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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Pebble Beach Market Action Index (Sept 2007)

Home prices are a function of supply and demand, and market conditions can be characterized by analyzing those factors. the Market Action 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. It takes into account the number of homes on the market, how fast they are being sold, as well as price drops.

If the Market Action Index falls below 30 and remains there, prices are likely in for a downward correction.

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.

How is the Market?

Across the Monterey Peninsula, the market can be tough on sellers at the moment.

There are buyers, but there is no sense of urgency to act. In times past, if a buyer found a house they liked they moved quickly to make an offer for fear it wouldn’t be available when they were next in town/fully ready to buy/or had sold their other home. A property for sale today will most likely be available days or weeks from now.

Most buyers are wise not to rush; to take the time to understand the pros and cons of a property. Many elect to wait in hopes that a more desirable property or better priced alternative will present itself. The exception is when there is excitement about a property and its price, both of which we are able to create on our 1265 Lisbon Lane, Pebble Beach property.

Pebble Beach Quartiles (Sept 2007)

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 Pebble Beach, saw a dip in median price earlier this year but has moved upward over the last few months. Meanwhile the second, third, and fourth quartiles have remained relatively flat.

A word of caution, there are only a few properties for sale in each quartile so a sale of one or two can skew the data.

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.

Pebble Beach Median Price and Sales (May 2007)

Pebble Beach is a good example of a market where one or two sales can dramatically skew averages. Properties in Pebble range from the $1,000,000 level to the tens of millions. The sale of one Estate property in a given month swings the numbers dramatically.

As with elsewhere on the Peninsula, the lower end properties are being negatively impacted while the upper end remains somewhat insulated.

Pebble Beach Inventory Creeps Up (April 2007)

Pebble Beach Inventory remains high. The seasonal dip of December hasn't held as inventory has climbed back to levels as high as we have seen in the last year. Sales were a bit off in April compared to the first three months of this year.

Pebble Beach Annual Prices and Sales

Pebble Beach Sales were off in 2006 from pervious years while average and median prices held.