Almost 900 Northern San Luis Obispo County homes sold in 2008 and well over 1000 homes will sell in 2009. The bottom in velocity, number of sales, has happened and pricing is stabilizing. This report reviews NorthCounty sales for 2008 with a view into 2009.
Almost one third of the home sold in 2008 were foreclosures or short sale transactions. There were no shortage of buyers for these residential offerings and the foreclosure properties clarified pricing for the entire market Foreclosures will last into our 2009 market. The number of listed single family homes for sale, on less then an acre, is half of the inventory in December 2007.
With virtually no new construction and few lots for sale it is easy to see demand and supply coming into equilibrium. Demand can change overnight but supply takes time to create.
Median pricing for residential single family homes has stabilized in the $360,000 range. The unique nature of North County, a wide range of property types, makes sale price averages somewhat misleading. What we do know is that property values have been established by a number of buyers actively pursuing homes for sale. Many properties, at the lower end, experience multiple offers. With no new construction the market is relying on foreclosures and short sales for inventory. This situation will not last. Higher end properties are beginning to sell as distressed properties aggressively meet the market. The combination of lower interest rates, bigger loan values and lower prices will spark the high end market. Do not look for any upward price movement in 2009 .
There were a lot of spec homes built on 1-2 acres, with million dollar price tags, in 2005-2007. Many of these estate quality homes, that did not sell, have gone back to the banks. There are great buying opportunities in this category with pricing well below the million dollar mark. Bigger loan limits and cheap money make these estate homes affordable.
Acreage parcels, 10 acres and up, are a very thin market. This fact notwithstanding it is interesting to note the demand for quality Westside acreage. Pricing is very strong for Westside dirt. Premier areas and premier parcels, few and far between, still bring big numbers. The supply of vacant acreage parcels continues to dwindle.
The vineyard market is dramatically divided between the Eastside and the Westside. 2008 crop yields were light in all areas. Westside fruit sells for double, sometimes more, than Eastside fruit. Vineyard land values are equally divided between Eastside and Westside. Eastsidevalues have languished in the low $20K-25K per acre range with Westside figures up to $50K. Pricing for raw Westside dirt, especially plantable, fuels the aforementioned price points. Vineyard quality is also important. Wine sales are fair so demand for fruit should be firm in 2009. Many wineries are signing multi-year contracts. More vineyards will sell in 2009.
Interest rates are hovering under 5%. These low interest rates are going to push more buyers into the market now. Historically winter is a great time to buy because demand is low and sellers are aggressive. Even though our North County Real Estate Market is recovering, we are benefiting from the government induced low interest rates designed to stabilize regions of the Country not as fortunate as North County. Investors and first time buyers will be aggressively pursuing property. This coupling of low interest rates and low property values is unprecedented. As a bonus building costs are down, construction loans are cheap and lower interest rates enable the move up buyer.
It is our belief that the stimulus dollars are already working. We live in a microwave society and these stimulus actions are more like growing a garden then boiling water. We do not know what will happen as the government continues to fuel the fire. In North County the Real Estate market has bottomed and is in a recovery mode. Recovery mode is defined as more sales and stable pricing. There can be no price recovery until sales increase and the sales uptick is underway. Today we welcome price stability.
The North County is one of the most desirable communities in California. It seems like it takes a half hour to drive down Spring Street in Paso Robles on Friday afternoon. Hotels are still maintaining good occupancy in the face of a weak state economy and a number of new rooms. Our wineries are competing successfully for market share in a global wine environment. Leadership is a difference maker and our wine industry leaders are making a positive impact. Real Estate is leading our local community out of the economic malaise that has gripped our society. In the coming years North County will exceed all expectations.
The preceeding is a combination of thought & work by several agents in our office. I would add to it that the "getaway" type properties, those located 30 minutes or further from town, have been essentially moribund in 2008. The high gas prices, coupled with the depressed economy has meant that most of these properties linger on the market for months if not years. It will take positive economy and strong consumer sentiment to bring back demand.
Similarly, sales of properties at or around Lake Nacimiento have been affected by the economy, low lake levels, and a rising number of foreclosure properties in the Heritage Ranch & Oak Shores areas. It will take a full lake and a few years of a strong econmy to bring these back to their previous levels.
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