Home sales in Monterey County drop 18%, median price hits $641,000 – Monterey Herald
MONTEREY – Even with interest rates remaining low, sales of existing single-family homes in June dropped 18.1% in Monterey County compared to last year, but the median price for those homes increased 1.3% to $641,000.
Compared to most other Central Coast counties and San Francisco, Monterey County is a bargain. The median home price in the most expensive area of California – San Francisco – is $1.7 million. In Santa Cruz its $897,000, Santa Barbara logs in at $717,000, and San Luis Obispo is comparable with Monterey County at $640,000. California’s median home price currently stands at $608,660.
Monterey County’s 18% drop in home sales is second only to San Francisco’s at 21%.
Other factors that may be hampering home sales are the reduction in the SALT cap which removed a financial incentive to trade-up, record-high home prices, constrained inventory, and limited options for first-time homebuyers.
“It’s a buyers’ market,” said Scott Dick, government affairs director with the Monterey County Association of Realtors. “Buyers are taking more time to watch prices which may explain some of the slowdown and sellers are learning to aggressively price their homes if they want them to sell faster.”
But even if the Monterey County median home price is lower than in other areas, only 24% can purchase a median-priced home here.
According to a report by the National Association of Realtors, existing-home sales in the U.S. declined 2.2% from a year ago in June.
“Home sales are running at a pace similar to 2015 levels – even with exceptionally low mortgage rates, a record number of jobs and a record high net worth in the country,” said Lawrence Yun, National Association of Realtors’ chief economist.
Yun says the nation is in a housing shortage and much more inventory is needed.
“Imbalance persists for mid-to-lower priced homes with solid demand and insufficient supply, which is consequently pushing up home prices,” Yun said.
Another aspect of the drop off in home sales is that nationally, foreign buyers have cooled on the U.S. residential home market. Year-over-year investments have slumped by more than one-third, and California is seeing even less foreign spending.
During the 12 months between April 2017 and March 2018, foreign buyer purchases of existing U.S. homes dropped 36%, according to the National Association of Realtors Profile of International Transactions in U.S. Residential Real Estate 2019 report.
California was the preferred destination among Chinese buyers, the leading foreign investment group, at 34% of the foreign buyer market, and Chinese purchases have dropped steeply at 56% from prior levels.
The slowdown in global growth, a stronger dollar, tighter controls on the outward flow of capital from China, and low inventory of homes for sale may account in part for the sharp decline, the association said.
Local realtors are watching the market closely.
Tim Allen, with Coldwell Banker Residential Brokerage in Carmel, said he has not worked with many foreign investors and has not seen a notable change.
Another real estate firm based in Beverly Hills, opened an office in Carmel earlier this year along with offices in Marin, Palm Springs, San Francisco, Silicon Valley and Sonoma County.
“Our office is focused on the luxury home markets of Carmel, Pebble Beach and the surrounding area so specific to those markets, currency control is one factor that has influenced foreign purchases in our area but it’s not specific to the Chinese. As a result, the luxury market is not as competitive but remains strong with interest shifting more to U.S. buyers who are taking advantage of the opportunity,” said Braden Sterling, managing director of The Agency in Carmel. “Interest remains strong in the form of property inquiries and interest in home construction (projects) but there is a decline in actual execution of those transactions (purchase and construction).”