Selling prices are higher than ever in the North County
This report is a look back at 2021 North County Real Estate and provides a window into the first quarter of 2022. Diving deeper into 2022 is a bit problematic with the myriad of economic, political, and health issues we deal with in today’s world.
Buyers are actively searching for North County properties today. The total purchase may be lower than it was a year ago but there is strong buyer demand today. This buyer’s demand for the product includes all non-commercial properties including homes, estates, farms and vineyards. With low interest rates and historically low inventory levels, it remains the optimal seller’s market.
Simply put, this is the strongest sellers market since post World War II. Selling prices are stronger than ever in the North County.
The total number of homes sold in 2021, 1,683 units, represents a 7% increase over 2020.
However, sales in the fourth quarter of 2021 decreased by 73 units, compared to the fourth quarter of 2020. Listings for sale in the fourth quarter declined to the point that there were only 10 homes available for sale in Paso Robles near the year-end.
The average selling price increased to $629,000 year-over-year with the fourth-quarter average price reaching $660,000. We don’t see prices going down in the coming months.
In our office, we see more people planning to sell their homes. These sellers must be successful and command solid prices.
With interest rates rising, more sellers are likely to venture into the market to take advantage of the strong prices. It looks like inflation will explode in the first quarter which may change demand among buyers. Some buyers may want to secure a large inflation hedge while other buyers may hold back due to higher expenses. Add in COVID and it’s going to be kind of a crapshoot after the first quarter.
Rental prices are expected to rise by 7%, reflecting the lack of new construction and homes available for sale. A single family residential home has become a luxury item.
Adding to the confusion is the continuing migration of great changes that began with COVID in 2020. When people faced the pandemic, people began to act with a sense of urgency. Many people retire early and move to affordable areas. Telecommuting has expanded housing options. The political divide has prompted more people to seek to live with other like-minded people. The rise in crime and gradual educational reform led to an increased mobility of the population.
Fruit prices are strong and the demand for vineyards and the characteristics of the winery is strong. Farm properties tend to dance to their own music and are more stable than house prices. Low interest rates and restrictions on cultivation provided a strong foundation for the characteristics of grapes and wine.
Operating expenses are rising and employment is always a problem. Our region’s reputation for high quality wine and fruit continues to rise.
One could argue that North County is the perfect place to own real estate in California. Our two primary nutrition markets are the Bay Area and Southern California.
These areas are still much more expensive and less desirable to live in on a daily basis than North County. Residents of the Northern Territory usually migrate out of the state. These sellers are being replaced by urban refugees who are buying cheaper and nicer homes and lifestyles.
Written by Pete Dakin and Fred Bruen
RE/MAX PARKSIDE PROPERTIES