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) continues to improve in 2013. When comparing the first quarter of 2013 to the first quarter of 2012, we see the recurring theme: stronger demand with less supply. The number of properties sold increased 20%. 50 properties were sold in Q1 2012 versus 60 properties in Q1 2013.
Rancho Santa Fe Real Estate: Q1 2013 Performance Summary
Supply declined by 17% when average daily inventory fell from 259 properties in Q1 2012 to 215 properties in Q1 2013. This increase in demand did not go unnoticed by sellers. Average marketing time declined 33%, from 336 days in Q1 2012 to 225 days in Q1 2013. While prices, overall, only edged up modestly by 1.2%, this increased sales activity attracted nearly 30% more new listings. However, when we look at the individual price submarkets in Rancho Santa Fe, we see that this overall market strength is coming primarily from properties with an original listing price less than $5 million.
Original Listing Price: less than $3 million
In Rancho Santa Fe, the biggest price gains occurred with properties originally listed for less than $3 million. The median sold price for this submarket increased 13.3% when comparing Q1 2012 to Q1 2013. This increase came from sellers starting with higher original listing prices and discounting those prices less than they did in Q1 2012. The medium discount given by sellers to buyers between original listing prices and final sales prices in Q1 2012 was 14.73% compared to 8.63% in Q1 2013. This accounts for nearly half of the median sold price increase between Q1 2012 and Q1 2013.
Furthermore, not only did properties sell for higher prices in this submarket, but more sold and faster. Sales increased 15.6% from 32 properties sold in Q1 2012 to 37 properties in Q1 2013. Average marketing time also declined by nearly 40%, from 244 days in Q1 2012 to 147 days in Q1 2013. Much of this strength came from a 23.8% decline in inventory. Going forward it will be important to keep an eye on the rate-of-change of inventory levels to median sold prices to determine how much of this submarket’s price gain is a temporary premium paid for supply shortage.
Original Listing Price: $3 million - $5 million
Properties with an original listing price between $3 million and $5 million had the largest percentage and absolute increase in the number of properties sold when comparing Q1 2012 to Q1 2013. Sales increased nearly 60%, going from 12 properties sold in Q1 2012 to 19 properties sold in Q1 2013. Sales also accelerated with marketing times contracting by 16.4%. Median sold price rose 8.3%, pushing the median sold price for Q1 2012 from $2,862,500 to $3,100,000 in Q1 2013. While this was a substantial increase, it lagged behind properties with an original listing price less than $3 million. Most of this lag occurred because this submarket did not have the inventory decline that the lower-priced submarket experienced. Daily average inventory declined by 12.7% when comparing Q1 2012 to Q1 2013.
With sales climbing, marketing times contracting, prices appreciating, and inventory shrinking, it looks like this submarket is finally making steady, broad, continued improvement. In the recent past, this submarket would capitulate while trying to form a floor. It appears we may have moved past those foundational challenges.
Original Listing Price: $5 million or more
The upper-end submarket in Rancho Santa Fe is the perfect example of price elasticity. Properties priced to sell are selling faster than they did last year with sellers negotiating closer to their original listing price. The average marketing time for properties sold in Q1 2012 was nearly two years or 717 days compared to 454 days for those properties sold in Q1 2013. The average discount off of original listing price to sold price was 34% in Q1 2012 versus 26% in Q1 2013. While the number of properties sold declined from 6 properties in Q1 2012 to 4 properties in 2013, this is not statistically significant to
conclude there was a decline in demand. There appears to be some segments within this submarket where over-pricing is creating pockets of inactivity, causing some sellers to take their properties off the market and thus slowing sales. For example, while there were fewer sales and more new listings, inventory continued to decline. The real estate recovery in Rancho Santa Fe has been bubbling from the bottom up. This submarket was the last to go into the decline and proving to be the last to come out of it. Hints of its recovery are showing as fair values become more broadly established.