1Q2023 Market Update

As the insatiable demand driven by the pandemic has eased, we’re increasingly seeing a return to sound economic decision-making and fundamentals. Our market peaked in the second quarter of 2021, gradually easing as all conceivable inventory was snapped up. The deceleration continued as the Fed intervened with rising rates in 2022. This has resulted in a drop in dealflow from 309 (2Q21) to 162 (3Q21) to just 125 this quarter and last. However, it is looking increasingly likely that the bottom of our market was over the holidays as demand picked up significantly in January and February with new buyers venturing into this area and starting their search. Unfortunately, we were hit by two storms simultaneously in March: a series of atmospheric rivers made this area nearly inaccessible, and a banking crisis erupted, impacting a significant proportion of this area’s key clientele. As such, we believe that this quarter’s numbers are disproportionately low and we anticipate a very strong 2Q23.

Buyers are taking a more subjective approach to real estate than they did in 2020-2021, which is resulting in more days-on-market and a very hit-or-miss effect on which properties move and which ones don’t. Some people are willing to make a move immediately, whereas others are either hoping for prices to fall or are still in a learning mode about the nuances of this area. This is resulting in an uneven rebound in this area. The $309M invested this quarter is down 11% from last quarter ($347M) and half what it was in 1Q22 ($615M). However, both Pacific Grove and the Carmel Highlands posted strong gains this quarter (19% and 26% increases, respectively). Pebble Beach, which dipped to $104M from $117M last quarter, had a strong increase in the number of sales (mostly driven by a surge in MPCC deals). Carmel had a similar quarter with $92M closing (down from $103M in 4Q22), with particular strength in the $4-6M price bracket. The Preserve has more demand than supply at this time, resulting in a slow dealflow quarter but strong price appreciation when things do come to the market. Carmel Valley Ranch surged back to life this quarter with fresh inventory, bringing in $6.5M in sales as the market continues to favor move-in homes by nice amenities. Monterey had a fairly strong quarter with 27 deals closing for $34M, which is down just a notch from last quarter. Monterra & Tehama also had a slower quarter with just 2 sales, but this is mostly due to a lack of inventory as we’re seeing strong interest (with multiple offers) for both land and houses in that region.

Rising interest rates did soften average home prices, going from a peak of $1.998M in 1Q22 down to $1.675M in 3Q22. However, as buyers have adjusted their expectations on interest rates and new buyers have entered the market, we already climbed back up this quarter to $1.897M. We’re still off the peak that we saw in 1Q22, but it’s increasingly likely that the gains that homeowners saw during COVID will be retained as we continue to bounce back this year.

Our summer season is always an important, and telling one, so it will be interesting to see how these new buyers respond to more inventory that’s on its way.

Median Sales Price ($M)

1Q2023 Sales by Price Range

Average Sales Price ($M)

Total Annual Sales

Quarterly Sales by Region

Pebble Beach Market Overview

As the Central Coast weathered one of the heaviest rainfall seasons in recent history, the Pebble Beach housing market struggled to build momentum in the first quarter of 2023 with just 31 sales invested in a total of $104.1M. Although transactions rose slightly from the previous quarter (+29% QoQ), total dollar volume dropped (-10.7% QoQ), which was due to a slowdown in deal flow at the top of Pebble’s market. More on that below.

With challenging storm-related conditions, it was difficult for Sellers to present their homes optimally for sale which delayed a percentage of homes from coming to the market this quarter – further squeezing the already thin housing supply. To put this into historical perspective, Pebble’s inventory levels have hovered at around 30%-35% of historical capacity over the past year. We do anticipate as the weather improves throughout Spring to see an uptick in listings coming to market for our peak selling season.

Even with the volatility in the Bay Area’s financial sector and an absence of Buyers who were traveling to enjoy the incredible snow this year, Pebble’s market was resiliently steady throughout the quarter. Property values held firm – signaling healthy consumer demand and a competitive marketplace, especially for the ocean-view homes and highly sought-after locations. By the numbers, the 1Q median sales price for Central Pebble Beach, MPCC and the Upper Forrest areas climbed to $8.17M (+6.7% QoQ), $2.5M (+6.1%) and $1.89M (+5.5 QoQ) respectively.

Interestingly, as mortgage rates dipped as a result of the uncertainty with banks, we saw a rise in loan-based deals in Pebble Beach – up to 35% compared to just 15% last quarter. Worth noting, the majority of those deals were concentrated in the lower price brackets below $2.5M. We’ll monitor these trends to see if we return to a higher percentage of cash purchases if rates climb throughout the 2nd quarter.

