Month: July 2012

Our Market has officially turned!

This is a great article from the Wall Street Journal which brings to light what I’ve been saying for the past 6 months- Now is the time to buy! Carmel-by-the-Sea real estate, Carmel Valley property, and even Pebble Beach real estate are experiencing really healthy activity. for the last 2 quarters. The market has indeed, turned.

“The housing market has turned—at last.

The U.S. finally has moved beyond attention-grabbing predictions from housing “experts” that housing is bottoming. The numbers are now convincing.

Nearly seven years after the housing bubble burst, most indexes of house prices are bending up. “We finally saw some rising home prices,” S&P’s David Blitzer said a few weeks ago as he reported the first monthly increase in the slow-moving S&P/Case-Shiller house-price data after seven months of declines.

The U.S. finally has moved beyond attention-grabbing predictions from housing “experts” that housing is bottoming. The numbers are now convincing, according to David Wessel on The News Hub. (Photo: Bloomberg News)

Nearly 10% more existing homes were sold in May than in the same month a year earlier, many purchased by investors who plan to rent them for now and sell them later, an important sign of an inflection point. In something of a surprise, the inventory of existing homes for sale has fallen close to the normal level of six months’ worth despite all the foreclosed homes that lenders own. The fraction of homes that are vacant is at its lowest level since 2006.

The reduced inventory of unsold homes is key, says Mark Fleming, chief economist at CoreLogic, a housing data-analysis firm. For the past couple of years, house prices have risen in the spring and then slumped; the declining supply of houses for sale is reason to believe that won’t happen again this year, he says.

 Builders began work on 26% more single-family homes in May 2012 than the depressed levels of May 2011. The stock of unsold newly built homes is back to 2005 levels. In each of the past four quarters, housing construction has added to economic growth. In the first quarter, it accounted for 0.4 percentage points of the meager 1.9% growth rate.

“Even with the overall economy slowing,” Wells Fargo Securities economists said, cautiously, in a note to clients, “the budding recovery in the housing market appears to be gradually gaining momentum.”

Economists aren’t always right, but on this at least they agree: A new Wall Street Journal survey of forecasters found 44 believe the housing market has reached its bottom; only three don’t. (The full results of the Journal’s July survey will be released at 2pm ET)

Housing is still far from healthy despite the Federal Reserve’s efforts to resuscitate it by helping to push mortgage rates to extraordinary lows: 3.62% for a 30-year loan, according to Freddie Mac’s latest survey. Single-family housing starts, though up, remain 60% below the 2002 pre-bubble pace. Americans’ equity in homes is $2 trillion, or 25%, less than it was in 2002 and half what it was at the peak. More than one in every four mortgage borrowers still has a loan bigger than the value of the house, though rising home prices are reducing that fraction slowly.

Still, the upturn in housing is a milestone, a particularly welcome one amid a distressing dearth of jobs. For some time, housing has been one of the biggest causes of economic weakness. It has now—barely—moved to the plus side. “A little tail wind is a lot better than a headwind,” says economist Chip Case, the “Case” in Case-Shiller.

From here on, housing is unlikely to drag the U.S. economy down further. It will instead reflect the strength or weakness of the overall economy: The more jobs, the more confident Americans are about keeping their jobs, the more they are willing to buy houses. “Manufacturing had led growth and construction had lagged,” JPMorgan Chase economists said last week.”Now the roles are reversed: Manufacturing growth has slowed as private construction comes to life.”

Plenty could go wrong. The biggest threat is a large shadow inventory of unsold homes, homes which owners won’t put on the market because they are underwater, homes that will be foreclosed eventually and homes owned by lenders. They have been trickling onto the market, slowed in part by government efforts to delay foreclosures; a flood could reverse the recent rise in prices. Or the still-dysfunctional mortgage market could get worse. Or overly zealous regulators or a post-election change in government policy could unsettle mortgage lenders or home buyers.

But the housing bust is over.”

June Market Update

For anyone driving down the street in Carmel-by-the-Sea, it is difficult not to acknowledge the incredible increase in activity; restaurants packed on weekday nights, crowded sidewalks and people splurging in our many retail shops. The Fourth of July holiday weekend we just had was a success and clearly indicative of a economic rebound. We’re expecting the Pebble Beach Concours in August to bring yet another healthy spike in tourism and buyer activity.
There were 19 closed sales and 13 pending transactions of homes in Carmel, so activity is looking healthy. All of the sales fell between $355K to $4.8M, spread evenly throughout that spectrum. Downtown Carmel-by-the-Sea continues to get major activity even as we get into what are historically our slower months.
Carmel Highlands
No closed sales in the Highlands this month, however June had 3 pending sales which continue to be pending. 2 of the homes are pending at a list price of right around $1M, both with ocean views. Spindrift Road had a pending sale at a list of $11.5M- quite a remarkable home. This is still a fantastic area for value when considering big ocean views combined with square footage.
Carmel Valley
11 closed homes and 22 pending sales in Carmel Valley, with the areas from Laureles Grade to the Carmel Valley village retaining the highest activity, and the Carmel Hacienda condos by Rancho Canada golf course continuing to get heavy activity as well. A 6 bedroom home on 5 acres sold in Sleepy Hollow at $3M, and one home in Quail Lodge at around $1M. The Quail Lodge area has some great golf course fairway view deals right now.
Pebble Beach
Pebble Beach is starting to pick up with 7 closed sales and 14 pendings sales. 4 of the solds were under $1M, while the other 3 were in the $3.5M to $5.5M range. This is great to see, as the high end market in Pebble Beach had been struggling, and I think a positive result of the heavy activity from vacationing Texas buyers. They always tell me how much they love the cool weather there versus the 110 degree temperatures they’re used to.
Please Note: While delighted to respond to real estate related inquiries, Ryan is not particularly interested in being contacted by persons with a specific interest in any “celebrity” affiliations.
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