1Q19 Market Update

1Q19 Market Update

Mike Canning

DRE#01004964 831.596.1171 mike@mikecanning.com

Jessica Canning

DRE# 01920034 831.238.5535 jessica@canningproperties.com

Ellen Krausse

DRE# 02046046 831.204.2204 ellen@canningproperties.com

Nic Canning

DRE# 01959355 831.241.4458 nic@canningproperties.com

Natalie Pitschke

DRE# 02041776 831.521.7363 natalie@canningproperties.com

Market Overview The local market had a nice rebound this quarter - despite the storms - and is building momentum as we go into the Spring. There was over $180M invested in Carmel, Pebble Beach, Carmel Highlands, Quail and the Preserve this quarter, which was up 16% from 4Q18 and matched 1Q17 investment levels. As usual, Carmel led the pack with $94M invested into 40 deals. Pebble Beach continues to see good momentum across the full price spectrum, with a total of $75M invested into 31 deals this quarter. The Carmel Highlands pulled back this quarter to just $3.7M invested, but we believe this is primarily due to the storms limiting access to the area and delaying marketing efforts. Demand remains strong for ocean view properties, so we anticipate this market will rebound going into our prime selling season. The Preserve has had six consecutive quarters with at least one sale and several more in the pipeline, so it appears that this market continues to gain momentum.

Quail Lodge is extremely active but the buyers are very price sensitive, so a well-priced home is selling on average of 2 days on the market, but if it’s slightly overpriced will sit for an extended period of time.

Overall median sales prices dipped 1% this quarter to $1.82M when compared to the $1.85M in 1Q18. Carmel actually climbed this quarter to $2.08M, up 7% from the same quarter last year. The other three regions saw a drop in pricing when comparing it to 1Q18. We believe one of the major drivers behind the Carmel prices is that people are increasingly demanding walkability from their homes which is something unique to Carmel in this area.

Across all regions, the $1-1.5M bracket accounted for 37% of dealflow, up 18% over 1Q18 and 7% from last quarter. Demand in this price bracket is competitive across all of the regions and we’re still seeing multiple offers on well-priced properties.

Although we have all had a long winter with the rain and the storms, we’re optimistic about a very strong 2Q, given the buyer demand and new inventory coming to the market that we’re seeing.

#1

Sotheby’s International Realty Team in Carmel

#2

Sotheby’s International Realty Team in California

Sotheby’s International Realty Team Nationwide

*Source: 2018 Sotheby's International Realty, Inc. internal rankings.

Featured Cover Photo: 36654 Highway 1, Carmel Highlands

#3

Market Insights

All Regions

Quarterly Sales by Region

Carmel

Sales Price Range

Carmel Highlands

Pebble Beach

Preserve

Quail

1Q18 Sales

1Q19 Sales

2017 Sales

2018 Sales

<$1.0M

14

8

52

40

21

89

$1.0M-$1.5M

21

28

103

102

20

82

$1.5M-$2.0M

19

6

85

80

12

56

$2.0M-$2.5M

7

9

42

47

8

32

$2.5M-$3.0M

12

9

29

32

5

19

$3.0M-$4.0M

11

8

39

40

7

27

$4.0M-$6.0M

7

4

26

28

4

18

$6.0M-$8.0M

8

3

9

19

2

7

$8M+

2

1

6

11

2

7

101

76

391

399

80

336

Total Sales

Market Overview

10 Year Ave. 10 Year Ave. 1Q Sales Annual Sales

1Q19 Update

All Regions

1Q19 Sales by Price Range

Median Sales Price ($M) 1Q19

Area

YoY % Change

$2.08

Carmel

7%

$1.85

Carmel Highlands

-38%

$1.22

Pebble Beach

-22%

$2.28

Quail/Preserve

-32%

$1.82

Overall

-1%

$8M+

1

$6M - $8M

3

$4M - $6M

4

$3M - $4M

8

$2.5M - $3M

9

$2M - $2.5M

9

$1.5M - $2M

6

$1M - $1.5M

28

<$1M

8

Total Annual Sales

Average Sales Price ($M) 1Q19

Area

YoY% Change

$2.36

Carmel

4%

$1.85

Carmel Highlands

-45%

$2.42

Pebble Beach

-11%

$2.54

Quail/Preserve

-25%

$2.38

Overall

-8%

Information believed to be reliable as obtained from the Monterey County Association of Realtors database and known off market transactions.

