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) has improved strongly, if we compare the first three quarters of 2012 with the same time period in 2011. Inventory has declined 20.8% from a daily average of 310 properties in 2011 to 245 properties in 2012. This reduction in inventory resulted from fewer properties listed for sale and an increase in the number of sales. Within the first 9 months of 2011, 168 properties were sold versus 197 in 2012. The relative demand for properties has been so robust that average marketing time has declined 12.5% from 160 days in 2011 to 140 days in 2012.
Rancho Santa Fe Real Estate: 2012 January - September Performance Summary
The combination of tighter supply and stronger demand increased the overall median value by almost 15% from $1,850,000 in 2011 to $2,125,000 in 2012. Almost 5% of this increase came from sellers staying closer to their original listing price when negotiating with buyers. In 2011, sellers discounted their final sales price from their original list price by 14.95%; whereas, in 2012, sellers discounted their final sales price by only 10.61%. This 29.1% relative year-over-year percentage change essentially put 4.34% (14.95% - 10.61%) back into the sellers’ pockets. If inventory continues to stabilize at lower levels and demand continues to persist, we should start to see sellers, not only be willing to give up less off their original listing prices, but increase original listing prices as well.
Original Listing Price: less than $3 million
Properties with an original listing price less than $3 million remains the strongest submarket in Rancho Santa Fe. Median sold price has increased 11.1% from $1,534,550 in 2011 to $1,705,000 in 2012. Much of this valuation increase is contributed to a significant decline in supply. The average daily inventory for the first three quarters of 2011 was 164 properties compared to 114 properties, during the same time period, in 2012. Moreover, demand has increased as well. The number of properties sold in this 2011 period was 123 properties versus 133 properties in 2012. No longer am I seeing buyers expecting to find distressed sales in this submarket. Instead, I am seeing buyers, investors, and builders looking for properties that they can 1) move-in without work, 2) renovate, or 3) tear-downs for new construction. Hints of a normal market are emerging.
Original Listing Price: $3 million - $5 million
The lower end of the market was the first into the housing crisis, but is also showing continuous signs of being the first out. Recovery is percolating bottom-up. Consequently, this submarket, properties with an original listing price between $3 million and $5 million, has shown the second strongest median valuation increase of all three submarkets in Rancho Santa Fe. Median value has increased 8.2% from $2,912,500 during the first nine months of 2011 to $3,150,000 during 2012. Interestingly, the improvement in this submarket came more from strengthening demand, than tightening supply. The number of properties sold increased 28.1% from 32 properties during the first three quarter of 2011 to 41 properties for that same time period in 2012. Not only did more properties sell at a higher value, but they sold 36% faster. The average marketing time for properties sold in this 2011 time period was 197 days compared to 126 days in 2012. The biggest problem this submarket is experiencing is pairing properties with buyers’ desired property characteristics, given this submarket’s low inventory.
Original Listing Price: $5 million or more
While this submarket, properties with an original listing price of $5 million and greater, has improved, it has not improved across as many of its market characteristics as the submarkets below it. Inventory, new listings, and average marketing time have all remained essentially constant. The one variable that sellers have been waiting to see improve most has been the number of sales. In the past, limited demand has hampered this submarket from entertaining a representative inventory. Fortunately, it
looks like this submarket has turned that corner. When comparing the first three quarters of 2011 to those of 2012, the number of sales for this submarket has climbed an astonishing 76.9%. For 2011, only 13 properties were sold versus 23 properties in 2012. Besides this broad-based demand increase, median sold price also increased 4.1% from $5,075,000 in 2011 to $5,285,000 in 2012. Clearly, the increase in the number of sold properties did not come from price reductions. As a matter of fact, sellers discounted their final sales price from their original list price 13.9% less than they did in 2011. In 2011, the median discount from original list price to sales price was 25.31% compared to 21.79% in 2012, resulting in a 13.9% relative change or a 3.52% absolute change. Consequently, this recovery is not only broad, but demand driven.