James Frangella, Monterey, Carmel, Pacific Grove real estate specialist
pg hd
Monterey Peninsula Professional Real Estate Services Home PageFeatured PropertiesResourcesArchivesContact Us
Monterey real estate, James Frangella
view commentary

by James Frangella
Revised Friday June 6, 2008 9:30am PT

The Monterey Peninsula should really consider seceding from Monterey County. We can then become Peninsula County or something along those lines. The good side of this great idea is that the median price for homes may no longer be declining in our new county. Maybe the foreclosure numbers won’t look so gloomy.

You see, other parts of the county are experiencing tumultuous declines in housing values, which brings the county-wide averages down. And that is what we read in the media. But actually, you might be surprised to know that here in the Monterey Peninsula area, the housing market is not as grim as we would like to think.

However, the median prices have settled for our Peninsula cities. There is no doubt about that. But the prices were so high that a correction was in order. Buyers stopped buying. Income levels could no longer support the debt needed for a roof over our heads. A settling of values was necessary.

According to a Monterey County Herald article dated 5.14.2008: “One of every 157 households in Monterey County received a foreclosure filing last month, said RealtyTrac, placing Monterey County in 10th place statewide in the rate of foreclosure filings.” Stop and think about this. For every one foreclosure, there are 156 households still keeping their heads above water! That figures to be 137,748 households county wide still kicking!

Foreclosures may have caused the value adjustments in Seaside and Marina as where Carmel, Pebble Beach and the other cities just haven’t experienced any appreciation since 2003 or 2004. Thus, the settling of their prices may have taken place. Yet, they’re still holding their own. I know of a $15,000,000 fixer-upper in Pebble Beach and a front-line property also in Pebble Beach, which sold this year for 42% more than it was purchased for in 2004!

Many of the buyers in the entry-level communities of Seaside* and Marina used subprime loans to purchase their homes a few years ago. The subprime loans account for a huge percentage of all foreclosures in these two cities. Surprisingly enough, the filings for Monterey are also somewhat noticeable.

I’m now analyzing only the Peninsula area cities of Monterey, Seaside and Marina as the foreclosure filing numbers for the others (they do exist in Carmel, Pebble Beach, etc.) are insignificant by comparison. Of course, I say that now and hope I don’t have to eat my words later. I should be able to determine the pulse of the foreclosure market in the Monterey Peninsula area with this analysis for these three cities.

Let’s look at some numbers but first you’ll need to CLICK HERE for my Foreclosure Stats.  You’ll then be able to follow along.  Please note that the filings for our three cities have steadily increased over the last 12 months. Not a good sign but on the bright side … more affordable housing if these filings become bank-owned!

Note that April’s NOD and NOT filings for Marina, Monterey and Seaside actually decreased by 16.67% from the previous month. However, let’s not get too excited folks because it is still too early in the year to make the determination that filings for the Peninsula area are on the way down.

Special thanks to Sean O’Toole’s excellent website ForeclosureRadar for the stats. By the way, his search engine is absolutely free for my visitors. Just scroll down to the bottom of my RESOURCES page and click away to your heart’s delight.

My goal is to predict the bottom of affordable pricing (where prices of entry-level homes settle to the point of being too affordable) and perhaps we can see an upswing in appreciation. This is still another topic for my future commentaries. As it stands now, the influx of bank-owned properties in the entry-level market is driving prices downward.

By observing the number of foreclosure filings (Notices of Default and Notices of Trustee Sale only) recorded every month, we might be able to gauge the trend. If the filings increase every month then it looks as if the worst has yet to come. But what if the filings start leveling off and maybe start declining in numbers? Not everybody is losing their homes, just the ones with loan qualification issues that either refinanced or purchased in the last few years. Eventually the foreclosures are going to dry up.

But by tracking foreclosures for our local market, we can depend on our own statistics and not have to rely on the county-wide numbers. At least the numbers will not be so depressing!! Honestly, it’s depressing for me to know our county is ranked 10th** in the state for foreclosure filings. It might not be the case if we were Peninsula County!

So … stay tuned for monthly updates to my Pulse on the Foreclosure Market for the Monterey Peninsula. We’ll weather this storm. You know, the Peninsula was booming when we had sardines. Then they went away. Then the tourists came. Business was booming again. When the tourists go away, the sardines might come back. Either way we are going to be fine.

I still think we should secede. I really like the name Peninsula County.


* With the exception of Seaside Highlands. An entry-level label may not apply here. Properties in that neck of the woods still command the highest prices in Seaside (easily over $700,000 plus) and still selling.  Pat MATuszewski is our Keller Williams expert for the Highlands.  Go to her website for more info.

** A recent article in the Monterey Herald published June 6, 2008 states that Monterey County is now ranked 12th in the state (according to RealtyTrac data).  Either the number of our filings have dropped off compared to every other county or every other county has increased!