The market started to break loose this quarter with deal flow notching upward 11% to 156 deals raising $440M. The middle and top of the market led the charge on the rebound this quarter, driving total investments up 41% from the $314M that closed last quarter. Interest was particularly strong for move-in ready properties in downtown Carmel which accounted for almost half of all sales, at $200M into just 50 deals. Pebble Beach is still below the historic average but did increase to 22 deals for $90M (up 15% for deals and 32% for dollars invested over last quarter). The Preserve broke a new record with 4 Vuelo De Las Palomas closing at $12.5M this quarter and building upon a trend of $10M+ sales in that region. The Carmel Highlands also rebounded nicely this quarter with 8 deals closing for $30M, compared to the 2 deals that closed for $6M last quarter.
It’s looking increasingly likely that the window for buyers who are trying to time the market is closing as deals are becoming increasingly competitive across the price spectrum. The median sales price shot up 25% this quarter to $2.10M, but this is primarily due to a higher percentage of deals closing north of $4M. The higher prices are squeezing buyers in Pacific Grove and Monterey, which both had slower quarters this time. Pacific Grove had just 30 deals close for $53M, which is essentially even with the past three quarters. However, big view properties are going for a premium and can move quickly, as we saw with 398 Calle De Los Amigos, which was listed for $5.9M and went into escrow immediately and will only be the 5th time a house has sold over $5M in PG.
Although we’re steadily climbing our way out of the bottom of the market that we hit in 4Q22, sellers have to adjust to two new realities: houses are staying on the market longer (average days on market jumped to 50, from just 33 last year) and need to negotiate with buyers by coming off their list price (average discount off list is up to 2% currently and up to 8% off list in the Highlands). This is another example of returning to historic trends as on average in this area we would see properties sit on the market for about 75 days and go for about 4-7% off list price. The good news is that for those who are a bit patient and willing to work with buyers, you’re still getting strong prices that are well above where they were in 2019.
The Monterey Peninsula market continued to rebound this quarter with 142 sales, which is up slightly from last quarter but still down from this time last year. However, it's looking increasingly likely that the bottom is behind us, with a strong rebound in our horizon. Read the Pebble Beach section for more details on this.
The bottom of the market has continued to show strong demand, despite rising interest rates, with a steady drumbeat of sales under $2M continuing through this quarter. The top of the market slowed considerably this year, with just 12 sales above $6M, compared to 35 in the first half of last year. Carmel is showing the earliest signs of revival with two sales in Carmel going above $6M, plus the Butterfly House going into escrow and set to close in July. However, Pebble is building momentum and traction in showings this month, so we anticipate an even stronger improvement next quarter across all regions.
Monterey had a nice uptick in sales this quarter, with 42 deals bringing in $44M in sales, which is up 17% from last quarter. Pacific Grove also held strong this quarter with 35 sales closing for a total of $52M (outselling even Pebble Beach). Carmel climbed a bit with 31 sales bringing in $109M, which is up a solid 11% from last quarter. Pebble Beach had just 20 sales this quarter, down about 38% from last quarter and with the top of the market so quiet, only closing $71M. As the top of the market gains momentum, we anticipate this changing quickly in both Pebble and Carmel. Quail Lodge has only strengthened coming out of COVID with 3 sales closing this quarter for $8M, all above list price. Carmel Valley Ranch also had a strong rebound with 5 sales this quarter, surpassing both last quarter and the first half of 2022. The Highlands had 2 closed escrows this quarter for about $6M, which is down historically speaking but, this market is particularly dependent on inventory levels, so we think this quarter is an anomaly. We also see a lot of buyers come look at the Highlands from the Central Valley once they hit 100 degrees, so we anticipate this market heating up as the summer marches on. The Preserve had just 1 sale this quarter which is low compared to the past couple of years, but that’s mostly related to extremely tight inventory levels up there as that community has really hit its stride and is growing nicely. Tehama and Monterra also had a steady quarter with 3 sales closing for a total of $4.7M.