Except for the apex of Pebble’s market ($20M+), deal flow was mostly balanced across the price spectrum with the majority of activity occurring in the $1.5M-$2.5M and $3M-$5M price brackets. Deal flow in these price brackets reflected steady demand for Pebble’s entry-level market and areas surrounding MPCC – which continued to draw interest for those seeking to join or be close to this highly desired Club. Pebble’s high-end luxury market was subdued this quarter with 3 sales at $12.35M, $11.25M and $8.17M and no sales above $15M. It appears Buyers at the upper price points are taking a step back and waiting to see how things play out in the overall economy. Heading into the Summer season, it will be increasingly important for Sellers in the upper price points to price their properties thoughtfully if they seek to bring deals together with Buyers, who are taking a more cautious approach in the marketplace.

Nic Canning

Featured Property Photo: 3364 17 Mile Drive, Pebble Beach 336417Mile.com

Quarterly Sales by Region

Even with the volatility in the Bay Area’s financial sector and an absence of Buyers who were busy traveling to enjoy the incredible snow this year, Pebble’s market was resiliently steady throughout the first quarter.

Central Pebble Beach MPCC

Upper Forest

Carmel

Market Overview

The Carmel market slowed a bit this quarter, down to 24 deals and $93M in investments. This is about on-par with the rest of the Peninsula, which saw an 11% drop in investments over last quarter ($347M to $309M). The top of the market proved to be very strong in Carmel, representing half of all sales above $4M (8) on the Peninsula and a third of all deals in Carmel. Despite the slowing volume, we’re seeing prices appreciate not just in the Golden Rectangle and Carmel Point, but also in Northwest Carmel, which saw 2 deals north of $4M this quarter.

Although buyers are being thoughtful and are well informed about the macroeconomic challenges, there’s always demand for special, and that continues in the face of uncertainty. A marquee example of this is the sale of the Frank Lloyd Wright home, which we sold off-market in February. It is truly a landmark in our area and we were honored to be hired to represent the sellers of this remarkable property.

In the face of tight inventory levels, buyers are being a bit more flexible on location than they were in the past, with sales very balanced across all regions. Northwest and Southeast Carmel led the pack this quarter with 5 sales each for $16.5M and $16.7M, respectively. Carmel led the pack with $29.55M investments, primarily driven by the Frank Lloyd Wright sale. The Golden Rectangle also had 4 sales bringing in $16.8M and the highest median sales price of $4.15M (which is 50% higher than before COVID). Northeast Carmel raised $8.3M in 4 deals this quarter, which has the lowest median sales price in Carmel ($2.0M), showing buyer’s strong preference toward walkability to downtown Carmel and the beach. Rounding out the area is Hatton Fields, which had just 2 deals close for a total of $4.7M).

We’re already seeing increasing strength on the demand side with days on market dropping to just 21 this quarter and the discount off list price dropping to just 1% (from 3% in 4Q22). We do anticipate days-on-market to increase in 2Q as all listings that were on the market before the storm will have about three weeks added to their DOM, but that will be an anomaly. Given the new buyers entering the market right now and as we enter our primary selling season (which tends to kick off in May), we anticipate 2023 to end up higher than 2022.

Jessica Canning carmel specialist

Top Carmel Sales

Quarterly Sales by Region

Demand is picking up with days on market dropping and less negotiating room.

Carmel Highlands Market Overview

The pervasive slowing in the real estate market was felt early and dramatically in the last quarter of 2022 in the Carmel Meadows and Carmel Highlands markets, when we dropped from an average of 8 sales per quarter during the pandemic years, down to only 2 as we ended last year. What 2023 would hold was anyone’s guess. Indeed, to an already slowing market and rising interest rates, banks were failing, and the area was also hit with wave after wave of significant and damaging storms, adding further confusion to the question of where we were heading.

And yet, amid all that, the Highlands market managed to claw its way back to its average volume of quarterly units sold with 4 home sales to begin the year. On the other hand, the Carmel Meadows neighborhood is approaching a year since it has seen its last listing. But, back to the 4 sales in the Highlands last quarter: the numbers there seem to indicate that while most of the market took a pause (the current average days-on-market for the 6 homes that are still actively listed in the Highlands is now 116), value buyers swooped in and scooped up some rare deals, taking advantage of some renewed buyer-side leverage. Supporting that analysis is the fact that the average price of those 4 sales last quarter was $3.2M, which is half the average of all the sales in 2022 (just over $6M).