Market Overview

Pebble Beach Market Overview

After a tempered 4Q18 (26 Sales & $56.7M), Pebble Beachâ&#x20AC;&#x2122;s market rebounded in 1Q19 (31 Sales & $74.97M) â&#x20AC;&#x201C; surpassing its 10-year rolling averages for 1Q (30 Sales & $66.79M). This rise in activity was largely propelled by a robust market under $2M that coincided with an uptick in sales throughout the upper price brackets above $4M. The Central Pebble area gained the most ground from the previous quarter in both total transactions and dollar volume (increased by 5 sales & 30.7M) as ocean-view properties near the Lodge drew strong demand throughout 1Q.

1Q19 Sales by Price Range $8M+

1

$6M - $8M $4M - $6M $3M - $4M $2.5M - $3M $2M - $2.5M $1.5M - $2M $1M - $1.5M <$1M Total Sales

2 2 1 1 2 2 16 4 31

$74.97M Total Dollar Volume

31

Units Sold in 1Q19

110

Average Days on Market

$23M decrease $21M increase from 1Q18 over 4Q18

14% decrease from 1Q18

24% increase over 4Q18

25% decrease from 1Q18

20% increase over 4Q18

Conversely, the MPCC area experienced a mild tapering as transactions leveled-off (15 sales) and total dollar volume shrunk (-30%) from 4Q18. The dip in total dollar volume was due to the bulk of activity occurring in the $1M-$1.5M price bracket coupled with tightened inventory levels in higher price points.

Although total transactions accelerated in 1Q for the Upper Forest (+2 sales from 4Q18), most of those sales were lower in price, which recalibrated the median sales price from a record high in 4Q18 ($1.45M) down to $1.01M for 1Q. Compared to the same point last year, we have seen a small rise in inventory (+7%) and anticipate that number to balloon further in anticipation of the US Open this summer. All eyes on Pebble Beach come June!

Median Sales Price ($M)

Average Sales Price ($M)

Quarter

Median

YoY % Change

Quarter

Average

YoY % Change

1Q19

$1.22

-22%

1Q19

$2.42

-11%

4Q18

$1.58

-6%

4Q18

$2.17

-14%

3Q18

$1.88

9%

3Q18

$4.09

77%

2Q18

$1.45

-13%

2Q18

$2.32

8%

1Q18

$1.56

15%

1Q18

$2.73

34%

1Q19 Update

Pebble Beach

1Q19 Top Pebble Beach Sales 3317 17 Mile Drive $ 1 4 , 5 0 0 , 0 0 0 3187 Cortez Road $ 7 , 5 0 0 , 0 0 0 1531 Riata Road $ 6 , 7 9 0 , 0 0 0 3301 17 Mile Drive, #15 $4,376,000* 3301 17 Mile Drive, #5 $4,200,000 1545 Venadero Road $ 3 , 4 0 0 , 0 0 0 4064 Ronda Road $ 2 , 9 1 5 , 0 0 0 3961 Ronda Road $ 2 , 3 0 0 , 0 0 0 1412 Cantera Court $ 2 , 2 7 5 , 0 0 0 1030 Sombrero Road $ 1 , 9 5 0 , 0 0 0 *Represents a Canning Properties Group Sale

5.3%

Average % off list price 1Q19 Sales

9% decrease from 1Q18

4% increase over 4Q18

Quarterly Sales by Region Central Pebble Beach

MPCC

Upper Forest

a in m e r s ion t a in i t o g Ne e ntly tight t c onsis market.s this

Pebble Beach

Carmel

Market Overview

Carmel activity rebounded in the first quarter of 2019 with 40 closed escrows, up 29% over 4Q18 and the highest velocity of the areas we cover this quarter. Although all price ranges under $8M showed renewed strength this quarter, the $2.5$3M bracket had a standout quarter with 8 closed escrows, more than double what we saw in the fourth quarter and the most seen since 1Q18. The $3-4M bracket also had a very strong quarter with 6 closed escrows, which was triple what we saw in 4Q18 (2) and above the 10 year quarterly average (3). Buyers are heavily favoring finished product in the Golden Rectangle and a close walk to town as we see more Bay Area buyers looking for a similar experience to their primary homes in Palo Alto and San Francisco.

