North County home prices up 6.5%
2012 Fourth Quarter Review and 2013 Forecast
North County home prices up 6.5%
1,000 homes sold • Avg. price $288,000 • Inventory down 40%
By Pete Dakin
Re/Max Parkside Real Estate
This New Year begins with equal parts of optimism and uncertainty. North County Real Estate has steadily improved in both pricing and velocity over the past few years. This report reviews North County Real Estate in 2012 and peeks into 2013.
North County sales of residential single-family homes hit the 1,000 unit mark for the second year in a row. The average sales price reached $288,000, which represents a 6.5% annual increase. Foreclosures and short sales still made up a significant portion of the market. More new construction was built and sold than in the previous six years. Demand is strong at the lower price points. Inventory has dropped a whopping 40% year to year. We believe more homes would have sold if the product was available. Low inventory will continue to be a big factor in 2013.
High-end million dollar properties doubled in sales on a year-to-year basis. The overhang in supply of high-end properties is finally starting to burn off. We still have a two- year supply of product but in the past we have had a four plus years overhang of supply. This market is pretty well defined in pricing.
Demand for tenant occupied commercial property and multi-family property remains robust. Investors are seeking stable cash flow and the possible increases in value that real estate offers over the long term. Tenant activity remains weak. Demand for raw commercial land is also weak. Tenant activity will increase if we have economic growth.
Five Paso Robles wineries were named in the top 100 wines of 2012 in the Wine Spectator. This aforementioned list is international in scope, which is a remarkable, yet deserving, accomplishment for our region. Tasting room sales are good which certainly contributes to the strength of the hospitality business. Ciao Bambino! Inc, a leading international family travel publisher, named Paso Robles as one of the top 10 destinations for family trips in 2013. Tourism is strong.
Because of the strength in our wine industry, our community is experiencing a sharp increase in wine grape planting. The beginning of this increase, in planting, was driven by local major wineries securing a long-term source for their brands. Thousands of acres are currently being planted or replanted in San Luis Obispo County. Many more smaller wineries and investors are beginning to jockey for position in acquisition of vacant land for planting. Prime plantable land costs have reached, and in some cases surpassed, previous high watermarks. Agriculture is really strong today.
New home construction improved slightly in 2012 as finished lots sold at a much brisker pace. Demand for low priced lots is strong with supply at all time low levels. Higher end parcels, in Santa Ysabel Ranch, also picked up velocity near year-end. Out by Lake Nacimiento there is a fair amount of new home construction. Finished lots will be firm in pricing. Developers are aggressively seeking lots for sale to build today. The environment is still very price sensitive for spec product.
Our real estate market is devoid of fear. People are wanting to do deals. Structurally there are still many hurdles facing our market. Supply is low. Foreclosures and short sales will continue in 2013. Financing is hard and appraisers are sparing in valuations. The biggest issue is that we have an economy with no growth.
North County should fare better then many other areas in our Country and State. We have a wine industry that is internationally recognized as one of the best in the world! That aforementioned industry is not moving to Nevada or overseas. So we got that going for us, which is nice. The economy is not going to bail out anybody. As Bill Parcells would say “we are what we are today.” This is the market so figure it out. There is always opportunity in chaos and for the moment we live in turbulence. Many people are starting to figure it out. We are grateful to live in North County and we will compete!