More important than ever is pricing strategy right now. If a home is priced perfectly, it moves quickly. This quarter, even with the slow movement in the market, we saw 6 of the 9 markets we track have sales prices go over list price. This is frequently a remnant of buyers who missed out repeatedly during the past couple of years, but it’s worth noting. Overall, it appears that the market is transitioning back to a slow, steady growth that we’ve known over the past few decades as a healthy balance of buyers and sellers have returned to the market. The days when every house sells immediately with multiple offers and all contingencies released are over, with a return to a healthy, balanced market already taking over.
As the insatiable demand driven by the pandemic has eased, we’re increasingly seeing a return to sound economic decision-making and fundamentals. Our market peaked in the second quarter of 2021, gradually easing as all conceivable inventory was snapped up. The deceleration continued as the Fed intervened with rising rates in 2022. This has resulted in a drop in dealflow from 309 (2Q21) to 162 (3Q21) to just 125 this quarter and last. However, it is looking increasingly likely that the bottom of our market was over the holidays as demand picked up significantly in January and February with new buyers venturing into this area and starting their search. Unfortunately, we were hit by two storms simultaneously in March: a series of atmospheric rivers made this area nearly inaccessible, and a banking crisis erupted, impacting a significant proportion of this area’s key clientele. As such, we believe that this quarter’s numbers are disproportionately low and we anticipate a very strong 2Q23.
Buyers are taking a more subjective approach to real estate than they did in 2020-2021, which is resulting in more days-on-market and a very hit-or-miss effect on which properties move and which ones don’t. Some people are willing to make a move immediately, whereas others are either hoping for prices to fall or are still in a learning mode about the nuances of this area. This is resulting in an uneven rebound in this area. The $309M invested this quarter is down 11% from last quarter ($347M) and half what it was in 1Q22 ($615M). However, both Pacific Grove and the Carmel Highlands posted strong gains this quarter (19% and 26% increases, respectively). Pebble Beach, which dipped to $104M from $117M last quarter, had a strong increase in the number of sales (mostly driven by a surge in MPCC deals). Carmel had a similar quarter with $92M closing (down from $103M in 4Q22), with particular strength in the $4-6M price bracket. The Preserve has more demand than supply at this time, resulting in a slow dealflow quarter but strong price appreciation when things do come to the market. Carmel Valley Ranch surged back to life this quarter with fresh inventory, bringing in $6.5M in sales as the market continues to favor move-in homes by nice amenities. Monterey had a fairly strong quarter with 27 deals closing for $34M, which is down just a notch from last quarter. Monterra & Tehama also had a slower quarter with just 2 sales, but this is mostly due to a lack of inventory as we’re seeing strong interest (with multiple offers) for both land and houses in that region.
Rising interest rates did soften average home prices, going from a peak of $1.998M in 1Q22 down to $1.675M in 3Q22. However, as buyers have adjusted their expectations on interest rates and new buyers have entered the market, we already climbed back up this quarter to $1.897M. We’re still off the peak that we saw in 1Q22, but it’s increasingly likely that the gains that homeowners saw during COVID will be retained as we continue to bounce back this year.
Our summer season is always an important, and telling one, so it will be interesting to see how these new buyers respond to more inventory that’s on its way.
The old adage that real estate is all about location, location, location, is playing true to how the market is emerging from the COVID surge followed by the Fed’s interest rate jolts. Across the country, deal flow tightened with each rate hike as buyers reevaluated the landscape and sellers held out for more money, hoping the market would recover. Around here, buyers were the quickest to adjust expectations regarding what they can buy, but the price for sellers to move also doubled, so with each rate hike inventory tightened further. That is not the case in the places that saw the fastest appreciation rates in the COVID years; these areas are seeing large spikes in inventory and therefore prices are softening. As such, the drop in prices that we’re reading about in national headlines aren't directly translating to our area. We did see the median sales price dip to $1.66M this quarter, down from the first quarter but still well above last year.
