Strong Local Real Estate Market Continues 4th Quarter Dollar Volume Astonishing!!  2017 Year-End and 4th Quarter Report

First Published in the Carmel Pine Cone on February 2, 2018

If you have been following our reports over the last year you know that in spite of our musings that such good news (for sellers) and bad news (for buyers) could not go on forever, 2017 just kept rolling along with the drumbeat of success continuing vigorously. Neither up nor down markets are forever phenomena (what is?), but there are no signs of a pause yet. The second quarter’s large decline in dollar volume in Carmel-by-the-Sea, dropping to just over $40 million in what is normally the strongest quarter of the year, seemed, at the time, a portent of weaker sales to come.  But it proved to be an anomaly as dollar volume in both the third and fourth quarters topped a robust $60 million, and the strong market stayed the course.

Knocking your Socks Off

In fact, the dollar volume in the final quarter of 2017 was off the charts.  Normally the last quarter falls well short of the earlier periods, but in 2017 the final quarter topped them all with a cool $436,214,666 changing hands up 29% from the same period in 2016.  This was accomplished with 45 more transactions than last year, a significant increase of 19%. An oddity is that there were 42 more transactions in the second quarter than in the 4th, an expected difference because, as we pointed out above, the second quarter usually has the highest number of closings.  Yet with 42 fewer closings the fourth quarter topped the second in dollar volume by almost $30 million. Highlights of the quarter, in addition to dollar volume and an increase in sales, were: 

1.    Median sales prices up in six of the eight markets surveyed.
2.    49% of sales over one million dollars.

Ten Year Summary
Comparing 2017 with 2007 has a built-in unfairness as 2007, for most markets, was the peak of the crazy, no-doc loan craze that pushed prices through the roof and the entire world economy to the brink of ruin.  But here we go anyway, and you will have to make up your own mind as to the meaning of the comparisons. According to the Bureau of Labor Statistics the inflation from 2007 to 2017 was 22%.  If you tack on 22% to our median sales prices in 2007 you get some pretty hefty numbers. Just to break even with 2007 prices, in real terms, we find that the median prices in 2017 in selected markets should be:  Carmel-by-the-Sea, $2,154,280; Carmel Area, 
$1,891,000; Pebble Beach, $2,821,250; Pacific Grove $982,100. None of these markets reached those numbers in 2017.  Approaching it from the opposite tack, subtracting 22% from the 2017 numbers, you get the true value in 2007 dollars.  We will do just one, Carmel-by-the-Sea: median sales price in 2017, 
$1,691,750, reduced by 22% to give you the value in 2007 is $1,319,565, more than 
$400,000 lower than the median price sales price in that year (2007). Yikes!  It is too depressing to calculate and too geeky to understand fully.  Fortunately for most of us, we do not make these calculations and just live with the fact the value of currency continues to slide, and to make up for it we just need more and more of the stuff.  We may have bought a coke for a nickel as kids and yet think nothing about shelling out three bucks for one at a movie today.  True, today’s movie cokes are truly of an obnoxious size in comparison to their tiny forefathers, but we got a lot more liquid for the penny back then.

Dollar Volume
On to dollar volume:  Here, mysteriously, we have a slight gain in terms of historic value reaching and all-time peak of $1,458,362,707 in 2017, fully 25% higher than 2007 and a true gain of three percent. We love the ten-year charts as the period is long enough to provide a good idea of what has been happening here before, during and after a major economic set back. The dark side of the current picture is the large percentage million-dollar plus prices for, in some cases, starter homes has made affordability a stark issue for young people. If you are a home owner, just enjoy it.  For you, if you want to sell, times are good. Paul Brocchini and Mark Ryan are real estate agents with Carmel Realty Company, NE Corner of Dolores & 8th, Carmel-by-the-Sea.  They can be reached at either 831-238-1498 (Mark) or 831-601-1620 (Paul). The charts are based in whole or in part on data supplied by the Monterey County Association of REALTOR®s' Multiple Listing Service (MLS). Neither the Association nor the MLS guarantees or is responsible for their accuracy. Data maintained by the Association or its MLS may not reflect all real estate activity.  

Paul Brocchini and Mark Ryan are real estate agents with Carmel Realty Company, NE Corner of Dolores & 8th, Carmel-by-the-Sea.  They can be reached at either 831-238-1498 (Mark) or 831-601-1620 (Paul). The charts are based in whole or in part on data supplied by the Monterey County Association of REALTOR®s' Multiple Listing Service (MLS). Neither the Association nor the MLS guarantees or is responsible for their accuracy. Data maintained by the Association or its MLS may not reflect all real estate activity.