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News FOURTH QUARTER 2006 REPORT First Published in The Carmel Pine Cone January 2007 |
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Market Ends Year with a Thud
Fourth Quarter & Year End Report
Dollar volume in the 4th quarter of 2006 fell 40% from the same quarter in 2005. In 2005 $519,318,000 changed hands in the quarter as opposed to $310,995,000 in 2006. There were 240 unit sales in the quarter, consistent with the weakness shown earlier in the year. In the previous three quarters unit sales were 235, 248 and 243 respectively.
On an annual basis, gross dollar volume fell by more than half a billion dollars from 2005. Unit sales dropped 31% from 1411 to 968. This unit-sale performance was the weakest since 2001, an off-year caused by the Silicon Valley bust.
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Gross dollar volume peaked at $1,793,979,000 in 2005, and the highest number of unit sales, 1,530, was in 2004. PricesMedian sales prices declined in seven of the 10 local markets in 2006, but not by much. Carmel Valley, Seaside and South Coast posted small gains. Those hoping to buy in a market crash must have been sorely disappointed. The year was a struggle for sellers and their agents but not a disaster. In spite of the turn-down, more than a billion dollars of business was logged, a sum not even dreamed of before the year 2000. The large price reductions seen throughout the year were mostly due to exaggerated expectations rather than a decline in values. As sales began to ebb and drop, asking prices kept on going up. What happens in rising markets is that sellers and agents become ever more ambitious until their ambitions out run reality. The market has its own reality that does not and will not conform to the hopes and ambitions of either sellers or buyers. Sellers who really want to sell have to look at market conditions today not yesterday, and buyers who really want to buy also need to look at today's market and not sit around hoping for the illusive crash in this market of scarce housing. In our 20 years plus of selling real estate here, we have not had a single case of buyer remorse. On the other hand, we have had many cases of non-buyer remorse afflicting those who could not or would not pull the trigger in the past only to find themselves later priced out of the market. In our experience, prices here have always seemed too high. But in our easy money and prosperous society, the long-term trend has always been up. We are definitely in a price pause right now, so it is probably a good time for buyers to get into action. On the selling side realistic sellers who price their properties well should continue to succeed. We can hope that 2006 cured sellers and agents of unrealistic ambitions. We have sat face-to-face with numerous would-be sellers whose glum expressions have told us how disagreeable our market analysis of their property was. Sometimes sellers do not want an honest evaluation of value but a confirmation of their hopes. Often our realistic analyses were hundreds of thousands dollars more than they would have been a few years before yet below the long-gone peak values hoped for. But reality is a difficult concept to sell. Those previous lower values are out of mind, while the peak prices burn hopefully in sellers and agents brains. Being human and weak, we have often caved in and gone along with sellers' ambitions. Other times our enthusiasm for a property has led us to over-pricing listings. We agents are sometimes the real culprits as our job is to get the best price for sellers and our ambitions can surpass reality... Everyone lives to regret over pricing. It kills the initial enthusiasm, with its best chance for success, and results in long market times or ultimate failure. |
Market Barometer
Our Market Barometer, the measure of the percentage of listings in escrow, has proved to be an excellent prognosticator of things to come. The Barometer on January 1, 2007 was as anemic as we have ever seen it. Only Monterey, with a Barometer reading of 24%, demonstrated a strong market.
Pebble Beach almost made it into respectable territory with an 18% reading, but all of the other markets were in the veritable tank. Carmel was especially weak, as it has been for a year, with an appalling reading of 8%.
The Barometer tells us that the first quarter of 2007 will continue to be weak. We don't know what it will take for the market to take off again, but smart pricing will help.
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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.
We Help BuyersMany 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 Help SellersWe 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.
