Summer Cooldown? August Housing Market Report for The CENTRAL COAST

It is August, which means we have the data from July, so join us as well recap on last month and give you some trends for the upcoming months!

As always, we want to thank our wonderful clients who have chosen to work with us and refer us as their preferred real estate team here on the Central Coast!

– Joshua Farris, Broker Associate / Real Estate Advisor at KW Central Coast. Lic# 01921964

 

ACTIVE LISTINGS ARE UP 20% YoY IN SLO COUNTY

 

Active listings on the Central Coast in July are up 20% when compared to 2023. We saw around 650 properties for sale in the County of SLO for July, which is is still below historic numbers of around 1,100-1,300 for July. This increase of inventory YoY is due to a few factors: (1) Sellers feeling more confident taking their property to market (2) Sellers accepting the 6-7% mortgage rates and acknowledging that the days of 3-4% interest rates are over. In other words, the “lock-in” effect is diminishing. (3) Buyer demand waning slightly due to elevated interest rates and a desire to “wait and see.”

 

“The housing market might finally be entering a transitional phase. Summer sales have been tepid thus far, but there are signs that activity could heat up by the end of the summer as mortgage rates edge down and much-needed resale inventory continues to enter the market, giving buyers more options. Other good news for home shoppers is the ongoing decline in the median price for a new home—now below the median resale home price—even as builders continue offering buyer incentives. Nonetheless, experts say the housing market will only see renewed momentum once mortgage rates drop enough to ease affordability challenges and incentivize homeowners locked in at low rates to move so inventory grows substantially to meet demand.” –Forbes.com

 

This increase in inventory is a shift in the right direction. The Central Coast has historically had a low inventory of available homes for sale and this has made it difficult for home buyers. Not all price points have seen an increase in inventory levels and we continue to see very low levels of inventory in the entry level SFR market, especially in SLO.

 

“With an increase of housing inventory and a pull back in buyer demand, leading to a slump in pending sales, now may be a great time as a buyer to gear up for home shopping in Q3 and 4 of this year. There is less competition among buyers, more houses for sale, and fewer multiple offer situations, all leading to sellers more open to seller concessions and price negotiations. In other words, don’t want until interest rates drop and you have to compete with other buyers like in 2021 and 2022.” -Joshua Farris, Broker. KW Central Coast. lic#01921964

 

DEMAND

 

We see a slight pull-back in the average percent of original price received compared to last year. 99.1% was the AVG closed value to original asking price in July of 2023… now we see the % of original price received at 97.6%.

 

As a real estate broker, I have a pulse on the market here locally. I can usually tell if a home is going to get a lot of offers or is over-priced. Each home is different and requires a different approach to the strategy… for example last week I helped 3 clients buy homes and in two of the cases we were able to close under the asking price and in the 3rd case we had to increase our offer by over $40,000 to beat out the other offers.

 

If you are a buyer and you are wanting a deal, look at homes that have been on the market for a while, you will typically secure a better price because you are not dealing with as many other bidders.

 

“My advice is to price your home for today’s market. We are still in a seller’s market, but we are not seeing the frenzy we saw in the last couple years. If you overprice your home, expect more days on market and some more concession requests as a seller. Price your property properly and you can expect strong interest and offers within the first couple weeks.” -Joshua Farris, Broker. KW Central Coast. lic#01921964

 

PROPERTY VALUE TRENDS ON THE CENTRAL COAST

 

We continue to see property values holding strong even though we have seen elevated mortgage rates and a slight pull-back in buyer demand due to the elevated rates. Rates have dropped in the last week with an AVG rate for the 30 year hovering around 6.5%…. which a great reduction from the highs in October of 2023. I expect rates to drop even more in Q3 and Q4 to the lower 6% range, which could heat the market back up and push home values up, especially in the step-up home market.

 

Greg McBride, Bankrate’s chief financial analyst, expects rates to fall gradually throughout the year, reaching 5.75 percent by the end of 2024. “Mortgage rates will spend the bulk of the year in the 6s, with movement below 6 percent confined to the back half of the year,” says McBride.

The Mortgage Bankers Association forecasts a similar outlook for the end of 2024, projecting rates to slide to 6.1 percent. Fannie Mae, meanwhile, calls for rates to dip to 6.5 percent by year’s end, while Bright MLS, a real estate listing service in the Mid-Atlantic region, forecasts a decline to 6.2 percent. Bankrate.com

 

The coastal cities lead the pack for median closed sales price with the median sales price for Pismo Beach being $1,375,000 in July, $1,903,200 for Avila Beach, and Cambria at $1,379,500. Grover Beach continues to be one of the most affordable “coastal” cities with a median sold price of $790,500 in July. We predict that these coastal “retirement” towns will continue to see strong demand in the future due to macro trends… for example, baby boomers retiring at a rate of 10,000 a day in the U.S.

 

With San Luis Obispo being such a hot market, we see the secondary markets outside of SLO proper continuing to see robust growth and demand. The cities of Atascadero and Paso Robles lead the pack when it comes to homes sold and we expect these markets to show strong value increases into the future with more and more demand coming from out of the area buyers and people moving from SLO.

 

SELLING OR BUYING IN SUMMER OR FALL?

 

We are still seeing strong demand for homes here on the Central Coast and I don’t think that will change anytime soon! We have amazing weather, nature trails, the beach, one of the best wine regions in the world, and a wonderful community. If you are looking to relocation to the Central Coast to enjoy the lifestyle it has to offer, reach out and we will help you find the perfect home and property for your lifestyle.

 

If you are considering a move in 2024 into a house or property that better fits your lifestyle and stage in life, reach out to our award-winning team, we are here to partner with you and help guide you with all things real estate here on the Central Coast. Whether you are looking to buy your first home, upgrade your current home, invest, or maybe you want to downsize, we have you covered!

 

We have a consultative, value-first approach tailored to your needs, goals, and timeframes.

 

Learn more about our process here: OUR PROCESS

 

“Josh was wonderful! He was always available to answer my questions and guide me through the paperwork. He was thoughtful and patient with me. I would recommend Joshua to anyone who is buying or selling a home.” – Ronald Miller (Grover Beach)

“Joshua is an exceedingly diligent, knowledgeable, and trustworthy realtor. He patiently listened to our needs, answered our questions and carefully tailored the process to make it as smooth as possible. We are very grateful for Joshua’s guidance and expertise in finding us a home.” – Clark G. (Arroyo Grande)

“Josh was amazing in helping me buy my first home. His connections in SLO helped us get our offer accepted in a competitive market. He also was patient with all the questions I had and guided me through every step of the process. I highly recommend Josh!” Alex D. (SLO)

Real Value •  Real Results • Real Simple.