$94.27M

1Q19 Sales by Price Range $6M - $8M $4M - $6M $3M - $4M $2.5M - $3M $2M - $2.5M $1.5M - $2M $1M - $1.5M <$1M Total Sales

1 2 6 8 5 4 10 4 40

Total Dollar Volume

40

Units Sold in 1Q19

89

Average Days on Market

$22M decrease $26M increase from 1Q18 over 4Q18

22% decrease from 1Q18

29% increase over 4Q18

34% increase over 1Q18

42% increase over 4Q18

The top two regions this quarter were the Golden Rectangle (12) and Northeast Carmel (10) followed by Northwest Carmel (6) and Carmel Point, Hatton and Southeast Carmel tying at 4 sales in 1Q19. The Golden Rectangle had the largest rebound in 1Q19 with a 71% spike in deals over 4Q18 and returning to historic activity levels, matching 1Q18 (12).

Somewhat surprisingly, Carmel Point has had a lag in activity the past two quarter with a combined 9 deals closing, which is below the 11 that closed in 3Q18 and the lowest level seen in over 2 years. This is primarily driven by low inventory in that region, but weâ&#x20AC;&#x2122;re watching it closely.

It's good to see a strong rebound out of a lackluster 4Q18, especially considering all of the storms we saw this quarter which definitely slowed activity. We anticipate continued growth through 2Q as weâ&#x20AC;&#x2122;re seeing very strong buyer interest in Carmel right now. However, buyers are extremely price sensitive and if sellers try to test the market too much the property can sit on the market for an extended period of time.

Median Sales Price ($M)

Average Sales Price ($M)

Quarter

Median

YoY % Change

Quarter

Average

YoY % Change

1Q19

$2.08

9%

1Q19

$2.36

4%

4Q18

$1.83

10%

4Q18

$2.22

11%

3Q18

$2.21

24%

3Q18

$2.49

18%

2Q18

$1.9

3%

2Q18

$2.27

-3%

1Q18

$1.9

14%

1Q18

$2.27

9%

1Q19 Update

Carmel

1Q19 Top Carmel Sales Scenic 4SE of 13th $ 6 , 3 0 0 , 0 0 0 Carmelo 3SW of 11th $5,725,000 4 SE San Antonio at 2nd Avenue $4,400,000 Lincoln 3 NW of Santa Lucia Avenue $3,995,000* Lincoln 4 SW of 12th $3,775,000* San Carlos 2SE of 13th $3,700,000* 26185 Dolores Street $ 3 , 2 6 5 , 0 0 0 3450 Mountain View Avenue $3,050,000 Carmelo Street 3 NW of 13th Avenue $3,025,000 Monte Verde 5SW of 10th $2,975,000 *Represents a Canning Properties Group Sale

5.6%

Average % off list price 1Q19 Sales

57% increase over 1Q18

113% increase over 4Q18

ore m g n i see om. e r ' e W iating r o negot

Quarterly Sales by Region Carmel Point

Golden Rectangle

Hatton Fields

Northeast Carmel

Northwest Carmel

Southeast Carmel

Carmel

Carmel Highlands Market Overview

After a steady 4th quarter and strong 2018, the Carmel Highlands and Meadows areas stalled somewhat to start the year, producing just 2 sales and a cumulative dollar volume of $3.7M in 1Q19. This matches the quietest first quarters in the area’s 10-year sales history from a units sold perspective (1Q09 and 1Q11). Also worthy of note, we saw a 66.6% dip from the seasonally adjusted average of 6 sales as well as a 79.3% decrease from the 1Q average dollar volume of $17.9M. Interestingly, the median sales price in 1Q19 ($1.85M) contracted back to near that of 2013 ($1.9M). Keep in mind the median sales price hovered between $1.1M-$1.6M each year in 2009-2012 – when our market bottomed out – then recovered from 2013-2018 when it reached values in the $1.9M-$2.3M range.

