This report reviews the first three quarters of real estate activity in 2015 for North San Luis Obispo County. The health of a community tends to be reflected in the local real estate market. Extreme current examples would be San Francisco and Detroit. Local real estate is geographically finite and driven by supply and demand.
Sales of residential single family properties increased year over year by 30%. The average price of sold homes bumped up 3.6% to $375,000, on a year to year basis. The supply of homes for sale continued to trend downward. Homes for sale in South Atascadero are in strong demand. Demand for homes in Paso Robles is steady up to $500,000 and Templeton demand is strong up to $600,000.
An important component in the demand for Paso Robles homes, especially on the West-side, is investor appetite for vacation rentals. Most of these investors are from the Bay Area. Templeton demand is fueled largely by families seeking the Templeton School District. South Atascadero is providing a quality, lower cost opportunity for San Luis Obispo employees. Quality, in different categories, is the common denominator in demand for San Luis Obispo Properties.
Million dollar higher end homes are lagging behind in sales as compared to 2014. Supply of big dollar homes is also dropping as sellers wait to see more market activity. Most of these homes are selling below replacement cost. We are now beginning to see investors looking at trophy properties for vacation rentals.
The drought and the uncertainty of the renewed water ordinance has muddied the picture for agricultural properties. There is so much noise about the water situation that people, buyers and sellers, are tentative. Grape prices are still strong for most varietals and this year’s light crop only highlighted that pricing situation.
No one knows the future, but here is one likely scenario. Whatever ordinance/district is ultimately enacted, it will restrict all new irrigated plantings. Existing built/planted properties will be more valuable versus replacement cost. If we have big rain and a defined ordinance, the agricultural situation will improve.
Right now it takes 6-9 months to get a well drilled on raw land. Obviously that time frame has curtailed demand for raw land parcels. Certainly there will be new building and planting restrictions/costs that will further complicate the raw land situation.
Our hotels and restaurants continue to do well in a competitive environment. I think the success of the Golden Hill/46 Intersection is a great example of how far we have come as a community. Our local leadership and citizen volunteers have gone a long way to set the table for a bright future.
Quality never goes out of style. Our community has worked with our wine and AG community to create a destination location for outsiders to enjoy and the locals to prosper. People come to visit, spend money, and then leave. It’s not easy to operate a city with a marginal employment situation. As long as we remain a quality product, this community will move forward.