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Rancho Santa Fe Real Estate: 2012 January-April Performance Summary

Rancho Santa Fe Real Estate: 2012 Q1 Performance

By linda sansone on Monday, April 02, 2012 3:03 PM
Overall, Rancho Santa Fe real estate (defined for the purpose of this analysis as all attached and detached residential properties listed with the San Diego Multiple Listing Service for the 92067 and 92091 zip codes as of April 1, 2012) is slightly slower this first quarter of 2012, compared to the first quarter of last year. Specifically, sales are down 14% from 57 properties sold in 2011 Q1 to 49 properties in 2012 Q1.

Rancho Santa Fe Real Estate: 2012 Q1 Performance

Overall, Rancho Santa Fe real estate (defined for the purpose of this analysis as all attached and detached residential properties listed with the San Diego Multiple Listing Service for the 92067 and 92091 zip codes as of April 1, 2012) is slightly slower this first quarter of 2012, compared to the first quarter of last year. Specifically, sales are down 14% from 57 properties sold in 2011 Q1 to 49 properties in 2012 Q1.
This decline in demand was not overlooked by potential sellers, resulting in an 18% drop in new listings. Falling supply along with the slower sales reduced average daily inventory 21% from 291 properties in 2011 Q1 to 231 properties in 2012 Q1. Generally, sellers took advantage of this reduction in supply by keeping their properties on the market 40% longer, waiting for the best price. This helped increase overall median sold price 9.7% from $1,937,500 to $2,125,000; however, it also extended the average overall marketing time to 11 months, an increase of nearly 100 days. Unfortunately, when we look at the performance of the subpopulations which make up the overall Rancho Santa Fe market, we begin to see the ambiguity of ‘median value’ as a sole performance indicator.

Original Listing Price: less than $3 million

Of all the three subpopulations that make up Rancho Santa Fe, properties having an original list price less than $3 million experienced the largest inventory decline than any other subpopulation. From 2011 Q1 to 2012 Q1, inventory declined nearly 30%. This decline occurred dynamically throughout 2011 from fewer new listing and sales. If we take a snapshot of 2011 Q1 and 2012 Q1, we can see the result of this slowing. In 2011 Q1, there were 102 new listings and 36 sold properties. In 2012 Q1, there were 90 new listings and 31 sold properties resulting in a -12% and -14% change, respectively.
While both supply and demand were decreasing, demand appears to have weakened most. Responding to this weakening demand, sellers kept their properties on the market 60% longer than they had only one year prior, bumping up average marketing time from 150 days in 2011 Q1 to 239 days in 2012 Q1. Unfortunately, waiting longer for a better offer was not enough to maintain 2011 pricing levels. Sellers also ended up more aggressively discounting their original list prices. In 2011 Q1, median discount from original list price was 10.9% versus 14.9% in 2012 Q1. Between lower starting original list prices in 2012 Q1 and more aggressive discounting, median value for this subpopulation declined 9.4%.
It appears that this subpopulation has given back some of the pricing strength it had acquired prior to 2011. Given that prior pricing strength and relatively lower inventory, I suspect we will see price stabilization start to take effect around current levels for this group.

Original Listing Price: $3 million - $5 million

Here is where we start to see the ambiguity of ‘median value’ as a sole performance indicator, as mentioned above, especially when applied to non-homogeneous properties like Rancho Santa Fe. Of all three subpopulations, this one, properties with an original listing price between $3 million and $5 million, was the only subpopulation to exhibit a median sold price increase when comparing 2011 Q1 to 2012 Q1. The ambiguity arises when we see that this subpopulation only represents slightly over 20% of the entire sold market for each of the two quarters and that its median price increase is less than the overall market.
What are important to remember when assessing this ambiguity are the definition of median value change and the direction of the other performance indicators of this subpopulation. Being a mid-point indicator, mathematically the median value change for the overall market can exceed the “change” of any subpopulation, but to further assess the positive direction of this change we can look to other variables that would corroborate it…and sure enough, they do. This subpopulation was the only one to maintain the same number of sales. The other two subpopulations’ sales declined. However, not only did sales remain steady for this subpopulation, but they sold 6% faster. All this occurred with 20% less inventory and essentially the same number of new listings. With these other indicators supporting seller strength, a positive median value change between 2011 Q1 and 2012 Q1 is most likely representative of this group’s quarterly annual performance. A key indicator to watch going forward is number of sales. If they can increase while keeping the other indicator strengths fixed or improving, we will see further directional strength for this group.

Original Listing Price: $5 million or more

Of all three subpopulations, this one had the largest percentage change in sales and marketing time. Sales declined 33% from 9 properties sold in 2011 Q1 to only 6 properties in 2012 Q1. Furthermore, the average marketing time doubled going from 328 days in 2011 Q1 to 717 days in 2012 Q1. While it appears that this marketing time extension allowed sellers to wait for a stronger offer, since median value decline was only 4.7% under such market weakness, one must wonder what price these sellers could have attained 717 days ago without incurring 2 years of market decline. Going forward, it appears that many potential sellers are waiting for some demand to come back into this subpopulation, since new listings have declined 67%. Given that this subpopulation has the largest percentage supply than any other subpopulation, 9 properties per every property sold, this is probably a wise decision, along with buyers insisting to see every property available that meets their criteria.


Copyright ©2012 linda sansone

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linda sansone

Blog for the statistical report for the year 2012