My grandfather was a thoroughbred race horse trainer and obsessive trader. There were times he would head off to the track in a given truck and return later that night having traded it for an older model truck…and a colt. (As in horse, not beer or gun.)

Trading is back in style in the current real estate market. A colleague of mine recently completed a trade of a large lot for a house. Another client considered a trade for a home in Pebble Beach. I have clients who own two homes in Carmel and we have begun a search for a home in Carmel Valley or along the highway 68 corridor. Our intention is to approach selected sellers and offer the possibility of a trade.

While a trade transaction can be complex, it can often be rewarding for both parties. For example, someone downsizing a home might find someone interested in moving into a larger home. Or, as is the case with my clients, two households who are combining into one.

Often one of the parties will take the property they have received in trade, discount it, and offer it for sale. They may opt to do this if the property they are taking in trade is in higher demand, a better location, or has other qualities that will make it easier to sell then the original property they were offering.

Rarely are trades “apples for apples” and often one party or the other will have to bring cash into the transaction. I am sometimes asked if it is possible to insert a loan into a trade deal. The answer is yes, but it is important to work with a mortgage broker that can help explain the deal to the lender.

In this market don’t discount creative thinking. Seller financing, long escrows, and trades are all possible ways to move a property you need to sell or move into the property you would love to own.

By the way, if you happen to own a home in Carmel Valley, Pasadera or Monterra and have dreamed of owning a home in Carmel…..give me a call.

As most of my clients know I drive a Toyota Prius. I enjoy new technology and over the last couple of years have especially enjoyed the gas mileage. As a Carmel and Pebble Beach Realtor and with the number of miles I put on the car, a Prius is a nearly perfect vehicle for showing my clients homes and land for sale on the Monterey Peninsula.

Of course, there are limitations. I also represent properties in Carmel Valley and have several clients that are interested in “horse properties.”

I recently spent six hours with a client and his son touring Carmel Valley and introducing them to properties with horse facilities or vacant land upon which they could build a home, barn, and arena. They are from the Galveston area of Texas and it was important that they left after the six hours with a good feel of the various areas of the Valley and an understanding of relative value depending on property location, size, condition, view, and slope. My goal wasn’t to find them a property but to send them home with enough knowledge so that we can discuss properties over the next six months with a shared vocabulary.

Too often I met people who bought a home in a given area after only a couple of weekends of visiting open houses and now wish they had opted for a home in another Peninsula area. The difference between Carmel, the Carmel Highlands, The Santa Lucia Preserve, Pacific Grove and Pebble Beach is dramatic but not immediately obvious without reflection and research.

All are wonderful places to live but are dramatically different from each other in terms of weather, demographics, lot size, zoning, distance from grocery stores and restaurants and school systems.

Take the time to explore each before narrowing your search.

Fair warning: This post may not be of interest unless you have kids at River Elementary School or are thinking of buying or renting a home in Carmel to send your kids to our exceptional public school system.

Last night the Carmel School District held a board meeting at the Carmel River School with  Jay Marden, the principal, presenting performance numbers and goals for the school. There were several excellent presentations.

The board also heard from the district’s administration on their strategy for the unexpected increase in the number of students registered at River school.

As I have said in earlier posts, the school system here is incredible and to some extent a victim of its own success. Along with the beach, the beauty, and quality of life–the schools are big part of why families buy or rent homes in Carmel.

The Issue

The number of students enrolled at River Elementary is approaching a critical number. I covered the issue and options presented at the board meeting in an earlier post, Carmel River School Boundary Issues.

The Several Steps in the Short Term Solution

The administration recommended a series of steps, some already underway, to address the problem in the near term.

• Residence Survey

Conduct a survey to confirm that the students that are enrolled, should be enrolled. This is already underway. As of last night, 92% of River School families have provided the administration with the documents required to prove residency.

As a result, three families have come forward and confirmed that they have moved out of the district and will not be returning in September.

• Establish a Tip line for anonymous reporting of possible residency violations

Four tips have been received and are being investigated.

• Quantify the number of Inter (from other districts) and Intra (from other elementary schools within the district) transfers

There are 17 students at the school from outside the district. There are 6 students from Tularcitos elementary school, some at the request of parents, others at the request of the district.

The highest concentration of these is 6 at one grade level.

