Pebble Beach Market Update

The median single family home price in Pebble Beach this week is $2,595,000. As with other Monterey Peninsula markets, Pebble Beach is firmly in the Buyer's zone. The increase in market activity we saw in the early summer seems to have faded.

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We are approaching the traditionally slower part of the year but I had hoped that we might have gone a bit longer without the fall off in activity.

Inventory
Inventory remains elevated. Some of the short decline in inventory is a function of sellers taking their homes off the market as we approach the holiday season.

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Market Action Index

The Market Action Index is 12 off a bit from past weeks. The MAI is a function of the number of homes on the market, the number of days on market, price reductions or increases, and number of sales. A score below 30 indicates a buyer's market.

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Again, the upward movement of the Index we saw in the summer has faded away and the index is in the low ranges that we saw in late 2006.

This doesn't mean that homes aren't selling or won't sell, but it does indicate that buyers are expecting sellers that are willing to negotiate and selling prices that are off from the numbers seen in the last couple of years.

Quartiles

Pebble Beach has such a wide range of price variability it can sometimes be useful to divide the market into quartiles (each quartile is 25% of the homes). Keep in mind that Pebble is already a relatively small market so when we look at segments the number of homes in each group can get small. If the number of homes is too few, one sale can radically skew the data.

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Nevertheless, it is interesting to note that earlier in the year Pebble's most expensive quartile was performing as well or better than the other 3 quartiles. In the last few months, the less expensive homes have been "hotter" while the more expensive estates are are not moving at the rate they were.

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Carmel Market Update

The median single family home price in Carmel this week is $1,762,500.

There are over 246 homes for sale in the larger Carmel area. The average “days on market” is 106 days. Of the 246 homes, 29 percent (71) have seen a reduction in price from their original list price.

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The Market Action Index is a very cool 11. An Index below 30 indicates a buyer’s market. While well priced properties are being shown, there is a lack of urgency on the part of buyers. The general sense is that a property that a buyer considers today will still be available days or weeks from now.

Market Action Index

Home prices are a function of supply and demand, and market conditions can be characterized by analyzing those factors. This index is a tool for measuring the balance between supply and demand using a statistical function of the current rate of sale versus current inventory.
If the Market Action Index falls below 30 and remains there, prices are likely in for a downward correction.


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If the Index is above 30 it typically indicates a “Seller’s Market” because demand is high enough to quickly absorb available supply. And, prices will usually rise as a result.
Carmel is firmly in the “buyer’s market” range. This does not mean that well priced homes won’t sell for near asking, but buyer’s are looking for value and expecting sellers to negotiate.

Market by Quartiles
In markets like ours there can be variability between the upper and lower end of the market. For example, the first quartile, the most expensive properties in Carmel, have tended to hold up against a slight downward trend on the part of the other quartiles over the last couple of months. The most recent data indicates that this upper quartile may again begin trending with the other three.

Inventory in Carmel at the moment is split fairly evenly between each of the four quartiles. The most expensive properties, in Quartile 1, are spending a bit longer on the market. The most expensive properties tend to be larger and younger, no surprise there.

Market Profile, Pebble Beach (Sept 2007)

The median single family home price in Pebble Beach this week is $2,695,000.

There are over 110 homes on the Pebble Beach market. The average “days on market” is 195 days. Of the 110 homes, 20 percent (22) have been on the market for more than nine months with 13 of those on the market for more than a year.

Thirty percent of the homes on the market have undergone a price decrease from their original list price.

This is a telling statistic.

I believe that it is far better to price a home well from the start than run the risk of chasing the market. Sometimes price decreases are necessary, but for them to have an effect they have to be substantial.