2011 North County First Quarter Real Estate Review

Real estate continues to be sluggish throughout North County. Despite low interest rates and low prices the North County market has yet to experience any traction. There are emerging signs though, that the market is poised for a real turn forward in velocity. Prices will continue to lag and be erratic at best. The real story is that we ARE selling homes!

Overall North County home sales increased 24% when compared to the first quarter of 2010. Our company handles about a third of the market and our sales doubled in January. Prices dipped 6% when compared to year end 2010. Most of the home sales have been at the lower price range of the marketplace. Investors and first time home buyers have reemerged in our market. That’s a great sign because as the lower range of our market is sold, move up buyers will push into upper price brackets. And so it goes.

Velocity will eventually increase the current average price point in sales. Our office has a lot of higher priced properties due to close in the second quarter. Higher end short sales, higher end foreclosures and demand for Westside product is fueling the uptick in velocity for higher end product. The important thing to remember in these coming events, is that prices are not going up! The average price may stabilize or even tick up but this fact is due to velocity increases in higher dollar product.

As these sales close in the second quarter, the market values above the average price point will be more clearly defined. Distressed properties will continue to dominate market share throughout next quarter and 2011. This supply of short sales and foreclosures will keep a lid on values at all price points.

Lots and land sales are still very weak. Financing for acreage is thin but demand is even thinner. It seems like most sale prices in improved properties, yield a non-existent value for the dirt when construction costs, permits and fees are subtracted out. Dirt is dirt cheap! There is a lot of upside in raw land if you are willing to hold on and wait.

Two major positive events in the wine industry are happening now. Number one is the international publicity our appellation is receiving almost daily. This publicity increases demand for our wines and hospitality businesses. Secondarily, wineries are out buying fruit today. Now the prices for fruit are still low by historical standards, but this change in demand is a very good sign.

The commercial market is still dormant. Absorption of new product is spotty. Demand for space is weak. Investor demand at the local level is tepid.   However, there are signs of positive changes coming such as the new movie theatre in Atascadero, the retrofitting of the old City Hall building and new business entering that market.

This newsletter is an attempt to give you honest information in an area specific context. Real Estate is the most local of businesses and it takes intimate market experience to give clear and concise data to my clients. My business is about putting you in a position to succeed, whether buying, selling or holding your real estate assets.

Call anytime. If I don’t know the answer, I’ll find it for you! Spring is here and with it comes the sunshine and pastoral beauty that we can all appreciate today.