These first few weeks in January have been sluggish with only 3 sales to date in Carmel-by-the-Sea. Looking back, 2012 was overall a very strong year. When you dissect the data further, the first 9 months were strong, with an especially healthy April through September, but we did see a slow down in the last quarter. With that said, the Monterey Peninsula market is a seasonal one. Typically, activity slows in the fall and winter months and our busy season runs May through October. This fall and winter season were certainly no exception. But are we seeing more than just a seaonsal slowdown? Many buyers moved to the sidelines in the fall with the election, new taxes proposed for 2013, the fiscal cliff and of course the holiday hustle and bustle. The new year has continued this slow pace as wealthy buyers appear reluctant and wonder how new tax laws will affect them. And now talk of another fiscal cliff doesn't help the uncertain environment. The lower end market (especially $1M and less) led the charge. Properties under $2M in Carmel, Carmel Valley and Pebble Beach sold in 4 months on average; whereas properties over $3M took at least 6 or 7 months to sell. In Pebble Beach, the first half of 2012 saw 7 closed sales over $4M. The last half - only 4 in that price category. And currently there is only one home in escrow in Pebble over $4M. Carmel has 116 properties currently "for sale" with an average marketing period of 193 days. Even though there are a number of "For Sales" signs up, much of the inventory is stale. The sellers that have been sitting on the market a while refuse to reduce their prices to meet the market - and it's hurting them. Unless of course they decide to hold it for a year - then I think it will be a different story!
The good news is that volume is picking up while buyers take advantage of our lower prices. Eventually, the dust will settle from the economic uncertainty and we'll get back to business as usual. The San Francisco markets are "hot" and as corporate profits increase up there, the demand for vacation homes will increase down here. Come summer, sellers should find themselves in a stronger negiotating postion since quality inventory is low. The highest demand remains in the Golden Rectangle of Carmel-by-the-Sea (Ocean Avenue to Santa Lucia and San Carlos down to Scenic) at $2M or less, and inventory is highly competitive in this category. Although it appears Q1 won't be too impressive, our selling season should be strong. Buyers and Sellers are on the sidelines now, either preparing their homes for market or educating themselves on current conditions. Even with the optimism, I warn sellers that now is not the time to be greedy. All offers should be taken seriously. Sellers need to come to market with a home that presents itself well (i.e. fresh paint, carpet, landscaping, etc) and is priced at market. If they do, they will find themselves in a stronger negiotating position than in years past.