• Acknowledge that if the critical number is reached in a given class, some of these non-resident students may loose their place

The administration has structured a prioritization list for the transfer students to determine in what order they would loose their “seat.” It is important to note, and there was some confusion at the meeting, under this solution every child living within the River School footprint maintains their right to attend River School ahead of all of the transfer students. These transfer students are only entitled to attend the school if the number of students in their grade is under the “caps.”

• Establish a strategy for dealing with increased class size.

As class size increases in each grade, the administration proposes to add resources to the class.

For example, in first through third grades for classes with up to 22 students, the lead teacher is supported with 90 minutes of an instructional assistants time in the classroom.  For classes with 23-25 students that time allocation increases to 120 minutes. In the event there are 26 or more students in a class, the administration either creates a combination class (a smaller class of approximately 18 students made up of kids from two grades) or frees up a classroom by instituting AM/PM kindergarten.

Similar guidelines exist for each grade level.

• Modifying kindergarten to release the pressure

There are currently 4 classroom dedicated to Kindergarten. In the event a classroom needs to be “freed up” to address overcrowding the most likely way to do so is to modify the kindergarten schedule so the same number of students are served by 3 (or 2) classrooms versus the current 4.

Option 1) Split the day into AM and PM Kindergarten classes. Unfortunately with AM/PM Kindergarten resources such as Spanish and computers become a problem and the schedule can be a problem for parents. Teachers are not supported of this approach as the teaching day is shorter for each group of kids.

Option 2) Establish staggered day Kindergarten. One half of the class would arrive at 8:30 and depart at 1:50 while the second half would arrive at 9:30 and depart at 3:00pm. This would give the teachers and additional hour a day focused on 1/2 the class at a time.

Conclusion

At the moment there are still spaces available in each grade before the “cap” requiring the Kindergarten change is reached. [In grade 1 there are 13 spaces; grade 2, 5 spaces; grade 3, 8 spaces; grade 4, 19 spaces; and grade 5, 11 spaces.]

Again, as of today we have not reached the point where modified kindergarten or combination classes will be required.

The School board will be reviewing the numbers periodically and at the end of June will structure the classes and allocate the additional resources according to the guidelines. In the event a “cap” is reached they will take the steps necessary to reduce transfer students and consider adopting the options related to Kindergarten and combination classes.

As I learn more, I will post updates here. If you would like to hear from me by email when I post something on the topic, send me an email or give me a call.

A quick summary on the stimulus Bill of 2009 as it relates to home buyers in Carmel, Carmel Valley, Pebble Beach and other areas of Monterey County.

> First Time Homebuyer’s Credit – First time homebuyers (which is defined as not owing a home within the past three years), are now eligigle for a tax credit of $8,000 or 10 percent of the purchase price, which ever is less. The entire $8,000 should apply for Monterey County as we’re not likely to see many sales below $80,000. Purchasers have until November 30th to purchase their primary residence. The credit does not apply to second homes or investment properties and is a direct $8,000 reduction in your Federal Tax liability. To apply is as simple as filling out your 2009 Federal Tax form next year. The National Association of Home Builders, www.nahb.org has information on their web site about the tax credit. Please consult a tax profession to be certian you qualify.

> 2008 Jumbo Agency loan limit of $729,750 has been restored for Monterey County. This may be the bigger boost to the Monterey housing market as the most recent Jumbo Agency limit has been $483,000. The “jumbo agency” loan category applies to “Fannie Mae,” “Freddie Mac” and “FHA” loan products. Guidelines and rates are similar to standard programs. These products will be a helpful boost to the mid-range housing market, i.e. $500,000 — $950,000. The $729,750 limit will be effective for the 2009 calendar year.

As we move into March there are 240 homesfor sale in the greater Carmel area (Carmel-by-the-Sea and the surrounding area), with properties taking about 180 days to sell…. These days, the number of sellers that “give up” is well above past years. This is reflected in the higher number of expired and canceled listings.

As the Carmel real estate market has softened I have seen buyers shift their attention from areas such as Carmel Woods or south east neighborhoods of Carmel-by-the-Sea to closer to town and into the “golden rectangle.” Properties are still selling in all neighborhoods but buyers are looking for the perfect home or the near perfect deal.

