We continue to see strong demand for single-family houses here on the Central Coast of California, bolstered by low inventory and out of the area buyers wishing to move into one of the most desirable coastal areas of California. The low inventory of homes for sale is in part due to something we call the “rate lock-in effect,” a phenomenon seen when many homeowners who have locked in a low mortgage rate in 2019, 2020, and 2021 are reluctant to sell and take on a much higher rate with a new home. This low inventory has kept home prices strong in many cities here on the Central Coast, however, we have seen some pullback from the high prices of 2021 and 2022 where mortgage rates were at a historic low.
New Listings
We have seen and increase of new listings for the month of May, totaling 273. This is up from 255 for April, but still low considering in June of 2022 the new listings were 422.
New listings around the country have seen a drop overall, primarily due to the “lock-in effect” we discussed already. 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 inventory market has contributed to a more competitive market for buyers and caused many renters to remain renting for the time being, which has pushed rental rates up.
Days on Market
DOM for May 2023: 8
As expected, low inventory and relatively high demand has led to low days on market. For May of 2023 we saw the median days on market reach 8, which is low considering in the more normal market of May 2019 it was 20 days on market.
This has led to a competitive market here on the Central Coast and we expect it to remain this way for the near future. This means that buyers need to be prepared to act quickly and schedule a showing right away so they don’t miss out on the perfect house.
Median Price Sold
Atascadero: $807,500
San Luis Obispo: $955,000
Paso Robles: $667,000
Los Osos: $810,000
Arroyo Grande: $909,950
Grover Beach: $669,500
We continue to see strong sales prices here on the Central Coast bolstered by the high demand and low inventory. We expect this to continue into the summer months of 2023, with a pullback expected when rates lower. Historically SLO County is well insulated from recession and home price pressures, so we don’t have major concerns with a major correction in prices unless there is an unforeseen element thrown in the mix.
Inventory Months Supply
May 2023 for SLO county: 2.3
A typical months supply for SLO county is around 4 months supply, which is definitely higher than the 2.3 months supply we are seeing now. Unless we see more sellers motivated to sell their houses, we expect this inventory issue to remain. While being low, we are heading towards a more normal monthly supply and for contrast, in December of 2021 we saw the inventory months supply at a historic low of 1.0.
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, make sure to 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.
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