Low inventory and high demand are pushing the Monterey Peninsula real estate markets into multiple offers with the attendant frustration of the losing bidders.
Inventory, or lack thereof, is at ten year lows.
Prices have yet to respond to the situation. We expect prices to start showing some strength in the coming months.
The high end of the market, however that is defined in a particular city, is solid. The low end of the market is being driven by investors with cash and is seeing the most activity. The middle market, the move-up market is soft because the entry-level homeowners are still underwater.
What’s next?
That’s hard to tell because inventory is so low and is putting constraints on the market breaking out. We don’t see that changing much in the near future for several reasons.
First, there is not a lot of new home building going on, which is necessary to relieve the pressure.
Second, many existing homeowners aren’t going anywhere. Many of them are still underwater and can’t sell without taking a big loss.
Lastly, forget about phantom inventory. As of March, the banks owned 816 properties in the county. That number includes homes AND condos. There are currently 697 homes AND condos actively listed for sale.
Even if the banks put all their inventory on the market, it’s less than four weeks worth!
We’re stuck with this market for at least the next year.
The median price for single-family, Monterey County re-sale homes rose 8% last month compared to the year before. The median price has been up, year-over-year, in Monterey County for the past six months in a row.
Home sales for Monterey County were up 0.8% year-over-year.
Pending home sales were up 30% year-over-year. Usually, this bodes well for the future. Unfortunately, in this multiple offer environment, many of these pending sales are not closing because the properties don’t appraise, the buyers can’t qualify for a loan, or they get cold feet.
Pending sales, in a normal market, track closed sales very closely. But, since 2008, the disparity between pending and closed sales has widened to historically high levels.
This is an extraordinarily tough market for buyers. It’s important to be calm and realistic. If you don’t know what to do or where to begin, give me a call and let’s discuss your situation and your options.
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