A look at the most Competitive Price Points. What does it mean for Home Buyers and Sellers?
Multiple Buyer Types
The Monterey Peninsula is made up of several communities each with unique character and market dynamics for home buyers and home sellers. Certain markets and price points are extremely competitive with several different types of home buyers. These include: First time homebuyers, second/vacation homebuyers, investors for remodels (i.e. “Flippers”), and investors for rental properties.
Competitive Price Points
When homes come on the market below certain prices in each respective market they receive an offer(s) quick. A valuable “Competitive Price Point” metric for each market is the average of the median sales price.
- A “median price” is that half the homes sell above that price and half sell below that price.
- The metric of both “Six Months” and “12 Months” illustrates the moving competitive price point.
Illustrating the Point
To illustrate the point, let’s look at one market, Pacific Grove, and the properties currently under contract.
- As of August 4th in Pacific Grove there are 17 homes in escrow.
- The “Competitive Price Point” metric is $1,004,667 · 5 homes in escrow are above this ($1,095,000-$2,250,000,000) with average days on market of 126 days.
- 12 homes are in escrow below this ($345,000-$995,000) with an average days on market of 63 days – half of those above.
For home buyers and home sellers the main takeaways are:
Trying to buy a home below the Competitive Price Point requires a well-prepared and solid offer. This includes cash or all pre-qualifications complete so that you are ready to present an offer (with limited contingencies) right when the house comes on the market. For those above the Competitive Price Point, there is an inverse correlation as to how many potential buyers there are based on the price. As price increases, there is less competition (buyers) for the property.
For the same reason, trying to sell a home above the Competitive Price Point takes a longer time. Make sure to be transparent with all information and inspection reports to reduce any friction or opposition of why a buyer might object to writing an offer. For those homes priced below, having preinspection reports is also important, as you can expect a more active listing and having this information readily available for buyers helps invoke confident offers that maximize the value of your property. market observations across markets are that the median priced homes are selling relatively quickly; however, the premium and luxury home sales are slowing. This is compounded by more people listing homes at aspirational (i.e. too high of) prices. This is contributing to a large inventory of luxury Monterey Peninsula homes.
In addition to this report you can find monthly market reports on all of the individual markets at Market Info.
For a personal introduction to the different neighborhoods of the Monterey Peninsula and a business analysis of real estate, contact Mark Peterson at 831.238.1380 or Email.