2014 local real estate market review
By Pete Dakin
This report is a look back at North County Real Estate in 2014. We will review both pricing and sales activity with comparisons on a year to year basis. North County is a dynamic community with a number of factors that influence real estate trends.
Perhaps the most significant statistic, for the residential single family home sector, is the 20% increase in homes for sale today versus 2013. Early in 2014 Sellers were bullish on pricing and listed properties hit the market based on this optimistic price outlook. By mid-summer it became apparent that the Buyers had a more restrained opinion on pricing. Actual unit sales remained on par with 2013 and prices did rise almost 8% on a year to year basis. The average North County single family home is now selling at $362,000. After a couple years of double digit percentage price increases the Buyers have decided to take a break. There is no sense of urgency amongst Buyers today.
The number of million dollar home sales increased significantly in 2014 and the average sale price did not change on a year to year basis. Million dollar properties, for sale, dropped a bit on a year to year basis. One could surmise this category is somewhat balanced based on these numbers. Buyers are very selective in these purchases and there remains plenty of supply in the pipeline.
Commercial properties have steadily recovered over the past few years. Retail and industrial rents are stable and vacancies are slowly being absorbed. This market is not robust but the trend line is positive. Well located properties get all the action while the secondary locations are much less in demand. There are a number of new hotel rooms coming on line in 2015. Multi-family properties have strong rents and investor demand at market prices.
Tourism and agriculture are the twin towers of our North County economy. The foundation of these two industries is our wine and grape growing business. Despite the drought and world-wide competition for wine sales, North County has held its own and then some. We seem to be like the “Little Engine that could”. These industries are populated with people that are creative, competitive and above all resilient. There are plenty of places to grow grapes and make wine in the world. It’s the local people in our industry that make it happen.
Real estate investors and farmers are looking to acquire large existing vineyards. Within the industry the participants understand that the drought has created a whole new set of costs and restrictions in regards to planting new vineyards. Investors are also buying existing wineries. These aforementioned Buyers are well financed and have longer term prospectives.
Has the drought had an impact on real estate in North County? This is a difficult question to answer but I believe the impact of the drought will be more long lasting because our local and state governments are gaining control of the water resource that was previously unrestricted. Government restrictions will have the most adverse financial impact on new development. Existing built and planted properties are better values based on new restrictions and costs that will inevitably be imposed on new development.
Today Buyers lack a sense of urgency which has stalled the nationwide housing recovery. We see the same thing happening in North County. Interest rates are low. Gas is getting cheaper which helps destination locations like North County. When we get a big rainfall this year we will be party fresh! It seems like we have the wind at our back and are running downhill. 2014 shows just how strong North County can be in the face of adversity.