Good morning Friends,
The FED just hiked rates another 75 basis points, so coming up here we may see a bit more slowing with regards to buying demand in our local real estate market. The 30 yr fixed mortgage is hovering in the low 7’s this AM, and I think its important to note that higher rates do just as much to keep would-be primary home sellers in their homes, due to inability to pick up a similar mortgage on a replacement property. This will keep transactions down and help prop up pricing as things cycle, due to lack of supply. Of course, not all sellers need a mortgage to replace their property, but this factor does impede velocity of the overall market and influence cash only deals that way.
We have been seeing regular price reductions around town, that don’t necessarily mean significant sale price drops, but rather more of a stoppage of upward average sale price movement due to factors mentioned above. Typically when a market returns to equilibrium from a fast growth environment, sellers take their time in recognizing this and eventually have to start pricing their homes rationally, and in line with comparable past sales. Over the past 2.5 years, it was generally only necessary to price within 10 or even 20% of true value. Now we are seeing more accurate pricing and sellers competing a little with one another to be the next to go under contract. This week we are seeing 35% of 65 active listings in Carmel reduce their asking prices; 38% of 24 active in Pebble Beach.
On the ground, if you list a cherry property (something standout or desirable for a variety of reasons to the general audience), you are still receiving full boat as a seller in some cases. This means your value has not dropped off from peak. I don’t have the data to back this up, but it is what I am seeing. Subprime locations and/or subprime homes are coming down slightly, but again the data is too general in real estate, as different sectors of the market are firing over others and bringing averages way up or down, which do not represent true value. I always tell clients to look immediately at what else has recently sold like their property, to truly know what it is worth. Appraisals and data are not fully reliable in this type of market.
People will always want to live in this area. If you are concerned about selling and getting top dollar, you’d want to do it now, unless waiting a couple of years is in your bandwidth. If you’re a buyer and worried about paying towards the top of the market, the outlook isn’t a massive crash like 2007/08, and if you plan to hold the property for a few years, you have an opportunity to regain any equity that may temporarily suffer. And again, the demand for Carmel, Pebble Beach and surrounding areas has and will continue to stay to one degree or another, through any market shift. There is really nothing quite like the Monterey Peninsula.
As always, please reach out with any questions or referrals. If you are a data junkie, scroll down and use the link to all the rolling local numbers on our website. Call me to chat if you want to know what’s really going on, and if I don’t hear from you this month, we want to wish you a very happy Thanksgiving.
Warmly,
Ryan & Team
Some Recent Sales
CARMEL
26047 Atherton Dr
$2,000,000
CARMEL
25690 Hatton Rd | $5,520,000
Significant Local Sales
For October, there were a couple of significant local sales I want to go into. There were fewer top end sales, partly due to a lack of high quality inventory in that range. That trend is expected to continue.
Scenic 6 SE of 8th
Carmel-by-the-Sea | $13,700,000
This frontline property with ocean views in the Golden Rectangle was on a large 11,200 sq ft lot and boasted prime siting and elevation from the street. This was a renovation opportunity.
1475 Padre Lane
Pebble Beach | $7,750,000
On a per square foot basis and location centric to the Lodge, this sale represents a very good number. This property featured some ocean views that were not protected, and hence was valued as a non ocean view property, but did have some likely remaining peeks of blue, and nice views of the land portion of Point Lobos and some of the Pebble Beach Golf Links.
10th Ave 3 SE of San Carlos
Carmel-by-the-Sea | $3,650,000
This 2485 sq ft home on a very private, oversized 6,000 sq ft lot was a bit too close to the Sunset Center, but still felt like a good deal in town. High quality structure that lended well to an easier remodel.
