CENTRAL COAST HOUSING MARKET UPDATE – JANUARY 2025

 

As we head into the New Year, we see a continued increase of housing inventory,  which has led us into a more balanced market. This shift from a strong seller’s market is a welcome change for many, giving buyers more options to choose from here on the Central Coast. In spite of high mortgage rates, we have seen property values hold strong. With days on market increasing in the month of December, we may see downward pressure on prices in 2025.

 

“The Central Coast had a strong transaction volume with $432,000,000 sold in the month of December. This volume was bolstered by some notable luxury sales, including the sale of Exotic Garden in Cambria for $17,225,000. We head into the new year with wary optimism for the real estate market on the Central Coast, with a predicted increase of transactions vs 2204.”

-Joshua Farris, Broker. KW Central Coast. lic#01921964

 

Many experts anticipate more inventory and an increase in transaction volume due to buyers tired of waiting on the sidelines. In order for the market see pre-pandemic numbers, we will need to see a strong reduction in mortgage rates.

 

MEDIAN SALES PRICES

 

“For housing market conditions to improve, housing supply needs to increase. As mortgage rates decrease, more sellers should come onto the market and list their homes, increasing the number of for-sale homes available.

In terms of new home construction, Fannie Mae expects the number of housing starts to end the year down 5.8% but increase 1.4% next year, driven largely by the construction of multifamily homes. The MBA says starts will rise 4.4% in 2025 and 1% in 2026.” – Business Insider

 

 

Days on Market and Price Per Square Foot

In December 2024, the median days on market for homes has seen a significant increase of 64% compared to December of 2023. Homes now take a median of 28 days to sell, up from last year’s 17 days. Homes took longer to sell as buyers faced higher mortgage rates, the Holidays and limited inventory. While the market remains competitive, especially in desirable areas like San Luis Obispo and Paso Robles, the higher interest rates have led to more cautious buying behavior, resulting in longer wait times for sellers. Homes that were previously selling quickly in 2023 are now sitting on the market longer as buyers adjust to the economic climate and affordability challenges.

 

Predictions for 2025: Buyers and Sellers

Looking ahead to 2025, the housing market is expected to see a few key trends emerge for both buyers and sellers.

 

• For Buyers: Inventory levels may improve, but they are expected to remain lower than historical averages, keeping competition for homes elevated. Higher interest rates will continue to impact buyer purchasing power, but buyers can still expect to find opportunities in the market, especially with properties that have a high days on market. We expect home prices to remain relatively stable, though some markets may see slight decreases due to higher borrowing costs. Buyers should prepare for a market where they may need to act quickly to secure the right property.

 

• For Sellers: If you’re thinking about selling in 2025, the market will likely continue to favor sellers, especially those with well-priced and well-maintained properties. Homes that are move-in ready will likely receive strong interest, and it’s expected that homes will sell quickly, with a median list-to-sale price ratio of around 98% of asking price. However, sellers will still need to price their properties thoughtfully to avoid sitting on the market too long in an environment with higher interest rates.

 

Hot Trends for 2025 Homebuyers

As we move into 2025, homebuyers’ preferences continue to evolve, influenced by lifestyle changes, technological advancements, and broader economic trends. Here are the top five things buyers are looking for in a home this year:

1. Energy Efficiency and Sustainability

Buyers are increasingly prioritizing homes with energy-efficient features. Solar panels, energy-efficient appliances, smart thermostats, and well-insulated windows are high on the list. Homes with certifications like LEED (Leadership in Energy and Environmental Design) or those built with sustainable materials are especially attractive. This trend reflects a growing concern for the environment and the desire to save on long-term utility costs.

2. Dedicated Home Office Spaces

Remote work is here to stay, and buyers are seeking homes with designated office spaces. Whether it’s a separate room, a nook, or a flexible layout that can accommodate an office setup, the ability to work comfortably from home is crucial. High-speed internet access, noise-reducing features, and privacy are key factors in choosing the right workspace.

3. Outdoor Living Spaces

Outdoor spaces are more important than ever, with buyers desiring larger yards, patios, decks, and outdoor kitchens. These spaces provide room for relaxation, gardening, entertaining, and even working or dining outdoors. In a post-pandemic world, the ability to enjoy the outdoors and create a personal oasis at home is a top priority for many buyers.

4. Warmer Colors

In 2025, one of the notable trends in home design is a shift towards warmer color tones. After years of cooler, minimalist palettes, buyers are increasingly gravitating towards warmer hues that create a cozy, inviting atmosphere. Earthy tones like soft beiges, terracotta, warm greys, olive greens, and deep browns are making their way into interiors, offering a sense of comfort and tranquility. These colors are especially popular in living rooms, kitchens, and bedrooms, where homeowners want to foster a relaxed, homely vibe.

5. Move-In-Ready Condition

Given the current housing market conditions, many buyers are looking for homes that are in excellent condition and require little to no immediate work. Freshly renovated kitchens, updated bathrooms, and well-maintained systems (HVAC, plumbing, etc.) are highly appealing. Move-in-ready homes allow buyers to avoid the hassle of renovations and start enjoying their new property right away.

In summary, energy efficiency, home office spaces, outdoor living, smart technology, and move-in-readiness are the top features buyers are looking for in 2025. These preferences reflect broader lifestyle changes, technological advancements, and the ongoing demand for homes that cater to both convenience and sustainability.

 

MAKING A MOVE ON THE CENTRAL COAST?

We are still seeing strong demand for homes here on the Central Coast and we don’t think that will change anytime soon!

We have amazing weather, natural beauty, amazing beaches, an award-winning wine region, and a welcoming, friendly community of residents.

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 real estate 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, buy your upgrade home, sell a ranch, buy an apartment building, or buy a farm, 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

 

• “I highly recommend Joshua Farris for all your Real Estate needs. He’s very detailed oriented. He’s always available to answer any of your questions. The Listing, Sale & Close of Escrow went very smoothly with no hitches! On a scale from 1 -10…Joshua’s a 10!” – George R. (Pismo 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.