One of the homes asking over $2M was a short sale and we saw a bank-owned

sale asking $1.699M.

PEBBLE BEACH CLOSED HIGH & LOW

17 Mile Drive near Bird Rock saw last month’s highest sale, a 3BR/3.5BA home

with 2,459sf on over an acre. They started at $4.250M and over 9 months worked

there way to a sale of $3.150M.

In Country Club East, this 4BR/2BA ranch home was clean and well-maintained.

It sold for $688K.

PACIFIC GROVE: NEW ESCROWS

PG saw 15 new escrows in December, staying at about the level where it was the

previous 3 months but up 25% from the previous December. No home was asking

over $849K and the highest priced home, along with one other, was a short sale.

There were also 2 bank-owned sales.

Notice below the developing imbalance between active inventory and sales. This

is starting to put upward pressure on prices.

PACIFIC GROVE CLOSED HIGH & LOW

Lighthouse, just a bit west of downtown, saw this remodeled 1,724sf, 3BR/3.5BA

home claim top spot. It was purchased last August for $475K; the owners spent 4

months spiffing it up before putting it back on the market. It sold in 5 days for

$850K.

Del Monte Park claimed the low end with this 3BR/1.5BA, 1,512 sf home. It

needed a little TLC and sold in less than 3 weeks for $450K.

MONTEREY: NEW ESCROWS

Monterey had 22 new escrows last month. Two were listed over a million and

three were under $100K (all condos). There was only one bank-owned but 5 short

sales.

As you can see below, sales are a growing percentage of the available inventory.

This is starting to put upward pressure on prices.

MONTEREY CLOSED HIGH & LOW

High up on the hill in Old Town, with commanding ocean views, on almost an

acre, this historic beauty featured 5BR/3.5BA in 3,755sf. The home was well-

maintained. They started trying to sell early in 2010 for $2.6M. After following

the well-worn path of price reductions, they finally sold for $1.295.

Such inspired marketing (the next photo was of a sink) helped this updated

2BR/1BA condo on Dela Vina secure the bottom spot at $168K.

MONTEREY-SALINAS CORRIDOR: NEW ESCROWS

(east to San Benancio)

Our corridor saw 12 new escrows in December. Almost half were asking over a

million. One home was bank-owned and 4 were short sales.

MONTEREY-SALINAS CLOSED HIGH & LOW

It took a little over a year for this San Benancio home to sell. It had a high-gloss

Zen feel, with 4,400sf, 4BR/4.5BA, and it sat on a hillside amid 40 acres of oaks

and fields. They started out asking $2.1M. Eventually, as they lowered the price,

it became a short sale. The home closed for $1.325M.

Off Corral de Tierra, this 2BR/2.5BA home had 1,225sf, sat on almost 3 acres and

had some good views . In 2007, the owners bought it for $750K. This time, it was

a short sale that closed for $385K, a decline of almost 50%.

SEASIDE & MARINA: NEW ESCROWS

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.

Marina had 10 new escrows last month. 60% of the sales - and all the sales listed

below $320K - were distressed: 2 bank-owned & 4 short sales. This is a hot

market: look at the sales volume versus the inventory!

Seaside had 16 new escrows in December. Almost 70% were distressed sales: 3

bank-owned and 8 short sales.

Peninsula Point, as usual, topped the sales market in December. In 2004, this

home sold for $970.5K. This time, it was a short sale. Offered at $579K, it got

multiple offers & sold in days for $660K.

At 1,033sf, this 3BR/1.5BA home on Darwin had been somewhat updated. It was

a short sale due to refinancing and closed for $250K.

SEASIDE CLOSED HIGH & LOW

An Agent’s Life

The last afternoon of 2012: Carmel beach.

Thank your for taking a few minutes with my e-magazine. Your com-

ments & 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 2012

Merritt’s Market Update

©2012 Merritt Ringer