For those who have read our quarterly updates for a long time, we’re very excited to announce that we’re now adding specialists in Pacific Grove, Monterey, Tehama, Monterra and Carmel Valley Ranch. We added these areas in response to demands from clients and because we’ve seen a lot of growth and overlap of clients moving throughout the area, beyond just Pebble Beach and Carmel. We’ve updated our historical charts to account for these regions, so some of these numbers may look different from before - they’re more comprehensive about this community and shows more insight across all price spectrums.
The fourth quarter brought in just 126 deals for $252M, which is the slowest quarter since the last market correction in 2008 and far below historic averages (204 deals and $385M). The second half of the year also dragged the 2022 numbers to just 679 sales, a 37% drop in activity from last year and the slowest year in over a decade. However, the tight inventory has held prices up, so the total invested came in at $1.9B which is just 24% off last year and actually 39% higher than 2019. For those sellers who do bring their house to the market, this area has gone back to standard practice of negotiating off list price. Rather than assuming you’ll get multiple offers and sell well above list, buyers are now more thoughtful and slower moving, resulting in an average of 3% off list price - historically standard from this area.
All things considered, this market continues to be strong and steady, and we anticipate this to continue throughout 2023. We’ll likely see our usual uptick in new listings after the New Year - especially in the summer - but we don’t anticipate seeing a plunge in prices like many buyers hope for. It’s looking increasingly likely that the prices set during the past couple of years will hold through the next market cycle.
The market etched up across the Peninsula this quarter, coming in at 143 closed escrows and $437M in the third quarter. The bottom of the market ($2M and below) continued to drive the local market forward, representing well over half the deal flow. However, sellers had to adjust prices to account for rising interest rates - we saw an average of 2% discount off list price which is not something we've seen in a while.
Pacific Grove has shown continued strength with 51 sales, which is down a bit from this quarter last year, but also a nice rebound from the 31 deals that closed in the first quarter.
Carmel slowed a bit this quarter with 44 deals but was fortunately lifted by some new inventory that hit the market in the Golden Rectangle, which represented 14 of the 44 deals this quarter. Pebble Beach bounced back with 32 sales this quarter with demand being heaviest at the bottom of the market, which drove overall investment down to $112M. However, Pebble's numbers can fluctuate significantly if a few oceanfront and golf front sales roll through, so we don't see this as a real trend in demand - if anything it is driven by a lack of quality inventory at the top of the market.
The top sale of the quarter was in the Carmel Highlands, which came in at $40M and is proving that oceanfront in the Highlands can compete with oceanfront in Pebble Beach. We are starting to see demand taper in the Valley, with Quail and the Preserve dipping in activity (1 and 3 sales, respectively in 3Q22). Carmel Valley Ranch was the exception to this, with 5 units sold this quarter, up from the 3 last quarter. This is most likely because the Ranch still has listings below $2M, something that's unheard of in Quail and the Preserve.
Overall, we're seeing prices start to level off and stabilize, albeit at elevated levels compared to before 2020. The median sales price so far in 2022 is $2.22M, compared to $1.98M last year and $810K in 2012. This quarter's median sales price is down to $1.9M, showing the rate at which it's leveling off and pulling down the median for the year. Historically, we've seen prices appreciate at about 10% a year on the Peninsula but will likely see a lower appreciation rate next year as it will take a while to replenish the buyer pool with less competition between buyers for listings.
As predicted last quarter, buyers have begun to pull back from the levels we saw over the past two years, resetting their expectations back to historic norms. However, the biggest challenge we’re seeing right now is that there is a clear disconnect between buyer and seller interpretations of the current market. Sellers still believe they’ll get numbers we saw in the beginning of the year and buyers are overestimating the market correction right now, as we’re not seeing prices fall precipitously. Nor do we anticipate a major correction in looking at the data. We anticipate that this gap in expectations will continue to stretch out days on market through 2022 and cause prices to level off.
