Here’s what we already know: Since the COVID-19 pandemic began, the real estate market has been on a wild ride of unprecedented highs and lows—record-high home prices on one side, record-low mortgage rates and available homes for sale on the other. It’s been a time of overwhelming stress for many, gigantic profits for some, and a myriad of economic, political and health issues worldwide.
We saw nearly 17% appreciation of values in our market in 2022. So real estate has been a great investment for those fortunate enough to own a home. Thankfully for buyers, that frenzied rise in values is predicted to
not continue into 2022 and economists are expecting something closer to normal market appreciation of about 5% for the year.
Buyers are actively searching for North County property today. The buying pool may be shallower than a year ago but there is strong Buyer Demand today. This Buyer Demand for product spans all noncommercial properties including homes, acreage, Ranches and vineyards. With low interest rates and historically low inventory levels, it remains an optimum Seller’s Market. Simply put this is the strongest Sellers’ Market since post World War II. Sale prices are stronger than ever before in North County.
The total number of homes sold in 2021, 1,683 units, represents an increase of 7% over 2020. However, the number of sales in the 2021 Fourth Quarter dropped by 73 units, versus the Fourth Quarter 2020. Listings for sale plunged in the Fourth Quarter to the point that there were only 10 available homes for sale in Paso Robles near year end. The median sale price surged to $629,000 year over year with the Fourth Quarter median price hitting $660,000. Prices will not be going down in the coming months. In our office we are seeing many more people making plans to sell their homes. These Sellers will be successful and achieve strong prices.
2022 North County Real Estate Forecast
As interest rates rise, which will happen sometime this Spring as the Fed raises rates to hold down inflation, more Sellers will likely venture onto the market to take advantage of strong prices. Some Buyers may want to secure a great inflation hedge where other Buyers may back away due to rising prices and interest rates.
Rental rates are predicted to rise by 7% which reflects the lack of new construction and available homes for sale. The residential single-family home is becoming a luxury item.
Adding to the confusion is the continuation of the migrations that began with COVID in 2020. The pandemic has caused many to rethink their plans to relocate and many to move up their plans to move. Retirees are seeking more affordable areas to live and remote work has increased demand for larger homes. Fruit prices are strong and demand for vineyard and winery properties is solid. Agricultural properties are currently more stable than housing prices. Low interest rates and planting restrictions have provided a strong foundation for wine grape properties. Operating expenses are rising and labor is always an issue. The reputation of our area for quality wines and fruit continues to rise.
One could argue that North County is an optimum place to own Real Estate in California. Our two primary feeder markets are the Bay Area and Southern California. Those areas are still significantly more expensive and less desirable to live than North County. North County people usually migrate out of state. These Sellers are replaced by the Urban Refugees buying product and a lifestyle that is more affordable and more liveable.