This Week’s SnapShot

 

Market Profile

Carmel remains firmly at the “buyer’s market” end of the spectrum. Since January first I have seen an uptick in buyer activity. The median list price has fallen $100,000 since the first of the year.  Successful sellers are those that adjust to the changing market by pricing their homes to differentiate themselves from the competition. If a home meets a buyer’s needs, they should submit a well prepared offer with supporting comparables.

The Market Action Index

The Market Action Index (MAI) measures available supply relative to the current level of demand. Index values above 30 indicate conditions favor sellers, below 30 favors buyers.

Median Price Per Square Foot

Homes in Carmel are not typically priced by “square foot” as there can be a 1,600 square foot home worth $900,000 a block from a home exactly the same size that might be worth $1,800,000. Nevertheless, median and average price per square foot are useful for tracking trends.

Looking at the market by Quartiles

To more accurately describe the sub-markets within Carmel, I report the median price in quartiles. The most expensive 25% of homes make up the first quartile, the next 25% the third quartile, the next 25% the third, and the least expensive 25% are the fourth quartile.

While the upper quartile is well off of what we saw in 2005, at the end of 2008 it was these higher priced properties that lifted the overall market.

Recent Sales

There were 25 closed escrows in Carmel in the last 3 months. They ranged in price from a low of $575,000 for the house on the corner of Highway 1 and Ocean Avenue to a high of $5,433,863 for a 3,100 square foot home on San Antonio Blvd and 8th Avenue. (Carmel Home Sales in the last 3 months) There are 20 Carmel properties currently in escrow. (Carmel Pending Home Sales)

Tracking Sales and Comparables

The easiest way to track comparables and properties of interest, is to use the Private Client MLS System to identify favorite properties. Once identified, the system will track and report on price changes, status changes, and the ultimate sale price when the property sells. You can also take a quick look at MLS listings for Carmel.

Carmel’s Schools

Anyone living in Carmel, or interested in moving here, with children knows Carmel School District is one of the best public school districts in the state of California. The district consists of three elementary schools (Carmel River Elementary, Tularcitos Elementary School and Captain Cooper Elementary School), one middle school and one high school.

Last night’s school board meeting was well attended and everyone acknowledged that the district is a victim of its own success. I have real estate clients from as far away as Atlanta interested in moving into the district, our schools being a major reason. As the price of homes has fallen, and rental rates have dropped as well, buyers and renters are moving into the district when possible. [Monterey school district spends $8,000 per student per year while Carmel spends $16,000.]

All three elementary schools are exceptional. Tularcitos was recently identified as a blue ribbon school and all three schools repeatedly score in the highest category used by a number of rating services. All California public schools undergo yearly testing. The Carmel district repeatedly scores well above the state average. Carmel CST scores.

The Issue

Carmel River has seen an unanticipated influx of new students in the last year which has prompted the district to consider a boundary change, adjustment in class sizes, a change in the school day, and other ideas.

Moving the boundary between Tularcitos and River was opposed by nearly everyone in attendance. Tularcitos is located in Carmel Valley Village (a 15 to 20 minute drive from the mouth of Carmel Valley) and any shift in the boundary would have  a major impact on the families affected.

The Solution Proposed by the District Administration

There was an audible sigh of relief when the administration stressed that they were not recommending a boundary change to the School board. It is still an option but there appeared to be near unanimity among the board, the administration, and certainly the audience that it was the least appealing option.

The administration is proposing allowing up to 25 students in each of the River School kindergarten classes (although the number will probably be less), up to 23 in the second grade (rather than 20) and up to 22 in third grade.  The cost of this “first scenario” supported by the administration could be as high as $60,000 in “penalties.”

These penalties are actually a reduction in “incentives” offered by the state for keeping the average number of students in each class in those grades under 20.44 students.

While the district would rather keep those penalty dollars, there was an acknowledgement that the other alternatives (boundary change, split day kindergarten, and several others) all have financial costs as well (impact on families, subsidizing busing etc.)

What Next

The administration is working with a demographer to better estimate future enrollment and the board will again discuss the issue at its next meeting.

An Audit

There is a belief that there are a number of students attending schools in the district that do not live in the district. It is difficult to say if this is an urban myth or a real problem. The district is proposing a student audit. Under the proposal, each family at River School will have to prove residency later this spring. That will be followed by random “house checks” in a couple of select grades to confirm residency. The district also intends to publicize a “tip line” for anonymous tips that someone may not be a resident of the district.

