Single family home prices jump 15-percent in 2015
By Pete Dakin of ReMax Parkside Real Estate
This report reviews North County Real Estate for the year 2015 and takes a look at what may be in store for 2016.
North County fourth quarter real estate review
–Residential single family homes under an acre experienced a 15-percent increase in the average sale price in 2015. Overall, the number of home sales remained consistent with 2014 sale numbers. Inventory of homes for sale dropped by 33-percent year over year. Today the average sale price of North County residential homes is $407,000. As a side note, our average sale price in 2005 was just over $500,000. These numbers show solid demand for homes in North County. Strong demand coupled with low inventory means firm pricing. Perhaps the greatest benefit of these market conditions, for sellers, is liquidity in the average price points. For buyers, it’s about competing for properties.
The price of homes has been real strong in the Bay Area and South County for the past few years. North County is finally getting some love from these strong outside feeder markets. Interest rates appear to be stable for the moment, new construction is modest and demand for quality communities, like North County, remains strong.
Higher end seven figure properties are more active today than any time in the last eight years. Pricing is still modest and these properties continue to sell at or below replacement value. There is plenty of high-end product on the market with a shadow back log in the wings. It would seem logical that this year should see a push in higher end product because the value is so apparent to buyers. We need a velocity or demand uptick before we see pricing strength in this high-end category.
Commercially, our market continues at a decent pace forward towards stabilization. Less commercial properties are vacant and local users are in a recovery mode which bodes well for rental rates and absorption. It’s still a tenant or buyer’s market in commercial product, but clearly not as one-sided.
Ranch and vineyard properties have languished somewhat over the past few years. The drought and the water ordinance noise have had a material impact in buyer demand for AG properties. In my opinion, this trepidation about AG properties is waning. Smart, well-heeled buyers are back in the marketplace. Buyers are seeing value in these properties and absorption has started. A strong rain season will push demand. Again, pricing is not strong but liquidity is on the horizon.
Residential rental rates are strong. Many buyers of average single family homes are paying cash and buying multiple units to rent. A lot of the new construction is dense housing and again buyers are acquiring these properties for rentals. There are some big multi-family units in the planning stages, so I look for rental rates to stabilize.
In 1966 there were a handful of wineries in Napa and Mondavi created his winery. Today, Napa is a playground for billionaires. Our first wine festival we had 22 wineries in Paso. The amount of wealth being invested in the North County wine industry is staggering. The push for quality in our local wine industry is strong. We will see greatness in the Paso Robles wine industry; greatness.
Why is real estate in an upward tick in North County? In my opinion, we have a confluence of factors contributing to this market strength. It looks like rain. That’s nice. Our pricing, cost value relationship is so attractive versus neighboring areas. All new government restrictions will only increase the cost of new building. Money has been on the sidelines and real estate is again perceived as a safe haven. Interest rates are low. It’s a good time to be in North County!