Local Real Estate Market Fares Better Than State Average
San Luis Obispo County suffered less during the housing market bust than most other areas of California, and we are recovering faster as well.
Looking at the leading indicators, it appears that the median price of housing bottomed out around January or February of this year—along with nearly every other aspect of the economy. At that time, the stock market hit its lowest point, consumer confidence was at rock bottom, retail sales were dismal, and unemployment was at its highest point in recent years.
At the same time, however, housing sales were actually increasing as prices came down. Actual sales bottomed out in California in 2007, and have risen steadily since then as prices have come down. The median price of a home in California in August, 2009 was $292,960, off from a peak of $594,530 in May 2007.
In San Luis Obispo County, our median home price is off 38.4%, a smaller loss than about 2/3 of the state has felt. The city of SLO shows a greater increase in sales from 2008 to 2009 than any other community in the county, with a higher median price ($512,500 in August of this year). Prices in SLO are off only 0.6% over last year. The county has fewer distressed sales (REOs, short sales, etc.), at 36% of total sales, than any other area except Marin County (with 26%). In contrast, Riverside County’s ratio is 80%, and Los Angeles County’s is 58%.
As most of us are aware, the “affordability index” in CA has been poor for some years, meaning that most people can’t afford to buy a home in the community where they live. After dropping to a low of 30% in 2007, the index rebounded to almost 70% in the first quarter of 2009—a sign that most people can now afford to live where they work.
The first-time home buyer credit has been extended into 2010, and a new credit, for existing homeowners wanting to buy another house, has been added.
Finally, interest rates are at an historic low. Here in SLO County, interest on a 30-year fixed loan for under $417,000 runs from 4.625% to 4.875% . . . an incredible bargain. These low rates, combined with the drop in home prices and the current local inventory, makes this an ideal time to buy a home.
Despite the low interest rates, it is still difficult to obtain a mortgage due to more stringent requirements regarding borrower income, home values, etc. Be prepared to spend extra time securing financing.
The most serious wild card that could affect the housing market next year is probably unemployment, which remains higher in CA than in the U.S. as a whole (12.1% versus 10.0%).
While there is no guarantee that the market will continue to improve, it remains an excellent time to buy, especially if you are a first-time homeowner or can qualify for the new $6500 tax credit for existing homeowners. There is a good inventory of homes for sale in the county, the median price is at a very affordable level, and there are many bargains to be had.
Sonsie Conroy is a Realtor with Coldwell Banker Premier, specializing in first-time buyers, serious sellers, and "problem properties" that need extra marketing help. Call her at 235-2351 to discuss your needs.