Boy, it’s been an interesting Summer in real estate! What had been mostly a hot seller’s market since Covid began, became a cross between a slightly seller’s market, and a sluggish selling environment sometimes offering up easier opportunities for buyers. With some properties selling right away, and the other half taking quite a long time to sell, it has become more difficult to predict the final outcome, or speed of sale, on many properties.
There are some big changes about to go into effect next week with regards to buyer representation. To simplify- Regardless of whether a seller is offering to pay a commission to a buyer’s agent, a buyer MUST have a representation agreement signed and executed with their agent, prior to their agent showing them homes. This is a cold hard rule imposed by the DOJ and includes even facetime showings, which is something we often do for our clients who are out of town. In that agreement, you MUST agree how much you are paying your broker to provide their services to you. There will be occasions where the seller concessions on a particular listing will be less clear, although most agents we’ve talked with say they will stick to what they have been doing with sellers and recommend 2.5% to 3% seller concessions for buyer agency. In the event a seller will not offer concessions on this item, a buyer will be required to come out of pocket to pay their broker. I will begin contacting buyers we are working with in the near future to let them know we need to paper our working relationship.
Next week kicks off the annual Car Week event! Every year this brings the biggest crowds to town, and the most exciting cars in the world. I will be running around between events and showings. If you are in town for the event, let me know! I also have some wonderful listings and off-market opportunities, if you feel like peeling off and taking a look! I am looking forward to catching up with many out of town friends! Here’s a link to the event schedule.
Overall economic conditions over the Summer have been a generally strong economy, followed more recently by a less than favorable jobs report, a wild week of fallout in the stock market (last week), and finally the lowest mortgage interest rate environment we’ve seen in 15 months (positive). The FED is looking more and more like they will begin lowering their rates in September, as we near the election, and I have a feeling next year will be much more favorable to those looking for a mortgage. Even when extrapolating the high end luxury market here on the Peninsula, which for the most part uses little or no loans for it’s deals, you can feel the loss of the upward thrust the entry level parts of the market typically create when rates are better.
Let’s break down the general luxury markets for a moment, and the greater Peninsula luxury market:
Pebble Beach YTD (year to date) –
- Our normally 4 good months this year are more like the slower months in 2023 as far as # of units sold. The # of closings year to date are 28% behind this time last year.
- 48% of the active listings in Pebble have seen at least one price reduction. Active inventory has been growing at a steady pace with 40 actives this week.
- Price Tier Grouping – # of closed sales YTD
1 sale over $10M at $10.4M
6 sales between $5M-$10M
7 sales between $3M-$5M
16 sales between $1M-$3M (6 of the sales were under $2M)
So, we are seeing the “entry level” in Pebble Beach as the portion of the market that’s moving as contrasted with the ultra-premium tier of the market.
That’s why we’re seeing an avg. sale price drop of 17% over this time last year. And the median SP is down 7%. That price per sq. foot is holding strong at $1,143 per sq. though. And overall individual properties do not appear to be losing value on their own.
Carmel-by-the-Sea YTD –
- Q1 was very sluggish and then Q2 was healthy in terms of the # of closings to where YTD we are just 10% down from this time last year.
- The avg. sale price is up a whopping 24% with the median up 47%.
- Price Tier Grouping YTD in closed sales:
Over $10M = 0
$5-10M = 3
$3-5M = 16
$1-3M – 9
The sweet spot being $3 – $5M which is driving that avg. sales price. And median price is up.
Active inventory is up to a healthy 21 units.
All Monterey Peninsula Luxury –
- The # of closed units is just down 3.5% from this time last year and the avg. sale price is up 7% to $1.33M, with the median is up 7% to $900,000.
- Inventory has been consistently increasing.
- $3M to $5M
Closed Units 66 – up 18% from July 2023
MSI (Months of Supply Inventory) 7.4 months – up 24%
DOM (Days on Market) 61 days – up 33%
Active Inventory 71 units – up 25% over July 2023
$ per sq. ft. $1,492 – down 2% - $5M – $10M
Closed Units 36 – up 37% from July 2023
MSI 9.3 months – down 38%
DOM 61 days – down 22%
Active Inventory 46 units – up 27% over July 2023
$ per sq. ft. $1,972 – up 16% - Over $10M
Closed Units 3 – down 4 units from July 2023
MSI 20.3 mo. – up 47%
DOM 19
Active Inventory 23 units – up 77% from July 2023
$ per sq. ft. $4,150
What’s happening on the ground? As I mentioned before, properties are hitting the market and either selling relatively quickly or taking quite a long time to sell. Part of this is due to seasonality and people largely taking advantage of the Summer months to travel. Part of this is due to kids going back to school and the attention that requires from parents. Another part, is some pricing fatigue on the part of buyers, sellers having a hard time acclimating to not still being able to pad their asking prices and still sell (as in Covid years), and lastly some plain and simple hesitancy with the global market. Pricing accuracy is proving paramount to procuring any offers at all. That being said, prices continue to be strong, and demand continues to be relatively strong, albeit with an emphasis on quality and location of the product- buyer’s have become more discerning because the velocity of the market allows them to be.
Our team has had a steady sales Summer. We also have a small handful of very nice listings, and some prime location stuff getting ready to come to market over the next month or two. Please reach out if you’d like to discuss further the state of the market or some of our upcoming opportunities in the luxury marketplace. And as always, scroll down for a link to market stats by area on our website, and to see some of our activity and highlights.
