2015 First Quarter North County Real Estate Review
This is a snapshot of the North County real estate market for the first quarter of 2015. All real estate activity is local. North County remains an inbound market for urban refugees. Therefore, we do evaluate economic activity in our prime feeder markets of the Bay Area and LA to predict the activity that will take place here 3 to 6 months ahead. This real estate review is designed to help you with your future decisions in our area.
Residential single family home sales are almost identical in number to this sameFront.JPG in 2013 and 2014. The average market price actually dropped a bit to $362,000 this quarter, so the Spring surge that we would begin to see especially beginning in March is not here. In Paso Robles the market is brisk up to $400,000 and much quieter above $600,000. Templeton properties are strong up to $500,000 and Atascadero is pretty active up to $600,000. Lack of inventory is not a factor in our market but may become so as we are seeing many more homes go pending vs. new listings in the past month.
Higher end homes in the million dollar range are active, but a large overhang of inventory is keeping a lid on any upward price push. We see a number of high dollar buyers in our office and they are very selective with regard to location and quality. Price is also a factor at this upper end.
Small business has struggled in the past 6 years and empty office, retail and industrial spaces attest to the weakness. Vacancies are certainly less than they were 4 years ago, but commercial demand remains weaker than expected. Commercial rents have stabilized.
Despite the persistent drought, agriculture has held on nicely. Grape prices look to be solid for this year. Cattle prices are off the charts. The top tier wineries, in quality and production, are doing well. The wine growers here are thinking outside the box and are creating a genre of wines that are specifically Paso Robles and are wonderful. Paso Robles is known world wide for its wines. That is great for our wine industry, tourism, and the future of this area.
In our market today, the interest rates are less than 4%. Most properties are selling below replacement costs. A majority of sellers have seen their equity return to the degree that they can sell and move on with some cash in their pockets. But many sellers may be choosing to stay put because of an inability to “move up” to more house or a better location. That, as well as higher building and government costs for new construction, may keep an adequate supply of new listings from coming on line this year.
I am often asked about how the drought has affected property values. Certainly, owners
of large undeveloped acreage within the Water Moratorium designation have seen their land values drop. As properties are no longer viable for planting, they have become residential in nature and only useful for dry land farming or cattle as was the common use decades ago. But for residential single family homes, the value seems more to be about jobs and the economy in general than any concern about the drought. After all, a drought, no matter how long, is only temporary. I believe that we all understand that the rain here will return and solve a multitude of issues.
Today in California, despite the need for rain, it’s hard to point to a community and say their future is brighter than ours. Our best days are well ahead of us.