Where are these markets heading? While the answer to this question is still materializing, there are indications that at least the Highlands market is already bouncing back strongly. As of the writing of this report, our team just put our newest Highlands listing in contract in its first week on the market, and we have a couple other great properties that we will be bringing to the market soon. Therefore, overall, the first quarter of 2023 has been a positive start to the year for the Carmel Highlands market and we are excited to see what the next quarters bring.

Dave Reese

specialist

Quarterly Sales by Region

Carmel Highlands

Carmel Meadows

The Carmel Highlands was one of the few areas on the peninsula to show early signs of a strengthening real estate market.

Quail Lodge/Meadows Market

Overview

The secret is out: Quail Lodge has become one of the most desirable communities in Carmel. With its idyllic weather just beyond the coastal marine layer, lush and immaculate golf course nearby and close proximity to the world class restaurants and beaches of Carmel-By-The-Sea, Quail Lodge is one of the most coveted locations around.

As intimated last quarter, the numbers reflect that level of demand as the median sales price for Quail ($2.9M in 1Q) continues to stand above the world-renowned Monterey Peninsula Country Club’s ($2.4M in 1Q). This impressive statistic is a testament to the unique features and amenities that Quail has to offer – paired with a majority of sought-after single-level homes in the area.

There were two sales this quarter, a partially updated single-family residence at 8001 River Place that sold for $2.93M after being on the market for 23 days and a tastefully renovated condo overlooking the 5th green that drew multiple offers and closed at $1.495M (4.9% over list price). Worth noting it was one of the rare single-level units and it set a new record for the highest priced condo to sell within that condo complex.

Quail Meadows has seen zero sales since 2Q22 as Sellers have been reluctant to part ways with their luxury properties within that gated and coveted community.

Given the lack of inventory currently available (zero active listings), we’re hearing that there may be an uptick in off-market deals occurring as Buyers pursue opportunities not available on the market. We’ll track this trend throughout the second quarter and report on any off-market sales that may occur.

As we approach our peak selling season, which traditionally starts in May, we do anticipate to see a rise in active listings and will be eager to see how Quail’s market dynamics play out in Q2. With the supply-demand imbalance continuing in Quail, it will remain a Sellers’ market this Spring and Buyers can anticipate it to stay competitive – particularly for move-in ready properties.

Jessica Canning quail specialist

Quarterly Sales by Region

With the supply-demand imbalance continuing in Quail, it will remain a Sellers’ market this Spring and Buyers can anticipate it to stay competitive. On average, sellers are getting full price offers in Quail

Quail Lodge Quail Meadows

Pacific

As we close out the first quarter of 2023, we are still experiencing strong sales in the town of Pacific Grove. With the limited inventory available, we are still seeing multiple offers on houses that check all the boxes for those that want to call the Butterfly Town home.

The first month of the year had 8 sales with an average price of $1.2M, while in February we saw only 6 sales but an average price of $2.3M. March has increased sales to 17 sold, with the average price coming to $1.7M. This growth is consistent with the trend over the past few years, as the demand for housing in the area continues to outpace supply.

In terms of inventory, we remain flat from last quarter and compared to 1Q2022. The lean inventory continues to put upward pressure on home prices, as buyers compete for a limited number of available properties. The sum of home sales prices for 1Q2023 was $52M, increasing by 19% from 4Q2022 and up 1% from 1Q2022.

The average days on market (DOM) is 55 days, which is up 56% from 4Q2022 and up 30% from 1Q2022. This is a good sign for buyers, showing less of the buying frenzy we experienced last year.

Let’s take a look at some highlights from 1Q2023 for Pacific Grove:

• Q1 average DOM was 55 days with a total of 31 sales, average sales price of $1.7M

• Strongest area of sales was the Washington Park area, with a total of 11 sales, quickly followed by the Beach Tract with 10 sales

• Highest priced sale in Q1 was $4.25M on Ocean View Blvd

Overall, the first quarter of 2023 was another strong period for the housing market in Pacific Grove, with steady growth in sales and prices. While the limited inventory presents a slight challenge for buyers, the market remains attractive to sellers who can take advantage of the strong demand and favorable pricing. Even with increased interest rates, when priced right, inventory is moving.

If you would like a market analysis for your home or if you are looking to move to the quaint town of Pacific Grove, please reach out to me. Our team would love to walk you through our process!

1Q2023 Sales by Price

Top Pacific Grove Sales

1%

The Pacific Grove market is holding steady with a slight increase in pricing and longer days on market, making it still a great time to sell.

With many of us happy to close the chapter on 2022, I think we also cautiously braced ourselves for what the start of 2023 would bring. As the old adage goes – when it rains, it pours! And boy did it pour during the first quarter of 2023…literally and figuratively! While the Monterey market experienced the lowest sales volume we’ve seen in years (27) combined with paltry inventory levels, mother nature decided she wanted in on all the fun as well. While low inventory levels and speculation around interest rates were expected, there were many surprises that caused the first quarter of 2023 to be one for the memory books.

