Salinas: Overvalued Homes

In a report released last week by National City Corp, Salinas ranked second nationwide of overvalued metropolitan housing markets. The study—which was based on historical price data, median income, mortgage rates and population density—concluded that the area is overpriced by 67 percent. The report says the overvaluation puts Salinas’ housing market at risk of a sudden price crash. Only Santa Barbara outranked Salinas, with an estimated 69 percent overvaluation.
The numbers are relative, according to the Monterey County Association of Realtors’ CEO Sandy Haney. To say that a million-dollar home for sale in North Salinas will ever be reduced to $330,000 is simply unrealistic.
“We have a lower median income, and a high median house price,” Haney says. “We will always end up at the top of the list.”
In July, the median price of a home in East Salinas was $525,000. The median home price was $620,000 in South Salinas, $629,000 in North Salinas—which was surprising because South Salinas homes generally sell for more money than their North Salinas counterparts.
Sales for the first quarter in Salinas revealed the same three-tiered pricing medians, with East Salinas being lowest and North Salinas being highest.
Despite the staggering prices, Haney says there is no bubble about to burst like in previous decades.
“In the late ’70s,” Haney says, “we had the savings and loans fail, and interest rates jumped to 18 percent. In the late ’80s, we had a bad economy.”
Haney explains that Monterey County’s market is unlike other cities in the top 10 overvalued list, like Riverside, Merced or Stockton. “We are a destination area. Boundaries between Peninsula cities and inland cities are breaking down. People are seeking affordable housing, period. That will continue to feed a supply-and-demand issue in this county. We just don’t have the supply. Even if the market had a lot of problems locally, you’d probably see investors coming in. We’re that desirable,” she says.
As of July, the average home in Monterey County sat on the market a mere 44 days. “It’s cyclical, though,” Haney says. “Some homes still get into bidding wars the moment they hit the market, and others sit.”
Steep prices mean creative financing. “Thirty to 40 percent of loans used to be adjustable rate mortgages. That’s now 60 percent,” Haney adds.
Santa Cruz and Oakland tied for 33rd on the list, each with a 39 percent overvaluation. San Francisco placed 51st on the list, with an estimated 30 percent overvaluation. [MC]

Water and Politics

The Monterey Peninsula Water Management District will host a town hall meeting 5pm, Aug. 25 at Embassy Suites, 1441 Canyon Del Rey, Seaside, which will include presentations and a panel discussion on the various water supply projects intended to solve the area’s water shortage. It won’t be a dry discussion.
“Water is important,” says Henrietta Stern, a project manager for the district. “Possible water supply projects will certainly affect the community financially as well as affecting what community development can occur, based on a water supply project.”
Beginning at 5pm, members of the public can view displays that describe water supply project options—including seawater desalination, aquifer storage and recovery, and purified recycled water, among others—and speak one-on-one with project proponents.
At 6:30pm, each of the eight speakers will make a presentation, and participate in a panel discussion on water supply project options. There will also be a question-and-answer session at the end.
“This is a real opportunity to ask questions directly to these folks,” Stern says. “Hopefully it will be a springboard to an informed citizenry, so when people read about ground-water recharge or the two dueling desal projects, they will know what it’s about.” [JL]