It looks like a very positive market year ahead for the local real estate here in Carmel and Pebble Beach. Even though there was lots of dismal news about the real estate economy in general last year, there was still lots of interest in the luxury home market here in Carmel by the Sea and Pebble Beach. It has been a buyer’s market here for about 4 years, which, I think, is slowly becoming a neutral market and that’s why I feel 2012 will be a better year than the past years. Of course, any unexpected severe political or financial crisis could tip the economy back into recession, and then all bets are off.
Philip A. White, president and chief operating officer of Sotheby’s International Realty, says “Our numbers as a brand are up year on year significantly.” While average sale prices are about flat compared with last year’s, says White, the company’s transaction volume [2011] is up from 2010.” “We think the reason the high-end market is doing well is [that] investors think this is the bottom of the market,” White concludes.
I speculate that the market in Carmel and Pebble Beach will get better for both sellers and buyers and generate more home sales than previous years. Prices appear to have bottomed out but home buyers and sellers continue to remain apart as to home valuations with home owners thinking their homes are worth more than the market is telling them. Most homeowners think that their home is worth more than the recommended listing price their real estate agent suggests, with some homes sitting on the market far longer than necessary due to an unrealistic listing price. A recent nationwide study by HomeGain showed that 68% of buyers think that homes are overpriced, with almost a third of buyers believing that homes are more than 10% overpriced.
Buyers, on the other hand, need to remember that all homes are different and not to rely on Zillow or other sites for valuation information. It’s misleading and, in some cases, totally unrepresentative of the actual home. Think about it, they have never been there to see the neighborhood, condition of the home, and any improvements made by the seller.
The only downside that I see is that the supply of luxury homes in Carmel and Pebble Beach still has excess inventory and will most likely stay that way for quite some time but with prices starting to stabilize. We will still have more homes sold as vacation home purchases than sold to full time residents.
“Luxury is the best performing segment of the housing market right now,” says Zillow.com chief economist Stan Humphries. Prices of $1 million-plus properties have risen 0.7% since February 2011, according to Zillow. Prices of houses under $1 million have fallen more than 1.5%.
“Luxury properties are drawing buyers from all over the world,” says CoreLogic’s chief economist, Mark Fleming. In addition, I anticipate an onslaught of new multimillionaires heading this way from Silicon Valley, where the resurgent market for initial public stock offerings is creating hundreds of new millionaires especially if the likes of Facebook go public. Facebook is widely expected to file a $10 billion IPO early this year. So, I expect the number of potential buyers for top-tier homes here in Carmel and Pebble Beach to grow dramatically during 2012.
Only time will tell…
