Year end 2003

THE GLEN OF PACIFIC GROVE HOMEOWNERS ASSOCIATION

THE BEAT GOES ON – LOCAL REAL ESTATE MARKET UNSTOPPABLE

Year-end report
By Paul and Nellie Brocchini

FOR THE third time in the last four years, the total value of homes sold in the 10 Monterey Peninsula real estate markets exceeded one billion dollars last year. The total for 2003 was $1,153,569,459, slightly above 2002 and just a shade under the record-breaking number for the year 2000, according to figures compiled by the Monterey County Association of Realtors.

Digging into the numbers, one finds that the make-up of the gross dollar volume has changed dramatically. The big money markets of Carmel, Pebble Beach and South Coast are all substantially off their 2000 numbers. The other high-end market, Carmel Valley, posted a small gain. Here are figures: Carmel sales were $308 million in 2000, $252 million last year; Pebble Beach sales were $270 million in 2000, $157 million in 2003; South Coast had $120 million in 2000, $38 million in 2003. These three markets combined for a decrease of $251 million in 2003 as compared to 2000.

This shortfall was overcome in 2003 by healthy increases in the lower-priced markets, especially Seaside. Incredibly low interest rates spurred those big gains. Seaside booked $82 million in 2003 and only $40 million in 2000; Marina’s dollar volume reached $49 million last year as opposed to $33 million in 2000. Another area of strong increases was the Salinas/Monterey Highway corridor. Dollar volume there has been pumped up by the marketing of the new properties at Pasadera and the expansion of Las Palmas. The Corridor booked $187 million in 2003 as opposed to $99 million in 2000.

These numbers reflect the theme of the split market that we have been reporting for a couple of years. Our local real estate market has been, and continues to be strong at the lower end and relatively weak at the luxurious end of the market.

Prices still climbing

Prices continue their inexorable upward march. Six of the 10 markets posted double-digit gains over 2002. Monterey led the pack with a 16.8 percent gain over 2002, jumping from a median sales price of $535,000 to $625,000 in 2003.
When the current boom began in 1996, Monterey lagged for a long time in price. Last year Monterey caught up!

These year-end reports are the meatiest ones we do as we have the luxury of reviewing a full year’s numbers and comparing them to previous years. Just for fun, we did five years of price appreciation and discovered these interesting numbers: Carmel was up 51.5 percent in the period from 1999 to 2003; Carmel Valley 42.6 percent; Del Rey Oaks 87.2 percent; Marina 71.4 percent; Monterey 57 percent; Pacific Grove 49.4 percent; Pebble Beach 40.9 percent; Salinas/Monterey Highway 69.8 percent; South Coast 52.3 percent, and Seaside a whopping 210 percent.

Number of transactions

There were 1,391 closed real estate transactions on the Peninsula in 2003. This was the third highest total in the last five years and a up a bit over last year. Fourth quarter transactions dipped slightly, from 415 in 2002 to 378 in 2003. Of the 378 sales closed in the 4th quarter of last year 92, or 24 percent, were for more than one million dollars; 75 percent of the sales were for more than $500,000. Housing on the Peninsula, even in the so-called affordable markets, has become very expensive.

Great start for 2004
Our Market Barometer was red hot on Jan. 1. Seventy-five percent of the listings in Marina were in escrow, 66 percent in Seaside, 44 percent in Pacific Grove and 36 percent in Monterey. These are extremely strong readings reflecting a thin inventory.

These numbers may, however, be inflated because many listings expire Dec. 31, diminishing the number of listings on Jan. 1. The month of January is also a strong listing period, so, in theory, the inventory should grow during the month. We did a spot check on the above four towns Jan. 26, and found Marina had a total of 17 listings, of which 12 were in escrow, for a reading of 70.6 percent, a little off the Jan. 1 mark but still very strong; Seaside’s Jan. 26 reading was 51.5 percent; Pacific Grove, 40.4 percent and Monterey, 33 percent.

These are also excellent numbers. As we moved toward the end of the month, the market in these towns continued to be strong, indicating there will be lots of closings in those markets during the first quarter.

At the cool end of the market, the situation is less rosy. Carmel and Pebble Beach had barometer readings of 17 percent on January 1, and South Coast had an extremely low reading of 10 percent. Our Jan. 26 spot reading showed Carmel had moved up a bit to a respectable 22 percent but Pebble Beach had slipped to 13 percent and South Coast to an almost invisible 7 percent.

Everything points to a terrific beginning for 2004 in the lower-priced markets. The high end, though not dead, is struggling. It will have its day again. We just do not know when.