This report will focus on Carmel Valley detached market trends and leave condo trends for another time. Carmel Valley sales peaked in 2003 and experienced major sales declines in 2004 and 2005 while the overall San Diego detached market was experiencing single digit sales declines. 2006 and 2007 Carmel Valley sales experienced smaller sales declines while the San Diego market had larger sales declines. 2008 San Diego home sales increased 22% from 2007 levels while Carmel Valley sales declined by 16%. Both San Diego and Carmel Valley 2009 sales will be larger than 2008 sales, San Diego should have an increase in year over year sales by 18% while Carmel Valley will be less than 5%. September sales in Carmel Valley were the best September in 4 years. However the decline in September pending activity of 30% will result in lower sales moving forward.  Carmel Valley experienced a 52% sales decline from the peak in 2003 to 2008 while San Diego had a smaller decline of 33% for the same period. Yet we have seen San Diego prices decline form peak prices by 36% while Carmel Valley’s price decline is only in the 15% range, which on the surface would not make sense. The most important metric to indicate price direction is the relationship between buyers and sellers – months supply – then the level of distress sales comes into play as well. While Carmel Valley sales declines occurred before San Diego saw major sales declines Carmel Valley inventory was adjusting downward to match the demand. While San Diego inventory was rising and months supply was going into double digits – to over 12 months supply – Carmel Valley’s months supply was running in the 4 to 6 month range relieving the pressure for large price declines. September was the first month since in over a year that the months supply has gone out of that range to 9 months. While many areas of San Diego experience large numbers of foreclosed homes on the market, Carmel Valley has experienced very little in the way of distress sales. As of this writing zero bank owned properties and 10 short sales are active on the market. Out of the current 206 active listings the distress portion is insignificant.  The major pricing issue facing Carmel Valley is the over $1 million market segment. These homes make up 60% of the total inventory and only 32% of sales in the last quarter. The 18 month supply of this market segment put it well out of balance with the market The over $1 million market segment has been showing a steady trend of downward prices and should continue to do so with the high level of imbalance between buyers and sellers. One word of caution on monthly prices, the absolute numbers may have some noise in them because of the low number of data points, but the trends will show. Carmel Valley has weathered the battered San Diego real estate market of the past few years reasonably well. As long as the Carmel Valley market retains a reasonable supply/demand balance home prices should remain relatively stable, except for the over $1 million market segment which will continue to decline. The combination of desirable location, supply/demand balance and the lack of distress sales have minimized the negative impact of the housing market over the past few years. Many other neighborhoods have not been this fortunate. |