The district has modeled its audit on that used by the Palo Alto district.

Other info

I’ll post links to the board minutes once they are available.

The Monterey Herald Article about the Carmel School Board Meeting

California Department of Education STAR results for Carmel School District

Great Schools (a source of data on school districts)

The School District Web page

Admittedly many of the homes that sell in Carmel, Pebble Beach, Carmel Valley and over the hill in Monterey and Pacific Grove are priced such that most buyers need a “jumbo” or “non-conforming” loan. “Jumbo” loans are the loan product that has been most changed by the current credit crunch. The cost of these higher principal loans is much higher and the hurdles that have to be overcome to be approved can be extremely tight.

Lenders used to make these loans to a home buyer and a short time later sell them to investors on the secondary market. The collapse in demand for these loans (turned into securities) has made lenders much less enthusiastic about lending.

“Conforming loans” on the other hand conform to government guidelines (set by the Office of Federal Housing Enterprise Oversight (OFHEO)) and can therefore be purchased by Fannie Mae and Freddie Mac, the two Government Sponsored Enterprises that are charged with facilitating the flow of credit.  Fannie and Freddie are continuously in the market for conforming loans. 

The Relevance To The Monterey Peninsula?

In 2008 the loan limits were raised to $729,750 for Monterey County. This allowed buyers to use conforming (less costly) loans to purchase higher priced homes. In January the loan limit for Monterey County reset to $483,000 while “high priced counties” reset to $625,500. Monterey was lower because of the high number of transactions in the Salinas Valley that pulled the median sale price for the year down.

Any increase in the conforming loan limits will be welcome news to buyers looking at $500,000 or more listings.

The First-Time Buyer Credit

 The bill also moves the first-time buyer credit up to $8,000 (from $7,500) and more importantly removes the requirement that it be paid back as long as the buyer stays in the home for at least three years. The credit is available for first time home buyers that purchase a home before the end of 2009.

The AT&T Golf Tournament mostly escaped rain on Friday and Saturday with 24 year old Dustin Johnson taking the lead. Every year as the tournament approaches I am asked by potential sellers what impact the event has on efforts to sell a home in Pebble Beach, Carmel, or the other peninsula communities.

The AT&T golf tournament and other events such as the Concours d’Elegance in August are very important because they bring people to town and remind those who watch the events on TV or read about them in the media that the Monterey Peninsula is a special place.

While a few homes will go into escrow during this weekend, the reality is that most attendees who are here for the tournament are far more interested in the golf, restaurants, and other activities than they are in looking at homes for sale. What happens most often is visitors for an event such as the Pro-am have a great few days here and decide to visit again in a few weeks or months on a follow up visit. It is on their return trip that they are more likely to learn a bit more about the different communities and explore the possibility of buying a home here.

This year the tournament fell on the same weekend as Valentine’s Day which is unfortunate for local commerce and for real estate as well. A Valentine’s weekend that doesn’t have any other major event will bring folks to town who are interested in walking on the beach, a romantic dinner, and exploring Carmel’s art galleries, Pacific Grove’s coastline, playing golf at Pebble Beach, and…..visiting a few open houses.

With any luck, next year we can all take long romantic walks through town-without rain-on Valentine’s Day, and enjoy the AT&T tournament on an equally sunny but different weekend.

In early December I had the priveledge of being the first Realtor to book a Zeppelin charter for some of my more adventurous real estate clients to look at their recent purchases from the air.  The twelve of us, plus the two pilots, departed Monterey airport and headed south east towards Carmel Valley. In advance I was able to provide the pilots with the GPS coordinates for a few of the passenger’s homes so we could more easily find them from the air.

The Zeppelin is Coming Back to Monterey…..

The Zeppelin is usually based in San Jose at Moffett Field from where it provides air tours of San Francisco. It also occasionally travels to Napa Valley. And, it will be back over Monterey, Pebble Beach, and Carmel on Thursday February 12th–The Thursday of the AT&T Golf Tournament.  [More information about schedule and costs below]

Our Trip

We headed out to just past Carmel Valley Village and on the way overflew the Del Mesa Development which is a short distance from the mouth of Carmel Valley on the North side.  [See CarmelValleyReport.com for market updates on the Valley.]

