We continue to see demand for houses here on the Central Coast which has kept our days on the market for homes low and pricing holding strong. Our inventory remains reduced due to many homeowners and would-be home sellers having a locked-in interest rate at a much lower rate than the current market mortgage rates. The Central Coast continues to see many out-of-the-area buyers move to the area due to the amazing weather, climate, beaches, and community.
New Listings
New listings brought to the market in October totaled 222, a 7% decrease YoY. The Fall season is typically a slower season for real estate transactions compared to the Springtime buying and selling season.
As discussed in our October 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 difficulty justifying making a move and taking on a higher mortgage rate. 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.
“Many of the lending experts I have spoken to say that rates need to be around 6% to 6.5% in order to get back to more normal inventory levels of homes for sale. The difference between a 3.5% mortgage and a 6.5% rate is palatable for sellers while a jump from 3.5% to 7.5% has made some would be sellers hold off on selling, hence lower inventory”
– Joshua Farris, with Joshua Farris Real Estate Advisors.
This low housing inventory, coupled with fairly high demand, has maintained a robust selling market in the county.
Days on Market
Days on Market for October 2023: 9
We have seen the median days on the market decrease from September to October, going from 12 days on the market to 9 days on the market for the SLO county. This is a good indicator that we are still seeing strong demand for the limited inventory and a signal that we will most likely continue to see strong demand in the foreseeable future.
Serious home buyers need to act quickly when a home they like reaches the market to avoid missing out, especially if it is well-priced. We advise that home buyers are pre-approved and clearly understand their criteria before they start seriously shopping.
The current challenge for some sellers is finding a replacement property when selling. We advise our clients to focus on the process and stick to a strategy when buying a replacement property. Because there is limited inventory, having the right strategy can be critical to not miss out on the perfect replacement property, hence our strategy session to help you determine the best strategy for you.
Median Price Sold in October 2023
Atascadero: $825,000
San Luis Obispo: $1,090,000
Paso Robles: $687,500
Los Osos: $912,500
Arroyo Grande: $900,000
Grover Beach: $816,250
Nipomo: $1,025,000
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Atascadero has seen the strongest price increase Year-Over-Year, due in large part to the increased prices and decreased inventory in SLO city. This has encouraged many buyers to look at communities like Atascadero for more affordable housing and larger lot sizes. We expect to see this continued trend in months and years to come as many people choose areas that are conducive to their lifestyle and wallet.
“The big question everyone is asking revolves around the mortgage rates and what they will do in 2024. If we see a significant decrease in rates we expect to see many buyers return to the market. We also expect more homeowners who have resisted selling in 2023 due to high rates put their house on the market, increasing the inventory of homes for sale. This is most likely result in initially pushing prices up and then, with a rush of inventory, to cause a slight reduction in some prices.”
-Joshua Farris, Joshua Farris Real Estate Advisors.
Inventory Months Supply
October 2023 for SLO county: 2.7
We have not seen much change in Inventory month supply for the Central Coast and expect the inventory 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 the supply of housing, and an increase of Month’s Supply.
Conclusion
When selling your house in November-December-January 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 to 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 clear criteria.
If you are considering a move for the Spring of 2024, we invite you to start the conversation with us now so we can properly advise you and help you prepare for your move and sale.
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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