There is a lot of news about recession and market corrections, so it’s appropriate to look at similar market cycles in this area when approaching an investment decision. Due to our substantial dependency on tech money from the Bay Area, the most likely comparable market correction was in the 2001-2002 dot-com bust, when we saw the drop-off in sales last about 2-3 quarters, representing a 43% drop in activity. However, the median sales price in 2001 dropped just 13%, increasing in 2002 by 7% and continuing to increase for the next 5 years. So if there is a window it’s likely to be a brief one, with values bouncing back within 1.5-2 years. Additionally, the price correction doesn’t necessarily work its way up the food chain. In correction years, we saw an immediate drop-off of available premium product; there were only 2 sales on each of the following in 2001: Scenic, MPCC frontline, Pebble Beach Golf front and Oceanfront. Nothing on the ocean or golf front in Pebble sold in 2009. One can conclude that sellers at the top of the market do not need to sell and can afford to wait out temporary declines to sell premium properties.
Additionally, the higher interest rates have made it more expensive for sellers to move, so we also anticipate restricted inventory at the bottom of the market through the end of this year, and hold until prices can climb enough for it to be worthwhile financially for sellers to move. When they do start coming to the market, the increased supply will be met with more buyers entering the market, driving strong price appreciation starting in 2023 and gaining speed the next few years. For example, prices jumped 24% year over year for two years straight in 2004 and 2005, and it’s likely we’ll see that kind of spike again.
At the end of the day, it’s helpful to remember that market cycles are a sign of a healthy market and looking at past cycles can help position you toward long term success. Each correction is a little different, but as one client told me a little while ago, “I’d rather watch the market cycle from Carmel Beach than my computer screen at home.” I couldn’t agree more.
The market has begun to taper a bit with deal flow coming in at 136 this quarter, down about 7% from last quarter and 12% from the first quarter of last year. As inventory continues to tighten, we’re seeing prices spike in the most coveted neighborhoods and elevate everywhere else. As such, the total amount invested in Carmel, the Carmel Highlands, Pebble Beach, Preserve, Quail and Pacific Grove actually leapt to $540M this quarter, which was up 10% from last quarter and 22% from the same quarter last year. The single question on everyone’s mind is just how sustainable these prices really are. This is where things get interesting…
In analyzing Carmel & Pebble Beach, this is the first time in over 30 years that we’ve seen three consecutive quarters of double-digit increases in median sales prices. However, it pales in comparison to the 59% spike we saw in 2000 or the 35% climb in 2004. The years that we have had a price decrease are those years that have had the fewest number of sales - under 210 to be specific. After the 2008 market correction, only 178 deals closed with a median sales price plunge of 23% in a single year. To effectively predict where prices will go in the near future, it’s more important to look at the number of new buyers entering the market than the total inventory. The 77 deals that closed in Carmel and Pebble this quarter is slightly above the 1Q average since 1998 and on-track to surpass 308 deals this year. Given this strong level of sustained demand we’re seeing in this area, we don’t anticipate a sudden shift in prices in the near future.
Demand is strong across the price spectrum right now with as many deals closing over $8M (12) as under $1M (10), with everything in the middle being very well balanced. Pebble Beach closed $232M in just 32 deals this quarter, which far exceeds the $176M into 52 deals in Carmel. The Carmel Highlands had a very strong quarter with $57M closing on just 9 deals, including one at $26M - a new record for the Highlands. In response to increasing demand, we have added a new team member, Kelly Savukinas, who focuses on Pacific Grove and wrote up that section of our report. PG surged to $51M in sales this quarter, in just 31 deals. Quail continues to hold steady with nearly $12M closing in just 4 deals and the Preserve had almost $10M in 8 sales. We have seen huge, unmet demand in Quail and the Preserve recently with Quail median sales price leaping 129% in a single year (compared to 33% overall).
As we enter our primary selling season of May through October, it will be very interesting to see how sustainable this buyer demand is.
It’s time for a change of perspective. Although it’s true that inventory is the tightest it has ever been, it’s equally true that more people have bought and sold homes in this area in each of the past 2 years than at any other time. Buyers need to adjust to seeing 1-3 homes when they come into town and moving quickly, rather than seeing 8-9 and taking a few weeks to decide if they want to move forward. Sellers need to understand that buyers are expecting the houses to be move-in ready and repairs made, otherwise we’re seeing a significant number of deals falling out of escrow. But, ultimately, a more accurate description of the market is that sale velocity has increased significantly over the past two years, with no change anticipated at this time.
