County's Home Sales Cooling Off

Houses stay on market longer; median prices beginning to dip
By MARIE VASARI, Monterey Herald Staff Writer

Inventory is up, sales have slowed and median home prices in Monterey County have slipped for two straight months.

Local real estate is finally showing signs of cooling.

Median home prices for single-family, detached homes for March dropped 2.1 percent from the previous month, according to California Association of Realtors data, although the median home price was still 11.9 percent higher than in March 2005.

The Monterey County peak median home price was $700,000 in February, but that number slipped to $685,000 in March and $670,000 in April. By comparison, last year's median home prices were $612,000 for March and $626,000 for April.

Sales activity in Monterey County was up by 45.2 percent over February, but showed a 25.4 percent decline from March 2005.

Statewide, median home prices rose by 4.8 percent from February to March, and 13 percent year to year, but sales were down 15.1 percent over the March 2005 sales volume.

Winter months traditionally slow the housing market, and high gas prices and a long, wet winter certainly didn't help matters, said Sandy Haney, chief executive officer of the Monterey County Association of Realtors.

The number of closed sales for the quarter ending March 31 was lower than the same quarter the previous year -- 563 compared with 765 -- and inventory continues to rise. Homes are staying on the market almost twice as long as a year ago -- the average number of days on the market rose from 53 in March 2005 to 95 days on the market for the same period this year.

For the first quarter of 2006, homes remained on the market an average 88 days, compared with an average of 64 days for first-quarter 2005, according to RE InfoLink, a service that tracks real estate market figures.

So while sellers are still retaining an average 96.66 percent of their original asking price -- almost the same as last year's 96.79 percent -- inventory keeps rising and home sales are definitely slowing.

Continuing trend

The fact that the sale-to-listing price ratio remains high means that homes are starting to be priced more appropriately, Haney said.

That number, 95.03 percent for the first quarter of 2006, is a slight dip over the 96.69 percent in the first quarter of 2005.

Jean Manner Schwimmer, past president of the Monterey County Association of Realtors, calls those numbers interesting but not alarming.

"It looks like, from what we're seeing in the field, there's still an increase in the market," said Manner Schwimmer, a Coldwell Banker/Gay Dales Realtor in Salinas.

Current prices may pale against the white-hot price jumps of the past few years and homes are moving slower than before, she said, but prices haven't stopped climbing.

"Has it changed that much?" she asked. "No, it's still on the increase -- it's just not 20 percent.
"People look at those numbers and they say, 'Oh, the market's sliding,'" she said, "but actually, this market is balancing itself back out again, which is needed."

Leslie Appleton-Young, chief economist for the California Association of Realtors, has gone on record predicting that the rate of home price appreciation would begin to moderate this year after four years of steep increases, and sales would decline slightly from last year's record pace.

According to the state Realtors association, California typically gains nearly 250,000 new households annually, yet it will build about 200,000 new housing units, creating a shortfall of about 50,000 units.

Median prices up

At a Realtors' convention in September, Appleton-Young predicted that declining affordability would affect sales in higher-priced markets, and the high-priced coastal regions "face a potential leveling off of median price gains compared with the 10 percent gain we expect for the state as a whole."

Countywide, single-family home inventory for the first quarter of 2006 was 1,915, with 563 closed sales, compared with 987 homes listed and 765 sales for the same period the previous year. Median prices for those two quarters were $691,000 and $625,000, respectively. First-quarter inventory in 2004 was 892, with a median home price of $491,000.

Median home prices in March for all types of home sales in Monterey County -- new and existing, single-family and condos -- were up 12.3 percent at $620,000, compared with March the previous year, when the median home price was $552,000, according to California Association of Realtors statistics.

Regional variation

But the year-to-year change varied widely by region within the county, dropping 10.3 percent in Pacific Grove, where the median home price fell from $895,000 to $802,500.

By contrast, median home prices climbed by 10.4 percent in Salinas and by 16.9 percent in Seaside, where homes were $530,000 and $577,500 in March 2005, respectively, and $585,000 and $675,000 in March of this year.

Sellers are still seeing backup offers and multiple buyers for certain homes, said Haney, "but it's definitely becoming a buyer's market."

It's a trend showing up in the lists they present after inspection, which are growing longer and more detailed as buyers grow more confident.

"Buyers are definitely back with a vengeance," said Haney. "They were stomped on for so long."
Variations in the makeup of the local market have an impact as well, said Haney. Some parts of Salinas are largely driven by first-time buyers, and these days fewer buyers are unattached to a home.

The high-end markets of Pebble Beach and Carmel have slowed. In North Salinas, there's been a flurry of middle-class buy-ins to new home developments such as Creekbridge, which in its first phases pushed the demand for existing homes down because of all its modern amenities.

New housing developments at Fort Ord in the future also are likely to soften the local market in the short term, Haney said.

"We're going to see changes we haven't seen in this area for a long time," she said. "It's going to be interesting to see where the housing market goes."

But Haney said there's little likelihood the bottom would drop out of the real estate market.
"Barring any national disaster, I think the market will adjust," said Haney. "Last year, the market was unreal."

She does predict a thinning of the real estate ranks in the next two years as the market slows and as consumers -- spending less time than ever at open houses and more time researching homes online -- drive changes in the industry.

But Haney said there's been an even greater shift in terms of what homeownership means to most buyers.

"Homes are no longer forever," said Haney. "Now, they're more of an investment.

"The real estate industry is already metamorphosing."