2014 3rd Quarter North County Real Estate
This report is a look back at North County Real Estate to date. We will review both pricing and sales activity with comparisons on a year to year basis. North County is a dynamic community with a number of factors that influence real estate trends.
Perhaps the most significant statistic for the residential single family home sector is that there are 20% more houses for sale today versus 2013. Early in 2014 Sellers were bullish on pricing and listed properties hit the market based on this optimistic price outlook. By mid-summer it became apparent that the Buyers had a more restrained opinion on pricing.
Actual unit single family home sales remained on par with 2013 and prices did rise almost 8% on a year to year basis. The average North County single family home is now selling at $362,000. After a couple years of double digit percentage price increase the Buyers have decided to take a break. There is no sense of urgency amongst Buyers today, especially with continual low interest rates and a good choice of options when house shopping.
The number of million dollar home sales increased significantly in 2014 but the average sale price did not change on a year to year basis. The number of million dollar property listings dropped a bit on a year to year basis. One could surmise this category is somewhat balanced on these numbers. Buyers are very selective in these purchases and there remains plenty of supply in the pipeline.
Commerical properties have steadily recovered over the past few years. Retail and industrial rents are stable and vacancies are slowly being absorbed. This market is not robust but the trend line is positive. Well located properties get all the action while the secondary locations are much less in demand. There are a number of new hotel rooms coming on line in 2014. Multi-family properties have strong rents and investor demand at market prices.
Tourissm and agriculture are the twin towers of our North County economy. The foundation of these two industries is our wine and grape growing business. Despite the drought and world-wide competition for wine sales. North County has held its own and then some. We seem to be like the “Little Engine That Could.” These industries are popular with people that are creative, competitive and above all resilient. There are plenty of places to grow grapes and make wine in the world. It’s the local people in our industry that make this particular place so special.
Real estate investors and farmers are looking to acquire large existing vineyards. Within the industry the participants understand that the drought has created a whole new set of costs and restrictions in regard to planting new vineyards. Investors are also buying existing wineries. These aforementioned Buiyers are well financed and have longer term perspectives.
Has the drought had an impact on real estate in North County? This is a difficult question to answer but I believe the impact of the drought will be more long lasting because of local and state governments are gaining control of the water resource that was previously unrestricted. Government restrictions will have the most adverse financial impact on new development. Existing built and planted properties are better values based on new restrictions and costs that will inevitable be imposed on new development.
Today Buyers lack a sense of urgency which has stalled the nationwide housing recovery. We see the same thing happening in North County. Interest rates are low. Gas is getting cheaper which helps destination locations like North County. When we get a big rainfall this year the party will be on! 2014 shows just how strong North County can in the face of adversity.