2nd Quarter Real Estate Review – North San Luis Obispo County
This 2021 second quarter Real Estate Report, for North County, reflects the remarkable surge in demand for properties in our Community. The pricing numbers far surpass any historical comparisons. Our economic recovery is in full swing with different levels of activity in certain property categories.
450 homes sold in the second quarter which is 50% more sales than the pandemic influenced 305 sales at this time last year. The median sales price climbed a whopping 27% to $649,000 from $510,000.
Inventory is shrinking with only 150 available homes for sale today in the North County. That inventory number represents 2 ½ months’ worth of homes. A balanced market generally has 6 to 7 months of inventory. In 2007 we had 1200 homes for sale in North County. This is a reflection of more than just a low interest rate.
There is more Commercial activity today than at any time in recent years. Commercial pricing has not been inflated which makes projects more attractive. Developers are looking to do multi-family, industrial, and hotel projects. Retail and office demand remains tepid. Large Ranch properties are seeing growing interest from Buyers.
Some larger residential projects are nearing or at groundbreaking status. Material costs and COVID have delayed some of these projects. We think that smaller builders will get back into the game as material costs drop and demand remains firm. Buildable in-fill lots are beginning to look attractive for spec development.
Our wine sales have been very good. Tourism has rebounded and it’s stronger than ever historically. Grape pricing is much stronger going into this harvest. There are a handful of vineyard properties for sale and activity is at a moderate level. There remains a gap between Seller price expectations and what Buyers are willing to pay for vineyard properties.
What is going on? Where is the tipping point?
There is currently no let-up in the migration out of the urban areas. A strong economy, low interest rates, and strong personal savings are continuing to fuel this market wherein multiple offers on a home are now commonplace.
New FHA 40 Year Loan Program
Real estate prices in both Los Angeles and the Bay Area remain strong which provides the capital to existing homeowners to secure their dream in our very desirable area. But the cost of homeownership for first-time homebuyers is getting so high that first-time homebuyers are not able to make that initial purchase. As a result, FHA is introducing a 40 year home loan program beginning sometime in October. This should help those first-time buyers and continue this seller market trend for an extended time. And as COVID wanes and people are feeling more comfortable leaving their nests, we should have more sellers in North County.