As always, it’s hard to believe another year has come to an end. Bit of a tumultuous one with the presidential election, fiscal cliff and all. Despite all the turmoil, the real estate markets in Pebble Beach and the prime parts of Carmel enjoyed a very solid year; absent some extraordinary macro-economic event, in our view, 2012 will prove to be the turning point in the market cycle locally. Of course, there were important nuances in the data we’ll expand on below.
We’ve attached our year-end summaries of the Pebble Beach and prime Carmel markets (Golden Rectangle and Carmel Point) – this data is updated weekly on our web site for the true market aficionados. A number of observations and comments:
· The lower two price brackets ($1.0M-1.5M and $1.5M-2.0M) were red hot, likely benefitting from the incredibly cheap cost of long term capital and a fair number of distressed or bank-sellers highly motivated to sell. Both of these brackets also currently have extremely low relative inventory levels; we see prices firming here in 2013.
· The $2.0M-2.5M bracket tied a ten year record with ten sales and, with 4 homes on the market, also enjoys a strong supply/demand balance.
· The market begins to average out going north of $2.5M but shows greater strength in the $4-8M bracket, with 9 sales and 2 pending; that said, with 20 homes on the market in that bracket there are clearly some headwinds and mixed signals going on there – we see discounting ahead for the $4-8M bracket to stimulate demand.
· There were 2 sales north of $8M, both of which we handled at $10M and $10.5M; encouraging to see, but also worth noting that we haven’t seen a sale above $11M since our $18.75M sale by the Beach Club 2.5 years ago. That part of the market is drawing lookers but no one has pulled the trigger in a long time.
· If you include Pebble Beach sales below $1M closed sales were at the highest levels since 2000.
· While somewhat slower than Pebble, Carmel also enjoyed a very solid year. Like Pebble, it was red hot in the $1.0-1.5M bracket with 24 sales, nearly doubling the historical record. With only 6 properties on the market in this sector we see velocity remaining high and prices also firming; as an aside, there are currently zero listings priced below $1.0M.
· North of $1.5M the market basically held to the ten year average and year-to-date sales matched last year, continuing a positive trajectory from the decline in 2006.
· While matching the ten year average, the $4-8M bracket is swollen at 13 properties, essentially a 2 year supply. We expect larger gaps between ask and sell prices in this bracket for some time as inventory reaches a better balance with demand.
We’ll be rolling out a number of enhancements to our web site in the next few weeks: integrating the 2013 calendar with local event information, adding a newly listed section, adding multi-language functionality, expanding our review of local restaurants and adding a live weather feed. Please give it a look and let us know what you think.
We hope the holidays treated you well and that 2013 is a healthy and prosperous year.
All the best,
Mike & Lynn