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Hwy 68 Real Estate, Monterey, CA - Why are homes not selling?

By Mark Bruno

Real Estate Agent with Monterey Peninsula Home Team - Carmel, CA - Keller Williams Coastal Estates DRE# 01715978

April 13, 2012 05:13 AM

I recently received this email from one of our past clients asking about the market around their home (Monterey Salinas Hwy off San Benancio Rd.). I thought it would be great to include their her email and my response here:

Sent: Friday, April 13, 2012 11:04 AM
To: Bruno, Mark
Subject: San Benancio Homes not selling...

Hi Mark:

Can you explain why homes are not selling on San Benancio? There are so many for sale. I think one of the reasons is we are in Salinas High School District, plus so many people are getting old, who built up here in the 50's/60's, are not keeping their property "up to date". I also notice the homes that are for sale are in the $500-600. Sad for us who take care of their property.

Hi to your Mom.

Regards,

Josephine

My respopnse to Josephine's email:

Sent Friday, April 13, 2012 12:05 PM

Hi Josephine,

Thanks for your email. I think all of your points are valid, but there seems to be two other major reasons homes are slow to sell in your area (Monterey Salinas Hwy off San Benancio Rd.) in my opinion. The whole HWY 68 Corridor was built as an alternative to living on the Monterey Peninsula..A way to live in the sunshine but still have the Monterey Peninsula lifestyle. The majority of home owners out on 68 had property in town (Pacific Grove, Monterey, Carmel, Pebble Beach) that they sold for a profit and were able to build very nice homes on nice sized lots with acreage out off 68 and still put money in the bank towards retirement or college for their kids, etc. With the current situation on the Peninsula, very few sellers are in a position to sell their Pacific Grove, Monterey, Carmel or Pebble Beach home at a profit, which means the ones that do not have to sell are sitting tight in town until the market improves. The people who have to sell (or are losing their homes to foreclosure/short sale) are not in a position to buy a home. In either case the Monterey Peninsula home owner (or recent seller) insn't in a position to make a purchase.

The other issue is there are just a lack of qualified home buyers right now that are looking for primary residences in our area. Most of the buyers we are encountering are second home buyers looking for a vacation home near the water. The only buyers considering 68 are those relocating here full time (we sold two properties this way last year) or first time home buyers. In general, these buyers cannot afford a the higher prices in town or they do want the sunshine. This is a very small pool of buyers, so good old supply and demand is driving the prices down. The distressed sellers are willing to let their properties go for very low prices and the result is the bar being lowered for the rest of the property owners in the area.

In general, we think the Monterey Peninsula cities are very close to being on their way to recovery. Some would argue that we are already on our way...The Hwy 68 corridor will lag a year to 2 years behind the Pacific Grove, Carmel, Monterey & Pebble Beach recoverey. So my best guess is we will continue to see tough conditions out there for another year or two...Maybe a tad bit longer.

I hope this answers your questions. Mom is doing great! I copied her too, so she can chime in if she likes.

Take care,

Mark

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Laura Allen, Lake Tahoe - Truckee Real Estate for Sale TahoeLauraRealEstate.com

Coldwell Banker Realty, Tahoe City, CA (530) 414-1260 - Tahoe City, CA

Tahoe Real Estate Agent Helping Buyers and Sellers

Mark - I'm sure Josephine is not alone in asking the question, why are homes on Hwy 68 Monterey, California not selling? You've figured out a great way to get this information out to a lot of sellers who are looking for answers. Nicely done!

Apr 13, 2012 06:11 AM

Mark Bruno

Monterey Peninsula Home Team - Carmel, CA - Keller Williams Coastal Estates - Pebble Beach, CA

Monterey Peninsula Home Team Leader

Thanks Laura. It is amazing the aount of "micro markets" we have here on the Monterey Peninsula and surrounding areas. It is always hard for people to dicipher all of the information that is thrown at them. I am happy to help in this regard.

Apr 14, 2012 12:08 PM

Anonymous

Michelle

Hi Mark,

Questions:

1) Based on your assesment of the supply and demand, for property off Hwy. 68 (San Benancio Road), what affect do you think the East Garrison Housing Development (Reservation Road) will have on real estate prices? Who will buy these units if there is already a short supply of qualified buyers for this "micro market"?

2) What is the latest on the Corral De Tierra Shopping Center?

My assesment is that there simply are not enough people making a sufficient salary in this county to warrant the prices on all these homes. It isn't like there is a solid industry here, as one would find in Silicon Valley. If there were, then I suspect the demand would support the market (prices), in it's current state.

Thanks,

Michelle

May 14, 2012 02:21 PM

Mark Bruno

Monterey Peninsula Home Team - Carmel, CA - Keller Williams Coastal Estates - Pebble Beach, CA

Monterey Peninsula Home Team Leader

HI Michelle,

Thanks for your post!

1) What a great question! What will any new developement do to the market/prices of real estate? It is no surprise that people (buyers) want new homes over the 1960's ranch remodels that are so common here (just look at Spreckels!). My guess is this developement could put more pressure on the HWY 68 market, although they really are apples and oranges. East Garison is going to be a new style developement with smaller lots and construction that are closer together...Like Seaside Highlands or Las Palmas. Most of San Benancio or Corral de Tierra offers home owners quite a bit of elbow room and space between neighbors when compared to any new developements in this great state of ours. So it will become a lifestyle choice for a buyer...Like the current buyers for SB and CDT. Those that want the rural experience with land around them will likely buy in SB/CDT and those who want a new home closer to services will purchase in East Garrison (or Las Palmas or Seaside Highlands for that matter).

I would have to guess the price points at East Garrison will be lower than previously thought possible and if interest rates are still low like now, there will be a lot of potential buyers. Again, people like new homes. There are a lot of qualified buyers out there. Just look at Las Palmas home sales. There is hardly anything available to purchase in Las Palmas and inventory has been running low out there for several years now. We are even seeing the market in San Benancio and Corral start to heat up since I wrote the original post just a month ago. In all of the HWY 68 Corridor there are 80 active listings (homes available for sale) and 61 pending homes (under contract) and in SB and CDT, there are 27 active and 14 under contract, so the market is changing right now, even in San Benancio and Corral! The high price points are still a struggle to get sold as the higher priced buyer is still more comfortable spending their money in Carmel, Pebble or Pacific Grove, but under $600k, the market is pretty strong in SB and CDT.

The other variable is the schools. Washington Union is a great school district and has had very good schools for a very long time. I would guess that East Garrison will be incorporated into the Marina school district, so this could affect values and the buyer pool considerably.

2) From what I hear the Corral de Tierra shopping center was basically approved and the developer will likely go through with the changes that were asked of him. I have a lot of friends who live out there (including two of my business partners and many clients) and I haven't heard a single resident say they were against this shopping center.

In general, I think there are more qualified people than you think in Monterey county, especially in the under $500k price range (which the market seems to be adjusting to). There are more people relocating to the peninsula and outlying areas now that the prices have settled down. I have clients in the high tech business that are living here and commuting to the Silicon Valley daily. And let's not forget the hundreds of people that have done short sales the last coupld of years. They are all renting right now but will likely be able to purchase again in just 2 years. One agent in our office has already sold a home to a client that had a short sale in 2009! Many of these are individuals are very well qualified but have been sidelined due to the sobering reality of our economy the last few years.

Let's face it, we live in one of the most beautiful places on the planet! People are always going to want to live here and figure out a way to pay for it.

May 15, 2012 02:00 PM