Merritt’s Market Update

Monterey Peninsula

February, 2015

©2015 Merritt Ringer

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

Merritt’s Market Update

©2014 Merritt Ringer