Foreclosures dominated the real estate market in Monterey County last month, with foreclosed properties making up 63.1 percent of all homes sold.
In August 2007, foreclosure sales - classified as homes that resold in August and had been foreclosed upon sometime in the previous 12 months - made up just 7 percent of all homes sold in Monterey County, according to research firm MDA DataQuick.
Median sales prices continued their steep decline, slipping under $300,000 as buyers snapped up properties at the lower end of the market. The median sales price for August was $299,000, according to DataQuick, down 48 percent from the same month last year.
In July, the Monterey County median sales price was $307,000.
Those prices are attracting investors and first-time homebuyers alike, said Sandy Haney, chief executive officer of the Monterey County Association of Realtors. With the exception of a slight decline in May, median prices have climbed steadily since the beginning of the year.
August sales were up 74.6 percent over the same period last year, with 398 sales, including new and existing single-family homes and condos, compared with 228 total sales in August 2007.
"What we're seeing is that foreclosures are moving, and the high-end (market) is moving," Haney said. "The opportunities out of that are for the first-time homebuyers. That's the light at the end of the tunnel, that we have first-time homebuyers."
Monterey County, long one ofCalifornia's least-affordable regions, has slipped into more affordable territory.
According to the California Association of Realtors, the percentage of households that could afford to purchase an entry-level home in Monterey County rose to 40 at the end of the second quarter, up from 17 in the second quarter of 2007.
"Historically, we are always one of the least-affordable areas. We're not on that list anymore," Haney said. "We've moved someplace that I didn't think we'd ever go."
She acknowledged that for homeowners wanting to sell a property, that might not be the most welcome news.
"I'm certain sellers aren't thrilled to death," said Haney, "but we've got rid of the mindset of all that rapid appreciation."
Chuck Cryder, a broker for Century 21 A Property Shoppe in Salinas, said his agents have seen lots of investors stepping up to take advantage of those prices.
"They're looking for positive cash flows and cheap properties," he said. "The investors are picking 'em up, and I'm one of them."
His office, which also handles property management, has seen an increase in first-time homebuyers, including one former renter who decided to make the leap into homeownership.
"Some of them are pretty savvy," Cryder said. "They realize this is their chance. They're not going to get to buy property in Monterey County again."
He debunked the myth that financial distress is behind all foreclosures. In some cases, he said, owners who owed more than their home was worth chose to walk away even if they could have made the payments.
"It's not wholesale," said Cryder, "but if I had to take a quantitative guess, I'd guess 10 percent, maybe 15 percent, could still make the payments and are choosing not to."
Some cases he has seen firsthand, others he has heard about from other agents: An investor opting for foreclosure when his mortgage payment reached $3,500 on a property with rental income of $1,500; a guy who lost his house to foreclosure evicting his condo tenants so he could move in; families giving up on $500,000 mortgages and rebuying similar homes for $350,000 in their kid's name.
Competition is increasing in more ways than one: Would-be buyers are now bidding on multiple homes at once, willing to chance losing deposits, and investors are offering defaulting homeowners cash - up to $2,000 - to keep them from tearing up their homes or removing the pipes.
And demands on the rental market are as high as Cryder has ever seen.
While it used to take a month or more to get a qualified tenant into a rental home, he said, those rentals are getting filled far more quickly as greater numbers of qualified applicants vie for the limited rental pool.
"The rental business is huge these days," Cryder said. "We can't keep anything."
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