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) looks stronger this year than last year. Comparing January through July 2011 to the same time period this year, shows that sales have increased 4% while inventory has decreased 20%. For those first seven months of 2011, 138 properties were sold whereas 144 properties in 2012. Average daily inventory was 161 properties in 2011 versus 113 in 2012. The result of this demand/supply change was an 11% increase in median value from $1,850,000 to $2,051,000.
Rancho Santa Fe Real Estate: 2012 January-July Performance Summary
Most of the inventory decline came from properties with an original listing price less than $3,000,000, while most of the valuation increase came for the middle price market, i.e. properties with an original listing price between $3,000,000 and $5,000,000. However, what was common across the overall Rancho Santa Fe market was that sellers have been pricing their original listing prices closer to their final closing prices than they did in 2011. This combined with overall lower inventory levels have contributed to creating a more robust market.
Original Listing Price: less than $3 million
This price group had the largest decline in inventory and new listings than any other price group. The average daily inventory for the first seven months of 2011 was 161 properties available for sale versus 113 properties for the same period this year. A reduction in new listings accounted for the majority of this 30% inventory decline. During this same time period, new listings fell from 233 properties in 2011 to 187 properties in 2012, resulting in a 20% decline in new market supply.
The demand for this price group has remained essentially flat. Sales for January through July 2011 were 94 properties compared to 95 properties in 2012. Nevertheless, despite flat demand, one would expect to see the median value for the price group to have increased, given the significant reduction in supply; yet, this was not the case. Median value actually declined 4.5%. Tougher underwriting guidelines have constrained borrowing, limiting the number of eligible borrowers, softening the market and holding back new inventory. Possibly as potential buyers see more economic certainty, more will step forward and consequently strengthen valuations in this price group.
Original Listing Price: $3 million - $5 million
This price group was the ‘rock star’ of all the price groups when comparing January through July of 2012 to the same period last year. Sales increased more than any other group in absolute and percentage terms. 24 properties sold during the first seven months of 2011 versus 32 properties in 2012. This represents a 33% increase in year-over-year sales.
However, not only did sales increase more than any other price group, but so did median value. Median value increased nearly 13% as a result of this significant increase in demand on a price group that also experienced a 15% reduction in supply. Average daily inventory declined from 83 properties in 2011 to 71 properties in 2012. This mix between more demand and less supply created stronger valuation within this group. It also reduced the marketing times by 24%. Average marketing time for properties sold during the first seven months of 2011 was 377 days, while it was 286 days for those properties sold in 2012 for the same time period. It will be interesting to see if the strength of this price group attracts more sellers during the remainder of 2012.
Original Listing Price: $5 million or more
Of all the price groups, this one has been the most challenged. It is the only price group to have a sales decline when comparing January through July of 2012 to the same time period in 2011. Sales declined 15% from 20 properties in 2011 to 17 properties in 2012. Not only did fewer properties sell, but they sat
on the market, on average, over 200 days longer. Average marketing time for this price group rose 50%, from 403 days in 2011 to 605 days in 2012.
The remaining statistics (Inventory, New Listings, Median Sold Price, etc.)have remained essentially flat after taking into account statistical noise. To be fair to this price group, much of its inactivity comes from a political environment wrestling with monumental economic-changing decisions here in the United States and more recently the European Union. Consequently, equity markets have been severely held back, anticipating resolutions that would create greater forward clarity. I’m afraid until then; this price group may be in somewhat of a limbo.