Cruising at about 40MPH we flew 1,000 feet above the ground past the village and the now closed Carmel Valley Airport.

We buzzed a few homes in Carmel Valley and then made our way west and flew over Carmel.  My two sons were able to identify their elementary school and we were able to easily identify the Sunset Center and a few other Carmel landmarks. [Carmel Real Estate info at www.carmelreport.com]

From Carmel we headed to Pebble Beach. [PebbleBeachReport.com] Looking back at Carmel Beach you get a sense of the view from the windows.

The airship is surprisingly quiet– much quieter than inside a commercial airplane. It is interesting to note that in addition to the large windows on each side, there are two windows that remain open. Given that you are only traveling at 40 MPH there is almost no wind noise but you don’t want to get to close without a hand on your hat.

There are no “bad seats” on the airship.

Except for takeoff and landing everyone is free to move around the cabin, discuss what they are seeing and even interact with the two pilots.

It is an amazing way to spend an hour and gain a whole new perspective of the Monterey Peninsula.

Information about Schedules and Flying

The Ship is scheduled to return to the Monterey area on Thursday the 12th. There are a couple of one hour tours scheduled about midday and a bit later in the afternoon. The standard rate is $495 per seat for the hour tour plus tax. However, they are running a special for this visit of “buy one and get the second one at 50%” and buy 5 get the 6th free.

If one wants to charter the entire ship (12 seats) the cost is $4,950 plus tax, equivalent to paying for 10 seats with 2 free.

If you would like to fly on the 12th drop me an email at malone@malonehodges.com or call my cell phone at 831-601-4740 and I can tell you more about our experience on the flight, the schedule for the 12th and set up a reservation.

 The airship website is at airshipventures.com. If you contact them directly mention my name and the discount offer. I hope to see you on the 12th!

Malone

Market Profile

There are currently 5 Pebble Beach properties in escrow ranging in list price from $1,745,000 to a vacant lot listed for $300,000. (Current Pebble Beach Pending Sales) There have been 13 closed sales in Pebble Beach since October 1, 2008, ranging in sale price from $3,150,000 to $675,000 (Pebble Beach Sales since 10/1/2008).

As with other Peninsula markets, Pebble Beach remains firmly at the “buyer’s” end of the spectrum with 207 average days on market.

While Pebble Beach is certainly healthier than many other high end markets, a telling statistic is the percent of listed properties that have seen a price decrease, discussed below.

Pebble Beach Market Action Index

The market remains firmly at the “Buyer’s end” of the Market Action Index (MAI). An MAI above 30 typically indicates a Seller’s market with prices tending to rise. An MAI below 30 implies a buyer’s market with a great deal of inventory, increased days on the market and weakening prices. 

Pebble Beach Median Price

Pebble Beach has a range of housing stock (the lowest priced listing at the moment is a lot at $470,000  while the highest is a front line estate at $35,000,000). This fact makes Median price of limited value. One high end listing coming on, or going off, the market skews the numbers. 

By breaking the market into quartiles the data is a little more enlightening.

Most of the large fluctuations in list price occur in the upper quartile. However, if you look only at the bottom half (quartile three and four) you see that the lowest priced homes have trended downward since 2007.

As properties come and go the characteristics of these four quartiles changes. Each quartile represents 25% of the market, so Quartile 1 and 2 combined is the upper half, while Quartile 3 and 4 is the lower half.

Tracking Pebble Beach Properties

The easiest way to track properties of interest is to use the Private Client MLS tool which lets you select properties of interest and track them through the sales cycle, including their final sales price.  You can take a Quick Look at Pebble Beach listings on the MLS.

Insights

Buyers remain mostly on the sidelines. While many are concerned that the market may continue to settle, others are willing buyers  but unable to secure credit. There has been a decided uptick in showings and interest since the first of January.

There is a sense in our markets that we will settle into the bottom of the value curve over the next few months and then remain relatively flat for some time.

Buyers who find the home that fits their needs should act, and present a well supported clean offer. 
Sellers must do everything they can to make their home the “exceptional deal” for an “exceptional home.” Proper pricing, home staging, quality photography, and a strong internet presence are all imperative.