Single family home prices rise 20 percent
2014 First Quarter Real Estate Review and Forecast
By Pete Dakin, RE/Max
This report reviews the first quarter activity in the North County Real Estate Market. Today the wine industry and the grape growing industry are driving economic activity in our community. A decade ago construction was the driving economic force. Things change. Communities need revenue to sustain public services. North County is fortunate to be in the right place at the right time in the context of our wine industry. Furthermore our city leaders have actually facilitated this economic growth, via the wine industry, and kept our cities solvent.
Residential single family sales dropped 15% in numbers sold but rose 20% to an average sale price of $368,000. The supply of homes for sale increased by 100 units or almost 30% from 2013 to 2014. The average listed produce rose to almost $400,000 in the first quarter. Sellers are getting ahead of the market today with the expectation of spring activity.
The luxury home market is moving at a clip similar to last year. Sales, pending sales and supply are all somewhat in line with last year’s numbers. There is more spec building activity in high end million dollar properties for the first time in years. It’s still a Buyer’s market at the high end.
Paso Robles is on track to double our current number of hotel rooms. Now maybe these rooms will not all get built immediately but this is an extraordinary vote of confidence, from inbound private money, on the future of our tourism industry. Tourism is driving new restaurants. Wine tasting room sales have been stable and growing. This type of economic activity is helping to absorb retail commercial space by providing entrepreneurial opportunities for small business people. Demand for office space is still weak. Industrially, the wine industry creates some demand for storage, processing and ancillary small support businesses.
The Paso Robles version of Silicon Valley success stories are boutique wine brands. Investors are seeking cash flow and growth off Wall Street. Some local Paso Robles brands are now worth millions of dollars net of real estate. We have some larger operations that may approach a billion dollars some day in brand equity. So we got that going for us which is nice.
Demand for wine grapes is stable for sure today. West side fruit is in high demand. Raw land for planting Westside fruit is in demand. Existing vineyard pricing, for sale properties, is also very strong eastside and Westside. A combination of solid prices for fruit and this uncertainty of planting, because of the ordinance, is driving this demand. We also see capacity; crush facilities, more in demand.
Drought conditions have created a cloud of uncertainty within the entire state. Real estate buyers are more cautious across the board in regards to water. This buyer caution has delayed some sales. I believe this drought will also foster innovation and conservation measures that will strengthen our community in the long term.
Real estate remains a strong investment in North County. Our community is well positioned for economic prosperity in the next few years. The cost of building a home, planting a vineyard or building anything will continue to rise through government fees and restrictive policies. Existing built properties are a good value when compared to replacement costs. The drought accelerated the future cost of building and planting. Desirable communities tend to become pricey communities. That’s just the way it is.