January Newsletter

What a year 2023 was! I finished the year off as #1 in units sold in Carmel-by-the-Sea and #1 individual Sotheby’s agent in Carmel again. Thanks to you! Many thought that by this time, we would be in the midst of a financial meltdown, with tumbling residential real estate prices and a blown up economy. We still may see some changes in the coming year or two, however unlike the last 2008 -2011 real estate crisis resulting from the Great Recession, a number of vastly different factors exist now to prevent residential values from materially coming down, such as tighter lending standards and people’s equity in their homes. The star of the show for last year and continuing into 2024, was of course, interest rates. Although they are scheduled to click downward this next year, they won’t approach 3% and 4% again anytime soon. With so many folks around here in the 3%’s on their home mortgages, people simply don’t have an incentive to sell. This will keep inventory on the tighter side for some time, even as buyers begin to accept the new norm over the next year and slowly re-enter the market. We may even see a little competitive rush to buy as rates come back down into the 5’s….

So what did transpire in last year’s market? With regards to rates above, I often hear people tell me that buyers in the high-end don’t use financing. While there’s some truth to that, the facts are that 80% of what I personally see is cash. As you move past $7M and $10M+, you’d see there are closer to 95+% deals with no debt or special anything in the deal. However the market moves as a whole to some degree- there is the needed upward thrust of the lower and mid-end local markets to truly put the high-end and top-end neighborhoods on fire. Higher rates also mean more expensive debt and lower market yields for the portfolios and businesses of clients able to buy a multi-million dollar property with cash, and so, they pull back. Lastly, with a more balanced market, buyers at all levels feel less of a sense of urgency to jump in. We may see an increase on that item with the rate drops by Spring, though. With regards to values, losses of overall local market value incurred from the 2022-2023 shift, were recovered; some more sub-par properties would still fetch less than their peak, whereas some properties would garner considerably more than the overall peak. The primary driving product continues to be contemporary-leaning, new construction, and extremely unique and custom homes and land.

What about the numbers? In 2020, Covid buying first became a “thing”. We hit 3,246 unit sales in 2020, peaking at 3,246 in 2021, then 2,636 in 2022 and 2,130 in 2023, which would normally be considered a more balanced market. Why is that? For starters, people were going back to work and some back to major markets to live. And because of inventory having had been decimated (especially the good stuff!) during Covid, we only have about half the normal inventory as typical in a balanced market. Add interest rates to the mix and you have sellers unwilling to sell ( 82.4% of homeowners have a mortgage below 5% and 62% have a rate below 4%!). Suffice to say, the median and average sale prices have held steady due to limited inventory and very healthy demand.

In my more primary markets, Carmel-by-the-Sea average price per square foot rose to $2,137, a 5% increase over 2022. The number of sales here (61) was actually up 3.4% over 2022 (one of the few areas where the # of sales actually saw an increase). Active listing inventory in the 4th quarter dropped to about a third of what it normally is. So, that limited inventory kept upward pressure on price points. The median sale price for 2023 landed at $3,295,000 (up 2% from 2022) and the average sale price was $3,813,286 (up 1% from 2022). We can easily say that the Golden Rectangle and other prime Carmel areas are alive and well and still one of the most desirable destinations on the Monterey Peninsula and California.

In Pebble Beach, the # of closed sales reflected many of our markets on the MontereyPeninsula with almost 20% fewer sales in 2023 as compared to 2022. The average sale price was $3,422,895 (36% lower than 2022) and the median sale price was at $2,590,000 (a 17%drop from 2022). This does not mean prices are going down. We simply saw less ultrapremium sales (Over $10M) in 2023. This brought the average and median price down. There were only 5 closings over $10M (at a $11.5M avg. sale price) which is a 61% drop in the # of these premium sales from 2023. And there were only 11 sales in the $5M – $10M price range which was a 35% drop from 2022. There is currently about a 6 month supply of inventory in Pebble Beach, which is more than enough, albeit the more “choice” product isn’t well represented in that inventory.

Last but not least, in 3 weeks the AT&T Pebble Beach Pro-Am golf tournament kicks off! There are a couple of unfortunate changes to the lineup this year, however. With the advent of LIV Golf, and the PGA’s need to compete, the purses have been majorly upped and the majority of celebrities have been permanently uninvited. Tom Brady and some other sports stars will play part of the tournament but the Bill Murray and Mark Walhberg days are over. It still should be a lot fun, just more of the pros than before! Please see below for a schedule of events to refer to.

My team and I appreciate your support and look forward to working together in 2024! Make sure to also scroll down for a quick recap of some of our more notable 2023 sales.

Cheers,
Ryan