July brings another busy month for real estate here on the Central Coast. We continue to see high demand for housing and a low housing inventory environment, which has proven to be challenging for some buyers. We are advising our buyers and sellers to expect interest rates to remain high for the rest of the year, which will mean lower inventory for Q3 and Q4. For sellers, it is more important than ever to price accordingly for today’s market and not overprice your property. For investors, we continue to see strong rental demand, so we are bullish on multi-family investments.
New Listings
New listings brought to the market in June have decreased from May, which is historically constant with the housing trends. The total number of new residential listings brought to the market in June was 275, which is a 31% decrease YoY. This contracted inventory is causing some challenges for home buyers shopping for homes to purchase, however, motivated buyers who are well-prepared are able to find the perfect home due to some buyers putting a pause on their home ownership goals due to lower inventory and higher rates.
As discussed in our June Housing Update, this low inventory is largely due to the “lock-in effect,” where many would-be home sellers are locked in at a low mortgage rate and have a difficult time justifying making a move. This will continue to put a damper on new listings until we see rates lower which will encourage homeowners to put their house on the market here in SLO county.
This low housing inventory, coupled with fairly high demand, has maintained a “seller’s market” in the county.
Days on Market
DOM for June 2023: 10
We saw an uptick in Days on Market for the Central Coast housing market from May. This is still historically low when compared to more normalized markets, for example, DOM for June of 2018 was 21 days.
This means that home buyers need to act quickly when a home they like reaches the market. We recommend that home buyers be pre-approved and have a clear idea of their criteria before they start seriously shopping.
For those of you selling a house, we recommend pricing accordingly to the current market to avoid your house staying on the market for an extended period. Improperly priced houses can stay on the market 5X longer than properly priced houses and often sell for less due to buyer interest drop-off. If you would like to receive an accurate analysis on your home, our team can provide that complementary.
Median Price Sold
Atascadero: $670,500
San Luis Obispo: $1,049,000
Paso Robles: $650,000
Los Osos: $1,062,000
Arroyo Grande: $1,112,000
Grover Beach: $682,000
Atascadero and SLO saw a pullback in the median sold price, while Paso Robles and Grover Beach for example saw a slight uptick in pricing. We expect home prices to stay relatively stable over the summer months unless there is a significant change in interest rates or inventory. We agree with the Forbes article “Mortgage Rate Forecast For 2023” which states:
“The new projection implies two more rate hikes before the end of 2023 if the Fed proceeds with quarter-point increases.” – Forbes Article
Inventory Months Supply
June 2023 for SLO county: 2.2
We have not seen much change in Inventory Months Supply for the Central Coast and we expect the months supply to hold steady for the rest of the year.
A typical months supply for the SLO County area is around 4, so we are still low historically speaking. If we see a pull back in interest rates or new build projects go through for the county, we will see an uptick in supply for housing.
Conclusion
When selling your house in June-July-August we suggest pricing your house accordingly for the current market. If you are selling your house in SLO county and purchasing a replacement property on the Central Coast, prepare accordingly so you can secure the new home. If you are a first-time home buyer, make sure to prepare by saving your downpayment, repairing your credit, and creating a clear criteria.
We have successfully helped many families and investors on the Central Coast with their real estate needs, so if you would like to discuss your goals, please reach out.
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