North County Homes Prices up 24-percent
North County Homes Prices up 24%
First Quarter North County Real Estate Forecast & Review
By Pete Dakin, Re/Max
Pete Dakin
The North county real estate market has both clarity and liquidity. Property values are well defined and home sales are brisk. We still have short sales and foreclosures but the drag on pricing is over for the moment. Appraisal and lending difficulties still exist but these aforementioned industry vendors are becoming more realistic. Let’s take a look at the first quarter real estate numbers for North County.
Perhaps the biggest reason for the price jump is the lack of inventory
Single family home sales, for the first quarter of 2013, matched the sale numbers for first quarter of 2012. We had 209 residential homes sell in the first quarter with an average sale price of $305,000. In the first quarter of 2012 the average home price was $245,000. Year to year that’s a 24% increase in pricing. So we got that going for us, which is nice.
Perhaps the biggest reason for the price jump is the lack of inventory. Today there are 172 homes for sale in North County versus a year ago supply of 298 homes. That’s a 42% drop in homes for sale. Do not look for new home construction to fill this void any time soon. More sellers will list their homes, for sale, as time goes on but it will be a seller’s market in residential single family for this season. More homes would sell if they were available. Liquidity is nice for an asset that is somewhat illiquid.
Million dollar properties have a different story all together. In 2012 there were 58 million dollar properties for sale and today there are 76 million dollar properties for sale. That’s a 31% increase in supply of million dollar properties. Sales for the first quarter were again identical to 2012 at 3 units. The average sales price was identical. Our office does the majority of these sales and we see many more prospective buyers today. This supply situation will keep a lid on any upward price mobility. However more supply means more choices for buyers. In such a discretionary market price and quality dominate the discussion. Prices are defined and stable in this market for today.
Our commercial market reflects the tepid economic conditions in our state. Vacant spaces are everywhere. Tenants come and tenants go. Rents are soft unless the location is A plus. Until this older space absorbs there will be weakness in this market.
Vineyard ground is in demand. The buyers are very selective and there are few properties that fit their profile on the market today. Grape prices are strong and Cabernet is very strong. Big well established Paso Robles wineries are doing good business. There are some significant high dollar investments taking place via the wine industry in North County. This wine industry drives our tourism business which is also strong today.
Traditionally real estate markets are driven by economic growth and job growth. We have no economic growth and the biggest boost in job growth happens when people stop looking for jobs. Health care costs are exploding and taxes are rising. The only thing cheap is money and that’s artificially induced by the FED. Let’s just say this is not our Mom and Dad’s recovery! So why real estate?
We are at the point where people just want to protect their assets. Real estate is favorably priced so investors and buyers, that have been on the sideline, are stepping up to make their move. Many foreign investors are buying million dollar properties in Los Angeles and the Bay Area. Better to have your money in real estate then a bank in Cyprus! That’s what’s going on in California.
North County is well positioned because wealth that flows into the Bay Area and L.A. trickles down to us as those urban refugees make their final pilgrimage to wine country. These high dollar sales, in our primary feeder markets, will fuel sales of million dollar properties in North County. Real estate sales spin off a lot of local purchases which keeps us going. Our tourism helps keep our local governments solvent. Life is good on the Central Coast!
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