The Buyers Turn.
The signs on the market continue to shift towards the Buyers Time.
Area realty market turning soft
It’s the buyer’s turn as homes on market start to pile up
By MARIE VASARI
Herald Staff Writer
July was a record month for Monterey County home sales.
But it’s not the kind of record anyone would want.
As prices slipped and sales slowed compared to the previous month, unsold home inventory for July jumped to its highest level yet, and sales slumped by 50 percent over the previous summer’s sales volume.
According to the most recent figures available from the Monterey County Association of Realtors, July’s single-family home inventory was at an all-time high of 2,502.
Median home prices dropped to $659,000 in July, down from $687,5000 the previous month, according to numbers provided by the real estate association. That median home price for July also slipped behind the median price of $698,000 for the same month a year ago.
But while prices in Monterey County haven’t dropped as drastically as in some regions of the country, the number of homes selling — or not selling — is the most dramatic shift in the local real estate environment.
Prices have inched back and forth month by month since March: slipping in April, climbing back up in May, rising slightly in June, then losing ground again in July.
That drop in the median home price for July represented a change of 4.1 percent from the previous month, and a figure down 5.6 percent from the previous year’s median home price.
But the county’s percent change in sales year-to-year places it at the top of the state in terms of sales volume shifts. Statewide, house sales dropped by 29.9 percent from a year ago, according to the California Association of Realtors.
That translates to an unsold inventory index statewide of 7.5 months, compared to an index of 2.9 a year ago. The California Association of Realtors uses the index to measure the number of months it would take to deplete the supply of homes on the market at the current sales rate.
For Monterey County, July’s unsold inventory index was 14 months; Salinas was 15. Last year in July, Monterey County had an unsold inventory index of just under 4, according to Sandy Haney, chief executive officer of the Monterey County Association of Realtors.
Haney said seasonal dips aren’t unusual, and late summer traditionally isn’t a peak period for home sales, as families vacation and prepare for back-to-school. Busier times for sales have traditionally been May and June, then mid-September and October, she said.
But the frenzied markets of the past few years “haven’t matched those patterns because people were buying when they could find something.”
Nonetheless, she predicts that next month’s sales figures won’t paint a particularly rosy picture, particularly reflecting consumer unease, and that September’s numbers will be even worse.
Buyers are unsure what’s going to happen with the housing market, and consumer confidence is down, said Haney.
“I think in mid-September or October, we should see a little uptick if the gas prices stay down and nothing dramatic changes,” she predicted.
But in Haney’s opinion, “for a down market, it’s not doing that bad.”
The outlook is brighter for buyers as more and more inventory gets stacked onto the market, increasing their choices and their bargaining power, and prices hover between remaining steady and dropping, albeit slightly.
Haney said it’s difficult to project exactly where and when the market will settle.
“My crystal ball doesn’t have any batteries right now,” she tells people. “But I don’t think we’re going to come out of it in the short term.”
It could take another 18 to 24 months to stabilize, and Haney also predicts the shift will change how both consumers and agents look at the real estate business. Agents are already becoming more selective in the properties they choose to list, she said, and how long they’re willing to carry those listings and at what price.
As the choices increase and buyers continue to gain ground compared to recent years, some sellers are resorting to incentives — from paying closing costs to adding upgrades — to lure buyers in.
“There’s a lot of that going on,” said Haney. “You have to somehow stand out in the crowd.”
And skittish buyers, fearing they might be paying too much as prices drop, are becoming bolder in escrow, even asking to renegotiate.
“Sellers don’t know what hit,” said Haney, “and buyers are trying to figure it all out.”
In Watsonville, one developer of energy-efficient homes is throwing in a free hybrid car to home buyers.
Palo Alto-based Clarum Homes has offered a new Toyota Prius to move the last five available “Enviro-Home” zero-energy properties in its 74-unit Pajaro Vista senior housing community.
Pam Panzis of Shankle Real Estate concedes that it’s a tough market right now.
“I know there are new agents who are wondering, ‘Why did I get into this business?’” she said.
Within Monterey alone, nine of 27 homes on the company’s Web site Friday were listed at reduced prices. That’s a pattern that’s becoming familiar with agencies across the county.
She’s representing the seller of a historic hunting cabin once owned by President Hoover and his family. Listed at just under $1.5 million, the property’s been on the market since June.
There’s been plenty of interest in the turn-of-the-century Monterey landmark but only one serious buyer so far, and that deal fell through.
“It’s difficult to sell anything right now, let alone anything historic,” said Panzis. “If this had been another market, it certainly would have sold.”
Nonetheless, she doesn’t believe throwing extra incentives at a potential buyer — like a free Prius, for example — will move houses more quickly.
“I believe that it might work in some markets and some instances,” she said, “but I am still a firm believer that if it’s a well-cared-for home in a good location, a buyer will fall in love with it whether it comes with a car or not.”
It’s more important than ever for sellers to listen to what buyers want these days, she said, but ultimately, “they still want the home to speak to them.”
“There has to be give and take in the escrow, ” said Panzis. “If there’s something that the buyer wants, the seller needs to listen. That’s how it works best in any market.”