The Sea Ranch market closed the year with a rising tide of sales, but the sales were at lower average prices than previously.  In fact, average sale prices declined by 19% in 2011, on top of many years of declines. 

The big question we all ask is “Have we hit the bottom?” 

I think the answer for The Sea Ranch market is “Yes, or close to it.”

Here’s why:

• Sale prices are approaching a 50%  decline since the peak year of 2007.
• The number of homes sold  per year has been increasing, and the inventory of unsold homes has been declining.
• Mortgage rates continue to be an outstanding bargain.
• It’s an election year.  I’ve noticed a tendency for economic newsmakers to take an up-beat tone when they have an election they want to win.

The increasing number of homes being sold is an important indicator, because the number of units sold has to increase, and inventory decrease, before prices can change direction.

But there is an unknown factor in the marketplace, and that is the problem of foreclosures and bank-owned properties.  Sea Ranch had 7 foreclosures last year, but we may see more this year.  Banks are still carrying properties on their books rather than pricing them for sale at realistic market value.  Fortunately, we are not as impacted here as in the rest of the country by the backlog of bank-owned properties playing havoc with the market, but it is still a factor, and an unknown.

The bottom line is that Real Estate is a long-term investment.  Despite all the attention focused on the real estate market, many have forgotten that essential investment truth.  Anyone who is willing to accept that fact, will find that NOW is a very good time to be investing in real estate, rather than trying to time the market to the exact day on which it bottoms out.  Whether the bottom was last week or next summer, if you are investing for the long term it makes sense to buy now if it is a good time in your life to do so. 

The average sale price for Sea Ranch homes was nearly half of what it was at the peak in 2007.  In that year the average sale price for a home here was close to a million dollars ($976,000) and this past year we saw the average price of a home a little over a half-million ($559,000). 

My own experience with a flurry of escrows closing at the end of December 2011 was that potential buyers have noted the benchmark drop in values, and the  psychological shift in the marketplace has begun. 

Best regards, Bill
January 2012 

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The real estate market on the Coast has not escaped the national economic realities, but it is still one of the most beautiful places on the planet.  And the future looks bright ahead because seaside real estate is a rare commodity -- they just aren't making any more of it.  And the properties on this part of the California coast are further blessed with a fantastic climate, sunny and fresh and moderate all year round.

For sellers there has been a difficult adjustment period, because we had become acustomed to property values rising close to 10% each year.  But in the middle of the first decade of the new century, that pattern reversed itself, and the market has dropped off here as it has elsewhere.  That has been difficult for those who bought within the last five years.  Until the larger economy makes a significant change, we just have to deal with what has become our "new normal" property values that are basically about half of what they were at the high point.

But for buyers, this is a spectacular opportunity.  There will probably never be a better buying opportunity for real estate in your lifetime.  Prices are low, inventory of properties on the market is high, and financing is a bargain with mortgage rates at historical all-time lows.

Best regards, Bill
June 2011