3^rd quarter home sales in Carmel Valley were the lowest 3^rd quarter sales in the past 5 years. Versus the 3^rd quarter 2010 sales declined by almost 14%. However, sales below $300,000 and above $900,000 did have sales increases. Pending sales for September decreased by 7% from June pending activity, this decline in demand could be the normal seasonal decline we generally see in the fall. It is difficult to predict at this point what effect the change in loan limits that took effect at the end of September will have on demand as we move forward. The introduction of jumbo loans at lower mortgage values could dampen demand.

Carmel Valley inventory declined in September versus June by 14%. The larger decline in inventory versus a smaller decline in pending activity had the effect of lowering months supply from June’s 5.2 months to 4.8 months supply. However, over the past few years Carmel Valley’s months supply has generally been below 4 months supply. The higher months supply indicates a softening in Carmel Valley demand. There is a wide variation in months supply by price range so the market impact will vary depending on the price range of particular interest to you.

Carmel Valley home prices in the 3^rd quarter declined about 5% from the 3^rd quarter 2010. The decline in home prices was seen across all home size ranges except for the 2500 to 2800 sq. ft. and the over 4000 sq. ft. ranges which experienced increased prices year over year. As you can see, the decline in Carmel Valley prices is similar to the directional price trends seen across San Diego County. Carmel Valley prices have not declined at the same rate as San Diego County over the past few years. This is due in part to the low levels of distress sales in Carmel Valley versus the county as a whole. Currently distress sales make up about 14% of the inventory versus 35% of the county wide inventory. Distress sales put downward price pressures on the market so the fewer distress sales in a market segment the lower the downward price pressure.