$3.7M

1Q19 Sales by Price Range

Total Dollar Volume

$2M - $2.5M $1M - $1.5M Total Sales

1 1 2

2

Units Sold in 1Q19

230

Average Days on Market

$30M decrease $21M decrease from 1Q18 from 4Q18

80% decrease from 1Q18

75% decrease from 4Q18

44% increase over 1Q18

255% increase over 4Q18

The slowdown in activity is likely due to the particularly intense storms this season as mother nature created barriers to the Highlands with fallen trees, power outages, and road closures throughout the area. The lack of inventory has also become apparent as there are now just 16 active homes in the region – down 20% from this point last year (24 homes).

This has impacted both oceanfront and ocean view homes, and views are the key drivers for buyers in the Highlands. Now that spring weather has returned, enabling agents to obtain critical ocean view photos, we anticipate a spike in activity in 2Q19 and through the summer.

Median Sales Price ($M)

Average Sales Price ($M)

Quarter

Median

YoY % Change

Quarter

Average

YoY % Change

1Q19

$1.85

-38%

1Q19

$1.85

-45%

4Q18

$1.60

-35%

4Q18

$3.04

-5%

3Q18

$4.94

110%

3Q18

$6.42

193%

2Q18

$2.21

-25%

2Q18

$2.56

-17%

1Q18

$2.98

120%

1Q18

$3.34

72%

1Q19 Update Carmel Highlands

1Q19 Carmel Highlands Sales 195 San Remo Road 164 Spindrift Road A

13.4%

Average % off list price 1Q19 Sales

128% increase over 1Q18

$2,400,000 $1,300,000

289% increase over 4Q18

Quarterly Sales by Region Carmel Highlands

fting i h s e b Could ards a tow arket. s m this r e ' y u b ow l l o f l We'l c closely. metri

Carmel Meadows

Carmel Highlands

Quail / Preserve Market Overview

The overall Quail & Preserve marketplace had a slower start to ’19 with 3 sales – finishing in total transactions below both 4Q18 (5 sales) and 1Q averages (3.8 sales). The sales prices remain high considering the volume, coming in 1% above averages - although 14% below 4Q18. There is seasonality to this particular sub-market with 1Q typically lag the rest of the year. Given the demand we're currently seeing, we anticipate a strong 2019.

Despite a rise in available inventory, the Quail Lodge market tapered below its 1Q averages (3.3 sales) with just 2 deals closing in 1Q. We’re beginning to see signs that the negotiation needle may be tilting away from a long-standing sellers’

$7.63M

1Q19 Sales by Price Range

Total Dollar Volume $3M - $4M $2M - $2.5M $1M - $1.5M Total Sales

1 1 1 3

3

Units Sold in 1Q19

2

Average Days on Market (sold)

$6M decrease $1.25M decrease from 1Q18 from 4Q18

25% decrease from 1Q18

40% decrease from 4Q18

99% decrease from 1Q18

98% decrease from 4Q18

market as Quail’s active inventory saturates further (218.5 average days and counting) and cancellation rates rise (2 deals fell through this quarter).

The Quail Meadows market is on target to hit the annual transaction averages (2.9 sales) with 5482 Quail Meadows Drive in escrow due to close early in 2Q. With all three properties in the ‘Meadows listed or in escrow above $4M, we’ll likely see the median sales prices for that area remain above the $4M threshold for another year.

The Preserve has continued it’s stretch of 6 consecutive quarters with at least one sale and we have seen very strong demand to suggest increased momentum through 2019.

Median Sales Price ($M)

Average Sales Price ($M)

Quarter

Median

YoY % Change

Quarter

Average

YoY % Change

1Q19

$2.28

-32%

1Q19

$2.54

-25%

4Q18

$1.75

-4%

4Q18

$1.78

-16%

3Q18

$1.79

-22%

3Q18

$2.18

-5%

2Q18

$1.97

-25%

2Q18

$2.23

-22%

1Q18

$3.38

-40%

1Q18

$3.38

-7%

1Q19 Update

Quail / Preserve

1Q19 Quail / Preserve Sales 5 Red Trail Trace $ 3 , 9 2 5 , 0 0 0 7044 Valley Greens Circle $2,280,000 8071 Lake Place $ 1 , 4 2 5 , 0 0 0

2.4%

Average % off list price 1Q19 Sales

88% decrease from 1Q18

57% decrease from 4Q18

Quarterly Sales by Region Preserve

Quail Lodge

priced t l l e W duc o r p y qualit ins in rema and. em high d

Quail Meadows

Quail / Preserve