2013 Second Quarter North County Real Estate Review
North County Real Estate maintained momentum throughout the first half of 2013. Our County appears to be strengthening in both employment and overall economic activity. Tourism and agriculture have helped our North County businesses and real estate. Even our local municipalities are breathing easier from a financial standpoint. This Real Estate Update is intended to both inform and assist you in your real estate decisions.
Residential single family units sales totaled 630 sales for the first half of 2013 which was similar to the first half of 2012 unit sales. The average sales price jumped up 22% to $325,000. Available properties for sale dropped 23% to just under 400 units, which equates to just barely a 4 month supply. More homes would have sold if more homes were available for sale. Higher prices tend to bring out more inventory, but we are still going to be faced with more Buyers than Sellers in the short term.
In the million dollar property category we have seen a steady increase in sales and pending sales. Prices are stable but they still lag behind replacement value. Lenders are extremely conservative in this price range. The biggest change has been in the supply category. In 2012 we had 68 million dollar units for sale. Currently we have 85 million dollar units for sale. Prime Westside estates are receiving the most Buyer interest. Our feeder markets of Los Angeles and the Bay Area have had steady million dollar activity and this activity should continue to trickle into North County. Strong grape pricing may also bolster this market.
This real estate update all covers the the pricing of bare acreage and lots for residential single family homes, which is a strong market here. The low inventory of brand new houses is driving more builders back into the spec home market. There appears to be no real immediate increase in ready to build lots, so Buyers are aggressive if the price is right. It’s a cash money proposition in raw land for Buyers and Sellers.
We have some very strong large wineries in the North County and a handful of high quality smaller operations that all have international recognition. It’s really remarkable to imagine we live in a community that has a recognized quality profile throughout the world wine industry. Real money is being invested in vineyards, wineries, restaurants and hotels. Agricultural leaders are also very strong and supportive in our community. This wine industry and vineyard industry is healthy and growing.
A word about interest rates: Everyone is concerned about the recent rise in rates. Often when interest rates rise, people pick up the pace in buying homes because of the fear of further rate hikes. We are not so sure Buyers will jump in so boldly in this economic market. A one-half to one point rise in rates can keep a first time buyer from his dream of home ownership. As rates rise, first time homebuyer activity will decrease. And yet we realize that these low rates cannot remain for much longer. This is not a normal real estate recovery.
Commercial real estate reflects our local economy. There is more activity in this market from investors and tenants. However, a lot of vacant space still exists. Small businesses are feeling the effects of the tax increases, health care costs and a “no growth” recovery. Investor interest in apartments is strong and will remain strong throughout this year. Residential rents are strong and commercial rents are tepid unless the space is A plus.
We are not in a healthy economy nationwide; we are in an unusual economy. Ditto for our real estate market. There is an uneasy feeling that this no growth, entitlement heavy society is unsustainable. The future may be uncertain but we believe North County will perform well in the coming years, and out perform many other parts of the Nation. The quality of our lifestyle, location and the wine industry is an enviable position.