Although inventory in the Monterey market remained razor thin, Sellers began to adjust their expectations and the homes that did hit the market were priced more realistically. During the first quarter of 2022, homes were selling for an average of 2% over asking price, while during the first quarter of 2023 we saw homes selling for -1% under asking. Despite low inventory levels, this is a good sign as we are starting to see a more practical and sustainable market emerge.

As inventory levels remained low during the first quarter, we saw a competitive Buyer's market develop as demand outweighed the available supply. Houses priced fairly tended to consistently receive multiple offers throughout the first quarter of 2023 and many of the homes in the Monterey market sold after only a few days of being listed. During the first quarter of 2023 the average days on the market for Monterey homes was 27, down 6 days from the previous quarter and a small increase from the same time period last year. Keep in mind, however, that a good number of homes that sold during the first quarter were on the market for less than 10 days prior to going into escrow.

Wind, rain, fluctuating interest rates, bank crashes and continued speculation regarding the future of our economy seem to be key themes that sum up the first quarter of 2023. Overall, the first quarter housing market in Monterey has been marked by low inventory, resulting in a competitive market for buyers. Considering the historical ebbs and flows of the Peninsula’s housing market, hopeful optimism (and my grandmother) tells us that “this too shall pass.” As we move into the rest of 2023, it will be interesting to see if these trends continue and how the housing market in Monterey will evolve.

Spiro Pettas monterey specialist

1%

Despite low

levels, this is a good sign as we are starting to see a more practical and sustainable market emerge.

Carmel Valley Ranch

Market Overview

Happy 2023! I’m pleased to report that 1Q2023 is off to an exciting start with three home sales compared to how 4Q2022 wrapped up which had zero home sales. Aside from the tremendous amount of rainfall and treacherous storms we experienced in the first quarter, it sure did not deter buyers away from buying and sellers from selling.

This quarter, a notable sale occurred at 28061 Heron Court which was listed at $2.399m and ultimately ended up selling for $2.6m with multiple offers over asking after being on the market for a mere 2 days! This home was updated throughout, had gorgeous high ceilings, primary bedroom on the main level as well as fully fenced property, which is in high demand these days for buyers. The other sales occurred at 9943 Holt Road with a sale price of $2.15m (originally listed for $2.25m) and was on the market for just one week, and 9912 Club Place Lane for $1.725m (originally listed for $1.899m). The current average days on market for 1Q2023 is 5 days compared to 1Q2022 which had an average days on market of 11. Altogether, the average sales price in Carmel Valley Ranch for 1Q2023 is $2.16m and the total subregion equaled $6.475m. Currently, there is one active listing, a condominium at 9909 Club Place Lane that recently had a $100k price reduction to $1.599m and has been on the market for over a month.

With warmer, sunny days on the horizon, it will be interesting to see how the next quarter plays out. Ultimately, it’s still a seller’s market given low inventory and high demand. If you’re interested in entertaining the sale of your home or simply curious on current market value for your home, I invite you to connect with me to discuss any questions you may have. My team and I take pride in providing superior service to our clients and are here for you and any of your real estate needs.

Paige Colijn

carmel & carmel valley ranch specialist

by Price Range

3

Quarterly Sales

CARMEL

Santa Lucia Preserve Market Overview

The winter season brought double the annual average rainfall making it less than desirable and difficult at times for buyers to travel to see property in the area; however, the spring wildflower blooms will be magnificent, the Preserve hiking trails are vibrant with rushing water and the aquafers are replenishing. Spring will kick-off soon with the MemberProfessional Golf Tournament, Spring Festival at the Ranch Club and plenty of hiking, equestrian, swimming, and glamping activities around the corner.

It was a slow quarter with only one homesite sale closing at 40 Pronghorn Run for $575k (~50% off the average land sale price) overlooking the 4th tee of the Golf Course after over 2 years on the market, even though it had previously approved architectural plans and a nice southern view. Vacant land showings and sales significantly slowed with poor weather, and prolonged time and build costs, but we anticipate sales will pick up in the spring and summer as The Preserve continues to be a highly desirable destination with security and privacy, protected nature, world-class amenities, great weather, and over 28 homesites for sale.

