The median sale price for single-family homes in Monterey in September was $1,400,206, down 2% from $1,430,000 a year ago.

This is not a significant drop. This fall, there's something else to watch in the area. There are discussions about possibly lifting the ban on new water connections that has been in place since 2009.

To clarify, the sales figures are from the October report of MLSListings affiliate Aculist, which aggregates September transactions as of October 5. As far as I can confirm, there are no statistics for October transactions yet.

For rentals, I looked at the November 3 update from Zumper. The water issue was assessed based on announcements from the State Water Resources Board, Cal Am press releases, and local weekly columns.

First, let's look at the county as a whole. The median price for single-family homes in September was $925,000, down 2.6% from $950,000 last year.

However, transactions have increased. The number of sales jumped from 143 to 171, a 19.6% rise.

On the other hand, inventory has decreased. New listings fell from 203 to 189, a 6.9% drop, and total inventory is down to 569, a 6.1% decrease.

The speed of sales has slowed. The median time on the market increased from 18 days to 28 days.

Conversely, the sale price compared to the asking price rose from 98% to 99%. Even though it takes longer, prices are not significantly dropping.

The market for condos and townhouses is different. The sale price compared to the asking price has decreased to 96%, down from 98% last year, and the time on the market has increased from 34 days to 58 days.

The median price in this segment is $457,000, which represents a 38.7% drop compared to last year, but this figure should be taken with caution as there were only 14 transactions in September.

Pacific Grove saw a 9% increase to $1,487,500. Seaside increased by 13% to $775,000, and Salinas rose by 4% to $812,000.

Some areas have seen declines. Carmel dropped by 6% to $3,041,010, and Marina fell by 17% to $845,000.

Pebble Beach shows a significant drop from $7,063,800 to $2,550,000, a 64% decrease. This does not mean home values have collapsed; rather, the monthly median in high-value areas can fluctuate with just a few transactions.

Some may be confused by Redfin's numbers. Redfin reported the overall median home price in Monterey for August at $1,154,236, a 1.2% increase from the previous year. This figure includes condos, so it should not be directly compared to Aculist's single-family home data.

Now, moving on to rentals. According to Zumper, the median rent in Monterey is $2,695 per month, which is 42% higher than the national median of $1,900.

The year-over-year increase is reported at 11%. However, Zumper also recorded $2,700 in June, with a 2.9% increase at that time.

This means that rents have not significantly increased since last summer; the lower figures from last fall have a considerable impact. If a landlord presents an 11% increase as justification, I would question this point first.

The average rent by bedroom type is $1,937 for studios, $2,275 for one-bedroom, $3,000 for two-bedroom, and $4,250 for three-bedroom units. Year-over-year, these have increased by 8%, 5%, 4%, and 6%, respectively.

In comparison to nearby areas, Seaside is at $2,925, Salinas at $2,477, and Pacific Grove at $3,553. However, Zumper's figures are based on available listings, so areas with fewer listings can fluctuate. Numbers like Marina's $3,800, a 38% increase, should be viewed with caution.

The demand for rentals in this market is closely tied to military educational institutions like DLI and the Naval Postgraduate School. When moving seasons converge, good properties tend to go quickly.

Now, regarding water issues. The State Water Resources Board issued a corrective order to Cal Am in 2009, which prohibits new water connections until a new water source is established to reduce Carmel River withdrawals.

This is why building homes here is particularly challenging. Even if land is available, progress cannot be made without water.

The situation is set to change in October 2025. The Monterey Peninsula Water Management District (MPWMD) has applied to amend the order. According to a column in the Monterey County Weekly, Cal Am has been adhering to legal withdrawal limits for four years.

Cal Am also indicated in a written statement in August that it could accept a temporary suspension. The conditions reported in the column state that by July 1, 2030, desalination facilities must be operational. The company anticipates starting operations by the end of 2029.

The demand forecasts from both sides differ. The water management district anticipates a gradual increase, while Cal Am predicts an initial surge in demand. The state Public Utilities Commission has acknowledged the potential for an annual shortfall of 815 million gallons by 2050, which supports Cal Am's argument.

According to the schedule, the commission was set to receive public comments on November 5. As of the range of materials I checked, a final decision has not yet been made. For conclusions, please refer directly to the commission's announcements.

Even if the ban is lifted, I do not expect a flood of homes to hit the market next year. Permitting, construction costs, and interest rates remain unchanged.

If you are looking at land or expansion properties, the situation is different. Please first inquire with the water management district and the city department about water usage rights. The conditions can be complex, and answers may vary by property.

If I were in your position, I would advise single-family home buyers to negotiate inspection conditions and timelines based on the extended selling period. I would set aside expectations of significantly lowering the price.

Tenants should compare actual listings with the same number of bedrooms before renewing. I do not recommend rushing to buy a home based solely on water news.