Local home sales increase, prices stay flat
North County second quarter real estate review
This is a review of the North County Real Estate Market for the second quarter of 2015. We will look at sales and pricing of residential and commercial properties. We live in one of the most dynamic and interesting communities in California. Of course, we have our issues, but it’s never boring in North County.
Residential single family homes had an increase in unit sales of 100 plus homes versus the first half of 2014. This increase reflects a 17% increase above 2014. Now pricing is pretty flat, with an average sale price of $369,000 in 2015 as compared to $363,000 in 2014. Available homes for sale dropped 12% to 504 units at the end of the second quarter of 2015. Lower inventory and buyer demand has firmed up pricing for the moment. There are some new homes being built and selling nicely. Most activity is below $500,000 across the board. Rental homes have almost no vacancy and strong rental rates.
Higher end million dollar homes are doing relatively well. Sales numbers are higher in 2015 and pricing is holding up. Inventory remains very plentiful in the upper end market. Buyer demand is strongest in West Templeton and South Atascadero. High end properties are still selling below replacement cost.
Small acreage lots, in areas not affected by the water ordinance, are selling with solid numbers. Raw land sales and lots in the ordinance areas are dormant. This aforementioned phenomenon is the clearest example of government policies creating winners and losers. If the economy ever improves, these discrepancies will widen.
Buyers are starting to realize that existing vineyard properties are much more valuable with these new restrictions in place. The same value proposition is true for wineries. Demand for cabernet remains strong and the crop looks to be short this year. Other varietals are not as strong and the bulk market is amply supplied.
North County is a community of small businesses. The continuing economic malaise has stalled any real momentum in small business growth. Empty buildings remain empty and rents are flat. Now there is strength in the tourism industry and ancillary businesses. The businesses that have survived the past six years are competing. Apartment rental rates and values are strong. Commercially everything seems to be at a stable level.
The drought and resultant government intervention have created winners and losers in the real estate market. There is no fair way to divide up a finite commodity. Much like our federal government, all the water arguments pit people against each other. Villains are created to promote agendas. In the end, everything will cost more money and be harder to build.
Great wealth is being created in the Bay Area. This wealth is slowly trickling down to North County. We have always been an inbound market for successful people looking for that country comfort. I think we would have had more urban refugees from both LA and the Bay Area had it not been for the drought. Paso Robles got a huge amount of bad statewide press early on in the drought, which has not faded away.
The fragile nature of economic conditions, in years past, seems to have abated for the moment. Certainly North County has done a remarkable job in moving forward. Our wine industry is the economic engine that leads the way. That aforementioned industry is stronger today than ever before. Factoring in the strength of San Luis Obispo, it portends well for North County in years to come.