According to The C Group’s December Market Update for Carmel and Pebble Beach, the real estate market is currently experiencing a slowdown, but this is not a cause for concern. In fact, it presents an opportunity for investors, developers, and homeowners alike. The update, delivered by Melissa Chernetsky, explains that fluctuating interest rates, low inventory, the holiday season, and extreme weather conditions have all contributed to the market slowdown. However, the pent-up demand is creating an opportunity for those who are able to capitalize on the market conditions.
Currently, interest rates are around 6.25%, and inflation is reported at 7.1%. The C Group expects inflation numbers to continue to slow down in 2023, which will reduce interest rates. If interest rates swing back to five and a half in the spring of 2023, multiple offer situations on all well-priced move-in ready homes can be expected. This presents a significant opportunity for investors and developers who are following Warren Buffett’s advice to be greedy when others are fearful.
On the Monterey Peninsula, there was a 61% decline in closings in December, with 53 compared to 137 last year, and a 23% decline in new listings with 48 compared to 62 last year. Pebble Beach and Carmel had a total of 13 new listings and 16 closed sales, which represents a 65% decrease in closed sales year over year and a 38% decrease in new listings year over year.
The lack of inventory moving forward still represents a huge risk to the market as homeowners are flush with equity and sellers are hesitant to list their properties for sale, fearing they do not have anywhere to go. This lack of inventory will continue to put upward pressure on prices as the supply will never really meet the pent-up demand. This presents a challenge for buyers in the market but also an opportunity for those who are able to capitalize on the current market conditions and invest in property. Developers who can turn around product fast and offer it at competitive prices while timing the market for the homes to hit in the early spring will see a huge payoff in profitability.
In conclusion, The C Group’s December Market Update highlights that the current slowdown in the real estate market presents an opportunity for investors, developers, and homeowners. It’s important to keep an eye on interest rates and the lack of inventory, as these factors will continue to have an impact on the market in the coming year. If you’re buying, selling, or investing in Carmel or Pebble Beach, it’s best to reach out to The C Group for expert guidance and market insights.