Carmel Valley / East Del Mar
When looking at the upper-end of the San Diego real estate market, one thing is clear. There are lots of homes to choose from. A perfect example is in the Carmel Valley zip code 92130 where there are presently 221 houses for sale. Considering that there are only 5,995 detached homes for sale in all of San Diego County, Carmel Valley accounts for 3.7% of the detached single-family house listings in the San Diego MLS. The number is lower for condos and townhomes. The 62 condos for sale in Carmel Valley represent just 2.1% of the 2,982 condos for sale in San Diego County as a whole.
The absorption rate (approximate time to sell the existing inventory) in Carmel Valley is also larger than in San Diego as a whole. In June 2009, there were only 32 homes sold in Carmel Valley (almost a 7-month supply). This was 18% fewer sales than in June 2008. With the increased inventory and longer market times, the median sales price also slipped in June, far more than other parts of San Diego County where there is arguably a housing recovery underway. The median price of a home in Carmel Valley in June 2009 was 13.5% the June 2009 median price, and 30% below the June 2005 median price. Where there used to be none, there are currently 79 houses for sale in Carmel Valley that are priced under $1 Million.
Until recently, home prices in Carmel Valley had been pretty stable relative to the rest of San Diego. Carmel Valley (East Del Mar) has so many things going for it: top-rated schools, newer housing stock, good proximity to employment centers, freeways, and beaches, superb weather, lots of clean family-friendly parks, etc. And there is a much wider range of housing types in Carmel Valley; much more variety than the neighboring Rancho Penasquitos homes, previously discussed in Part I of the San Diego Real Estate Prices blog post. The most expensive home currently on the market in Carmel Valley is a 10,000+ square foot estate priced at $7,995,000 (this is a reduced price, down from $9,995,000). The lowest priced Carmel Valley house for sale is a 1,348 square foot home priced at $545,000. Due to the large variation of home styles and prices, the median price is a better gauge of market activity than the average price. The average price really becomes skewed whenever the large Carmel Valley luxury homes sell.
It’s hard to say when prices will stabilize in Carmel Valley. There were three times as many homes listed in Carmel Valley in June than were sold. However, there are currently twice as many homes in pending status than were sold in June. So July and August should show some higher median and average price numbers.
When priced right, Carmel Valley homes are still selling. The average time-on-market for the homes that sold in June 2009 was 59 days, and the median time-on-market was just 35 days. In June 2009 there wasn’t a single home that sold over asking price, and only a few homes sold at asking price. So the time is right to negotiate when buying a home in Carmel Valley or in any of the San Diego luxury homes communities.
We are looking at a couple properties in the Carmel Valley to do as rehab and flip, but the market has not dropped very much. It seems like banks have a lot of pent up inventory, so how stable do you think the prices will be 4-5 months from now?
My crystal ball broke a long time ago. But from what I’ve seen, the entry-level market of San Diego homes has found support. With the limited inventory and relatively easy access to low-interest rate FHA loans, prices of entry-level homes under $500,000 are actually getting bid up again. But at the upper end (Carmel Valley real estate included), there is a lot more reluctance. San Diego luxury homes are sitting on the market longer, and there are more homes coming up for sale than are selling. This has a lot to do with tightness in the jumbo loan market. The conforming loan limit for FHA loans is $697,500, and above that the only way to buy a home is with 20% down payment. We’re even starting to see more foreclosure properties at the top end. This does not bode well for the upper-end San Diego home prices in the short term. I think it is a great time to negotiate for luxury homes. Prices will come back eventually, and prices may stabilize in 4-5 months, but I definitely don’t think that 4-5 months is a realistic timeframe for equity gains in Carmel Valley.
We primarily deal in the Inland Empire, but have a couple agents that send us properties in that area. We buy under market and right now we aren’t looking for equity gains, but we’d need to budget if there is going to an “equity loss.” Randomly assigned appraisers and lack of lender motivation really makes conventional loans a hard-sale. We really like to sell FHA…
With or without crystal ball, very usefull information. Thank’s.
Thanks for the info- it turns out Microsoft’s bing really is making an impact, it seems to me your blog is getting a lot of search engine traffic from bing- have you found this to be the case?
Real estate is always going to be hot in America because it is the land of the free!!