There were 124 deals that closed in the fourth quarter across Pebble Beach, Carmel, The Carmel Highlands, Preserve and Quail markets generating $452.3M and bringing total 2021 investments to nearly $1.7B. Carmel led the pack with almost $203M closing this quarter, followed by Pebble with $196M, the Highlands at $24M, Preserve with $15.5M and Quail at $13.6M. The fourth quarter was stronger in both deals and dollars than last quarter, which is fairly common historically, but was lower than the fourth quarter of last year as buyers were snapping up excess inventory available at the time.
Prices have reached the highest levels on record, climbing 26% over this quarter last year to $3.01M. The Preserve led the pack with a median sales price of $5.43M as people continue to pay a premium for lots of space and amenities. Given the dearth of listings under $2M, we anticipate this median continuing to climb through 2022.
Sales are trending slower this quarter with just 102 sales across Carmel, Pebble Beach, the Carmel Highlands, The Preserve and Quail areas, which was the slowest third quarter since 2015. This slower pace was primarily driven by tight inventories and more cautious buyers. However, the anemic inventory levels continue to keep prices high, with $351M in sales this quarter, bringing total investments to approximately $1.25B in 2021. At this pace, we’re set to surpass the $1.49B sold last year and are holding at a solid three-times 2011 levels.
Median sales price surpassed $2.69M this quarter, up 24% from last year ($2.18M) and up 13% from 3Q19 ($2.38M). The market continues to be strong across the price spectrum, with more sales above $8M than below $1M. Additionally, we’re seeing homes in Carmel, Pebble and Quail Lodge area going above list price, on average, which is atypical for this region.
As we transition from a COVID-surge into a more typical sales cycle, we are seeing buyers get a bit fickle, with more deals falling through (13 so far this quarter in these regions). This is an important metric we’re tracking and are cautioning our sellers to treat each offer and deal carefully. Similarly, as summer comes to a close and we start to head toward our slower season, we are recommending to buyers to treat each opportunity carefully as it’s likely inventory won’t begin to truly replenish until next Spring or Summer.
The past four quarters have brought unparalleled activity in our area, with 648 deals closing for over $2B in sales. However, the peak in activity came in 3Q20 when 213 deals closed, subsequently tapering to about 145 deals the following quarters. This is still well above historic averages but it appears that the wave has passed us. The top of the market roared to life this quarter with 21 deals closing above $6M, including 15 north of $8M. However, we are starting to see demand plateau with buyer fatigue setting in and more travel options opening up again.
Pebble Beach has held the strongest in the area, with over $200M closed in each of the past 4 quarters, which is more than double what we normally see. Carmel has tapered a bit from the high we saw in 3Q20, but is still well above average in total investments. One of the bright spots continues to be the Preserve with over $100M invested in the past 4 quarters, including several sales at or above list price. The tight supply is even having a halo effect in the surrounding areas, pushing prices much higher out in Carmel Valley and Pacific Grove.
Although this market has been nearly impossible to predict over the past year, we are starting to see seller motivation coming from personal life events, rather than trying to time any market appreciation. Life is slowly returning to normal again.
The market tapered a bit in the first quarter across Pebble Beach, Carmel, the Carmel Highlands, Preserve and Quail. We're starting to see the market normalize again toward historic levels, with 119 deals closing this quarter, which is down 29% from last quarter but still 63% higher than 1Q20. The thrust of the demand we saw during the summer last year was in of second home purchases, but we're increasingly seeing full time buyers look to this market, across all of the regions we track.
These buyers continue to face tight inventory levels, which is keeping prices high; $378M was invested this quarter, which was down 28% from last quarter ($525M) but up 116% from 1Q20 levels. This continued demand has driven the median sales price across all regions up to $2.2M, which is 5% over last year but almost double that of 2011.
