Paso Robles housing market closes its best year since crash
Expect the real estate market to move closer to ‘normalcy’ in 2014
There were 39 total single-family Paso Robles residential home sales in December of 2013. This total is a drop from November, 44, and October, 48, but is a typical decline for the winter season as buyers turn their attention to the holidays.
What is less typical – at least in recent Paso Robles real estate history – is the complete drop off in foreclosure sales numbers. Since July, there have been just four foreclosure sales of residential, stick-build homes on the open market.
The 2013 total of 104 total distressed (foreclosures and short sales) property sales was over 50 percent below 2012’s total of 222, according to SloCountyHomes.com, a local real estate statistical aggregator.
REO and short sale properties are valued lower than “normal” properties, and so weigh down home values. Just 18 percent of Paso Robles sales were distressed in 2013 (7 percent foreclosure, 11 percent short sale), according to SloCountyHomes.com. That number was closer to 50 percent from 2009 through 2011.
“Distressed sales dropped 51.7 percent in 2013 in San Luis Obispo County,” said Monica Chudgar, a realtor with Patterson Realty and a property appraiser. “The fact that these distressed properties are declining in number so much shows that the market is returning to normal.”
With a larger percentage of “normal” homes reaching the market, median home prices jumped by double digits year-over-year. The median Paso Robles sales price was $370,000 in 2013, which is up 12.5 percent year-over-year and 26.5 percent from 2011.
Total home sales for the year declined slightly, dropping from 594 to 588. Paso Robles had the most home sales of any city in San Luis Obispo County.
“We had a good year as far as price appreciation as well as sales volume,” Chudgar said.
The county-wide median sales price was $450,000, up 13.9 percent year-over-year.
North County in general registered a sales jump in the latter part of the year. Buyers took advantage of favorable mortgage rates and still-low prices.
“It panned out to be a great year for our local housing market,” said Jacob Rodrigues, appraiser and realtor with Peabody & Plum Realty. “As compared from the first six months of the year, total number of sales units increased roughly 50% for all residential housing, while median home prices showed consistent month-to-month improvement.”
Moving forward, Rodrigues listed several factors that could slow home purchases in 2014. To begin the year, weather is typically a limiting factor (though not so much on the California Central Coast). Potential buyers will be navigating tax season and the Affordable Care Act. Higher mortgage rates will also limit the affordability of real estate. Still, Rodrigues predicts that sales will continue at a moderate pace.
“I predict sales volume in the first quarter to be similar to that of 2013, with a slow start in January and then a steady climb,” said Rodrigues, noting that he expects year-over-year price appreciation at 4 to 6 percent, down from the double digits gains in 2013.
Mortgage rates rose over 1 percentage point throughout 2013, as markets prepared for the eventual reduction of the Federal Reserve stimulus program. Known as quantitative easing (QE), the program included $40 billion in mortgage-backed security purchases per month, which helped mortgage rates plummet to the lowest level in history.
To begin 2013, Freddie Mac recorded the average 30-year fixed rate at 3.34 percent. The final reading of the year had the average at 4.48 percent, which came after the Federal Open Market Committee (FOMC) announced that it would reduce or “taper” QE by $5 billion per month in the new year.
Chudgar said that she expected positive housing market trends to continue, but that overall growth would drop.
“I think we will see home price appreciation at a more normal pace,” said Chudgar. “I think it will be good to come back to a normal market where there aren’t extremes.”
If the past few years can be characterized as sharp jumps up and down, both Chudgar and Rodrigues are optimistic that the housing market is finally balancing out, and that more predictable, steady growth can be expected.
Columnist Rylan Stewart is the Director of Marketing for Central Coast Lending, the Central Coast’s source for real estate, economic and mortgage news & analysis.