News FIRST QUARTER 2006 REPORT First Published in The Carmel Pine Cone April 2006

Contents Market Barometer Median Sales Prices Gross Dollar Volume Sales by Quarter Distribution of Sales

Market Slowdown Continues


First Quarter Report

The long running hot real estate market ran out of breath during the fourth quarter of last year and is still panting. The year-end numbers pointed to a struggling first quarter, but no one foresaw the rain. Who knows what the wet weather did to the market, but whatever it was, it wasn't good.

Overall, the ten markets registered a $97,000,000 decrease from last year with more than half of the decline happening in Carmel. Total dollar volume last year was $426,148,000 whereas this year came in at $328,471,000, a decrease of 23%. Carmel was especially weak during the quarter in relation to last year. Dollar volume was down over $50,000,000 and prices dropped 12%.

Even with the drop, Carmel was certainly not dead. There were 39 closed transactions during the quarter, more than $77,000,000 changed hands and the median sales price was $1,390,000. The percentage declines may be as much a factor of the stupendous first quarter the town had last year as of this year's results. Pacific Grove and South Coast actually posted small dollar volume gains during the quarter. As usual, our market directional arrows were not 100% in agreement. Unit sales, as one would expect, were also down substantially. Last year 330 single family homes sold in the first quarter and this year only 235, a decline of 29%. In summary, the numbers to remember are that dollar volume fell 23% and unit sales 29%. Prices Economic principles tell us that when supply exceeds demand, prices will decline. In eight of 10 local markets, during the first quarter, demand was lower, but not enough to cause prices to fall. Carmel and Monterey were the only markets to suffer selling-price declines. Distribution of Sales The distribution of sales prices is illuminating. The over one million dollar market is beginning to dominate. Fourteen percent of sales were over two million dollars, and 30% of the sales between one and two million dollars. That adds up to 44% of the transactions during the quarter exceeding the million dollar mark. The tremendous inflation in home prices over the past few years belies the notion that we are living in an economy with a low inflation rate. Cheap and easy-to-get money has fueled the price boom. Market Barometer The Market Barometer, which measures the percentage of listings in escrow, is our best forward looking tool. Robust Barometer readings tell us that for at least the next quarter sales will be strong and weak readings the opposite. On January 1, the Barometer was weak. Only two markets had readings above 20% and only 104 properties were in escrow. On April 1, the Barometer continued weak. There were still only two readings above 20%, Monterey and Del Rey Oaks. The number of listings in escrow moved up a bit to 133. The readings in comparison to April 1, 2005, though, were steeply down. The biggest decline was Marina where the April to April readings went from 44% to 9%. Asking prices in Marina have apparently outrun the ability of buyers to pay. The other popularly priced Peninsula market, Seaside, suffered a similar but not so drastic fate. Seaside's April to April readings went from 46% to 19%.

Other April to April readings of note were Carmel 38% to 12%, Pebble Beach 32% to 12% and Carmel Valley 30% to 18%. In all of these cases the number of properties on the market increased substantially from April 1, 2005 to April 1, 2006. Examples are Carmel 98 to 162; Pebble Beach 57 to 91; Pacific Grove 44 to 79.

One would think that the slowing of the market would shift the power from sellers to buyers and that prices would fall back a bit. The tenacity of sellers and the generosity of lenders, however, have combined to maintain prices so far.

Although the market has stalled we don't think we can bury the strong market yet. We need a few more quarters to either establish a flat or downward trend or to enjoy another rebound.

The charts are based in whole or in part on data supplied by the Monterey County Association of Realtors' Multiple Listing Service (MLS). Neither the Association nor the MLS guarantees or is responsible for their accuracy. Data maintained by the Association or its MLS may not reflect all real estate activity in the market.

Please Call Us

We have lived on the Monterey Peninsula since 1978 and in the heart of Carmel since 1986. We know the market and have deep experience assisting both buyers and sellers.

Many of our buyers are from out of town and before they act they need to gain an understanding of our local market. If you are an out-of-town buyer, you are extremely dependent on your agent for guidance. We are skilled at assisting you up the learning curve so that you can make sound decisions. The way we prosper is by putting our buyers into good, solid situations.

We know the market and would be happy to evaluate the value of your house at no charge. We know how to help you get ready for market to get the best price for your property. Selling a property is a cooperative effort between the seller and his or her agent. We will guide you on the team approach to success.

Please email us, call us at 831-622-4642, or write us at PO Box 350, Carmel, CA 93921.