Low inventory levels continue to be our biggest issue. As of April 13, 2023 in 92130 there are two single-family homes for sale under $2,000,000. Between $2,000,001 and $8,000,000 there are a total of 21 single family homes for sale. To put some perspective on the demand relative to the price we just sold a property in the subdivision of Sausalito where we received 18 offers and we are in escrow considerably above the listed price. We also listed a home in Alta Del Mar at $4,699,000 and we have that home in escrow in less than a week. A very high demand and no inventory. 

  When the federal reserve raised the interest rates in June 2022 a lot of buyers moved to the sidelines and decided to wait. Those same buyers are now back in the marketplace. The buyers have become very picky in what they’re willing to purchase. They are ready to buy if the right property comes on the market. The current market is more attractive to the buyers because statistically we are down 23.6% in the median sales price as of March 2023 compared to March 2022. The downside for the buyers is that the interest rates have increased substantially since July 2022.

  I started selling real estate in the ZIP Code of 92130 in 1987. My son Taylor joined me as my partner in 2016. Over the last 35 years we have had the privilege of helping thousands of individuals build wealth and achieve their real estate goals. Please call, text, or email us for a private consultation on how we can help you build wealth and achieve your real estate goals.  

Statistically we are beginning to feel the brunt of these high mortgage interest rates. 30 year mortgages on jumbo loans were over 5.9% this morning. Our median sales price in 92130 is down 19.3% over a year ago. The days on the market have gone from eight days in February 2022 to 55 days in February 2023. Despite all of this I still am receiving multiple offers on most of my listings. Buyers are much more aware of the current prices and are not willing to pay a ridiculous premium as they were willing to do all the way up until June 2022 when the feds doubled the interest rates. I believe the reason we have only dropped 19.3% in the median sales price is because inventory levels are still low. Only time will tell. 

As of this morning, there were only 20 detached houses for sale under $5 million in the entire 92130 ZIP Code. That’s a very small amount. Properties are remaining on the market a little longer than they have in the past, however, sellers are receiving multiple offers on their property. The higher interest rates seem to be affecting the first-time home buyer but are not necessarily a deterrent for the seasoned buyer. Only time will tell.

Onward,

Richard

WHAT SELLERS CAN DO TO FURTHER ENTICE BUYERS:

2-1 BUYDOWN: A 2-1 buydown program is a type of financing offer to reduce your interest rates for the first two years of a mortgage. If you opt for a 2-1 buydown, that means as a buyer, your interest rate is reduced by 2% the first year and 1% the second year. By the third year of the mortgage term, the interest rate goes back to the original interest rate on the loan. But with a 2-1 buydown, buyers have reduced payments for the first two years.

3-2-1 BUYDOWN: A 3-2-1 buydown mortgage is a type of loan that charges lower interest rates for the first three years. In the first year, the interest rate is 3% less; in the second year, it’s 2% less; and in the third year, it’s 1% less. After that, the borrower pays the full interest rate for the remainder of the mortgage. For example, with a 6%, 30-year mortgage, the interest rate would be 3% in year one, 4% in year two, 5% in year three, and 6% for the remaining 27 years.

The real estate market this year has certainly defied all reason. Compared to last year at the same time. Between January 1 and August 31 the median sales price is up 29.06%. And although the news keeps saying there’s not enough inventory, what I think they’re saying is there’s not enough inventory for the increased number of buyers. I say that because the number of sales on single-family homes in 92130 from January 1, 2021 until August 31, 2021 is up 24.3%.

What does that say for the rest of the year? I think the real estate market is going to remain strong through the end of the year. The next four months will remain a strong sellers market. After the first of the year it’s anyone’s guess. The good news is that if you buy what you want and you don’t speculate you’re going to be very happy 10 years from now. It always works that way.

Inventory levels in Carmel Valley continue to be extremely low. Lower than I have ever seen them in the last 33 years I have been specializing in the sales of homes in 92130. According to Housing Wire magazine, “America’s housing market is undersupplied by 3.3 million units, and the shortage is getting worse every year”, Freddie Mac said in a report on Friday. “New housing supply is not keeping up with rising demand,” said Sam Khater, Freddie Mac’s chief economist, who said the shortage is increasing by about 300,000 units a year as homebuilders fail to keep up with demand.

Many factors lead to a lack of inventory, although I believe the changes that were made by Fannie Mae and Freddie Mac after the last recession have Led to this lack of inventory. Although I thought that this year housing prices would flatten out, I seem to be wrong. Because of the lack of inventory and the low interest rates, I believe the demand and appreciation will be strong during 2020 in Carmel Valley and the entire ZIP Code of 92130.