No home sales closed in the quarter, but we put an architecturally significant redwood retreat in escrow after just 3 days that will close early May - list price was $6.595m. It’s a Hart/Howerton design with 5 bedrooms, 4/3 baths and is over 5780 square feet with a beautiful pool and spa near the redwoods and San Jose Creek, creating a serene setting. Inventory remains at all-time lows with one of the best homes listed at 19 Long Ridge Trl for $13M, compounded with buyers lined up ready to buy. Although the challenging geopolitical scene and macro-environment would lead one to think prices will fall, we have not seen a drop in prices yet but, instead, an increase by 15% in the year over year average. It remains a good time to sell in the tail-end of this unique sellers’ market as there are more buyers than sellers for this highly desirable world-class Community

We are honored to have represented the buyers of 40 Pronghorn Run and both the buyer and seller of the house in escrow at 42 Rancho San Carlos Rd.

Brian Keck preserve specialist

Featured Property Photo: 19 Longridge Trail, Carmel 19Longridge.com

Quarterly Sales

It remains a buyers’ market in vacant land sales

Average Home Sales Price ($M)

SANTA

As with most of the Monterey Peninsula, Tehama land sales were a bit slow in the first quarter of 2023 as buyers were coming out of the holiday season, and the disruptive weather patterns appeared to slow interest in the community.

There are currently nine lot listings in Tehama ranging from $2.1M to $3.5M, and one finished home listed at $11,950,000. There were a total of four sales in 2022 that recorded over $11M in sales of vacant land with an average sale price of $2,781,250. There are approximately 20 homes in various stages of development. There were no home sales in 2022.

Canning Properties Group currently has six Tehama lots listed for sale from that range from a $2,100,000 8-acre parcel with dramatic Monterey Bay and distant Santa Cruz Mountain views to a $3,500,000 parcel on 5.45-acres on the golf course among a grove of oak trees with water views as well located close to Tehama Golf Club. We have one lot currently in escrow and are excited to welcome a new family and a new home to add to the fabric of the community. Demand remains very strong for finished homes here in Tehama but finished homes are rarely available since it seems the more people spend time in their homes in Tehama, the more time they want to spend time and stay in Tehama.

Now that the rains have subsided and the landscape has greened up beautifully, we are sensing an increase in activity. With the re-launch of Tehama Developer lots, we anticipate seeing an increase in showing requests of our resale listings and look forward to closing some sales in 2023.

Photo: 7935 Cinquenta (Lot 96), Carmel

Brian Keck

tehama specialist

4Q2022 Sales by Price Range

Available Listings in Tehama 7935 Cinquenta (Lot 96), Carmel | 15.01 Acres | $2,595,00 12 Alta Madera (Lot 4), Carmel | 4.8 Acres | $2,575,00

8350 Tres Paraiso (Lot 73), Carmel | 8 Acres | $2,755,00

Tehama (Lot 10), Carmel | 15.43 Acres | $2,750,000

Generally speaking , home and land sales in Monterra Ranch slowed in the first quarter of 2023 due to Buyers coming out of the holiday season and then confronting the torrential atmospheric weather patterns we experienced on the Monterey Peninsula in February and March. We did see an increase in Buyer activity in the community prompted by our listing at 7548 Monterra Ranch Road. While that property may not have worked for potential Buyers, it provided them an interest in looking at some of our other listings. Several of these Buyers have been coming to Monterra for years now and have never bought, so this may be the year they finally commit to building the home they’ve been thinking and dreaming about all these years.

Canning Properties Group currently has ten lots listed for sale, two of which are in escrow. List prices of Monterra lots range from $795,000, for a 4.43 acre lot located in a private cul-de-sac surrounded by forest, to a $2,750,000 8.87 acre Ranch Lot with panoramic ocean views from the Monterey Bay to Pacific Grove and the Santa Cruz mountains.

There have been no home sales in Monterra in 2023 primarily because the only homes that were listed for sale were in the process of being built. Both are now cancelled until they are completed when they will come back to the market most likely priced between $4,500,000 and $5,500,000. Demand remains very strong for finished homes. There are several properties in Monterra that are investor owned and are being developed for resale. We have enjoyed watching them progress and look forward to them coming to the market in the next few months.

Brian Keck monterra specialist

CPG Estate Management

A New Division

We are excited to announce Canning Properties Group is expanding with a new estate management division!

Properties do not take care of themselves. Whether it is the natural elements or unwatched systems, your home needs oversight and proactive care. Canning Properties Group has been selling the very best in Carmel and Pebble Beach for 3 decades and our experience with high-caliber properties uniquely qualifies us to manage yours with the highest level of service. We understand this asset-class, and we have longtime relationships with the best vendors and service providers in the area. It would be an honor for us to take care of your home.

If you are interested in learning more about our Estate Management team and services, please reach out and we’d be delighted to meet with you.