The top of the market continues to deliver, with 15 deals closing north of $6M, which matches last quarter but 5 times that of 1Q20 (3). Pebble continues to dominate this price bracket, representing 9 of the 15 sales this quarter, with Carmel closing 3, the Highlands getting 2 and the Preserve closing 1. The strength of the ocean view continues to be the driving factor in prices, with median sales price nearly 50% higher for ocean view properties, versus non-ocean view properties.
As of April 1st, Prop 19 became effective, which has implications for both legacy properties and transferability of tax basis. We had several clients work pre-emptively on their trust planning. If you have questions about this please feel free to reach out.
At this time, we don't anticipate any material shifts in demand or inventory levels for the next 6 months. We expect to see continued strong demand in this area for both primary and secondary homes, confronted by tight inventory levels throughout the area.
2020 finished off strongly in Pebble Beach, Carmel, Carmel Highlands, Quail and the Preserve with 167 deals closing in the fourth quarter for $525M, which is the second highest volume on record, behind only the third quarter of 2020. Overall, 2020 was the strongest year in history for this area, bringing in $1.49B in 507 deals, which is a 57% increase in invested dollars over 2019 and almost triple that of 2010 ($437M).
Demand shifted from Carmel Valley, which was particularly strong this summer, to Carmel and Pebble this winter.
The top of the market proved surprisingly resilient this quarter with 15 sales above $6M, continuing the momentum of the 19 sales in this price bracket that closed in 3Q20. In 2020 there were 45 sales above $8M, which is double that of last year (21) and 5 times the level seen in 2010 (8).
The $4-6M bracket was stronger this quarter with 24 sales, the highest ever for that price bracket and 2 more than last quarter. The bottom of the market continued to move, despite tight inventory, with 76 sales under $2M, which is down from 99 last quarter but 41% higher than 4Q19. The combination of tight supply and strong demand has resulted in increasing prices across the board with median sales prices increasing 16% overall this quarter.
As such, we’re anticipating more sellers testing the market either through a soft launch on the discreetly available inventory or coming live to MLS. There are some interesting trends we’re tracking in each region, so head to the full report for further detail.
This summer was a record-setting time for real estate in Pebble Beach, Carmel, the Carmel Highlands and Preserve with 209 deals bringing in over $610M in just three months. This brings 2020 up to 337 deals and $957M invested, which is already 1% higher than all of 2019 in total investments and double that of 2010 ($437M), and we still have one quarter to go. This surge of interest is particularly impressive considering there were just 3 deals that closed in May, bringing in a total of $3.9M.
All regions are up across the board this quarter with Pebble leading the pack with $249M into 69 deals, Carmel came in at $227M in 88, the Highlands had $67M in 23, Preserve with $55M in 24, and Quail closed $12M in 5 escrows. Although we saw a surge of interest in the market $2.5M or below earlier in the year, somewhat surprisingly, the top of the market took off this quarter and continues to show strength going into 4Q. There were 127 sales below $2.5M this quarter, which accounted for 61% of all deals this quarter (down from 66% in 3Q19 and 70% last quarter). The top of the market continues to be strong this year with sales north of $4M accounting for 21% of all deals this quarter and 16% last quarter (compared to just 8% of deals in 3Q19). We believe this is partially because we’re seeing more people move here for full time residences, rather than part-time vacation homes which typically come with a lower price point.
The brisk demand has had an immediate impact on prices with median sales prices climbing 22% compared to this quarter last year with a notable spike in Carmel (32% over 3Q19) and the Preserve (35% over 3Q19). We’re continuing to see very strong demand for both primary and second homes in the market still, with $167M already in escrow and set to close by the end of the year, in addition to strong buyer interest still circling. However, inventory levels are currently at about 30% of what we normally see right now so we’re definitely going to see deal flow slow down as we head into the holidays and into the first quarter.
