Tracy and Nora Valleau have owned the house at 641 Lily St. in Monterey for 10 years. Tracy says, “We decided to move and so put it on the market about three years ago.” The house fell out of escrow and the price has been lowered several times, but even taking the tanked economy into consideration he’s scratching his head. “Right now we’re asking one dollar over what we owe on it.”

The house was built in 1982 in a neighborhood much appreciated for its family orientation and its proximity to Monterey, New Monterey, Pacific Grove and Pebble Beach. It’s directly off of Prescott Street, where access to all those communities is between two and seven minutes by car.

This is not a huge house (approximately 1,093 square feet with two bedrooms and one bath), but it has huge potential. For one thing, the property is a double lot measuring 5,000 square feet, of which only 2,500 are being used. The driveway on one side of the house (out of sight) is shared by two other homes behind this one. They also appear to have more space around them than typically aligned houses on any given block do. The cultivated part of the yard around the Valleau home is fenced, and jasmine has folded itself sweetly over most of it. Within the confines thus delineated is a world of possibility for the yard and for the house, inside and out.

From the sidewalk on Lily Street the house is introduced through wrought iron gates with a big half-hoop of the black metal curving high above. The butter-cream house presented a pleasing sight with weathered teal trim. An air of generosity right from the start is exemplified by the width of the gate, walkway and equally wide steps to the portico with a smaller one within it that harbors the front door. In Carmel the home would be deemed a cottage, and from the front that fits.

There’s a long-lived Podocarpus tree (a wonderfully multi-national, bright green conifer with great, thick foliage birds love to nest within, a tree that we share with places as widely spread as Tasmania, Chile, South Africa and Florida). This one currently stands house-high as a bush that offers a deep privacy screen but doesn’t block the view across rooftops to a long, narrow strip of the bay, opposing shoreline and much of the Santa Cruz Mountains dwarfed by so much sky. The view is set off by a healthy pair of 40 something cypresses a bit away; classic forms, so iconic, the signature silhouette of our peninsula.

When one steps inside the house, the sight line to the kitchen is direct from the front door through the living room/dining room combination. The first impression is of how many dual-pane windows there are and how much light fills the space.

Valleau says, “All we ever added was the fireplace/stove [freestanding] in the living room corner [between the corner windows with the best view], the hot tub [sized for four] and the wood shed in back.” So the house would appreciate some remodeling. For example, a second bath and second floor are splendid ideas not only for the grace of more space but for an amazing view upstairs. The kitchen begs upgrading, and the grounds are a creative gardener’s blank pallet. A freestanding garage where the carport is now would be perfect.

So much potential, so many options.

Price: $510,000641 Lily St., Monterey • Contact JoAnna Tupman, Broker Associate Sotheby’s International Real Estate, 224-2582.