2020 will certainly go down as a landmark year for change, both individually and as a community. The first half of this quarter was essentially locked down with just 3 deals closing in May across all of the regions that we track. However, it seems that buyers were spending that time re-evaluating priorities and their scenery, as we have seen a surge of demand come from the Bay Area at a pace never seen before. Frequently, the buyers are younger families looking to move down to our strong school districts and into larger, newer homes, at lower prices than what they can get in the Bay. We think this will have a significant impact on the culture down here as more neighborhoods are filling with full time residents.
This is colliding with our seasonal demand for vacation houses, so we’re seeing increased interest on both fronts. Given that more people are looking to drive to their summer homes (rather than fly for family vacations), the type of house they’re looking for is also changing – there’s a strong preference for a private pool, more land, access to trails and outdoor activities, and home offices. As such, we’re seeing demand increase across Pebble, the Preserve, and deep into Carmel Valley.
The stats included in this report only tell half the story as they represent those deals that went into escrow in May and were able to book in June. However, there have been 40 deals that already closed in July and another 78 set to close this year. We do not anticipate this pace to continue far into 2021 as the level of inventory, which was already tight at the beginning of this year, to continue to tighten and constrict velocity. For example, Pebble usually has approximately 93 active listings in the summer, across all price points, and currently only has 54. Similarly, there are only 8 active listings in the Golden Rectangle, where we usually see closer to 24 at this time of year.
It's safe to say that the second half of this year will be equally difficult to predict with a pandemic, election, and economic uncertainty on the horizon. However, we don’t anticipate the root drivers of this demand changing significantly at this time.
In the words of Kierkegaard, “Life can only be understood backwards; but it must be lived forwards.” In this time of great uncertainty, we wanted to take a moment to study the days following the 2000 and 2008 crashes as we look ahead to the rest of 2020. The first quarter of 2020 saw nearly $163M in 64 closed escrows across Carmel, Pebble Beach, the Highlands, Quail and the Preserve. The first quarter is frequently a sleepier time in our area, so it’s not surprising to see a drop in activity from last quarter and even with all of the turbulence of the past month, we’re only down about 8% in volume when compared to 1Q2019 ($177M).
Historically, we do often see a dip in activity and volume in the first year after a market crash, but that rebounded immediately the following year. For example, 2000 brought the biggest increase in deal volume going from 209 in 1999 to 406 in 2000. However, after the .com crash in 2001, that number fell to 226 deals, which is 44% less than 2000 but still an increase over 1999. The 2008 crash behaved similarly, but to a less exaggerated level; 2008 had 227 deals which fell to 202 the following year, but rebounded to 235 in 2010. Although this year is certainly different in many ways from any other, there is evidence to suggest that some version of this rebound will likely occur throughout this year and into next. Anecdotally, in speaking with our clients and other local agents, we haven’t seen any major price grinds for deals currently in escrow – some are asking for extensions to see how this plays out and others are excited to get it done so that the buyers can now enjoy this area immediately as a reprieve from their primary home.
From a pricing standpoint, the median sales price for this quarter was $2.17M, which is up from last quarter and 1Q19 ($1.8M and $1.65M respectively) and the highest level we’ve seen in history. It is likely that we’ll see slower velocity across the entire price spectrum with the lower price brackets regaining traction faster than the top of the market. However, given that the current market is unique in that both buyers and sellers are simultaneously sidelined (rather than an influx of one or the other, which is what drives prices up or down) it’s too soon to know exactly what the impact on pricing will be. Even with everything that’s going on in the world, we’re seeing a surge in online activity of our website and are well positioned to rebound quickly with people looking for a vacation home that combines nature and privacy within driving distance, and families looking to move from the Bay Area to enjoy larger lots and great schools. It doesn’t take much to absorb our inventory, so this area might not play out the same way as Manhattan or San Francisco will.
We’ll be posting weekly updates on the market on our website and social media pages as we learn more but feel free to reach out with any questions.
With over 30 years of experience in the Pebble Beach and Carmel markets, they know the market – both the openly listed and discreetly available inventory. Together with their associates, they are uniquely qualified to offer the highest level of professionalism and service on the Monterey Peninsula.