High interest rates continue to limit SLO County home sales. Will that change this year?
Housing affordability increased modestly in San Luis Obispo County in the first quarter of the year, while stubbornly high interest rates continue to tamp down home sales.
According to a new report from the California Association of Realtors, San Luis Obispo County’s median of $895,000 in the first quarter of 2024 is considered affordable to just 10% of the county’s households — a mild improvement on the county’s 8% affordability rate in the last quarter of 2023.
To afford a median price home, a San Luis Obispo County household needs to make at least $229,000 a year, making it the second-least affordable county in the state behind Mono County, where 4% of homes are affordable, according to CAR’s report.
Overall, the Golden State saw a similarly modest improvement in affordability from 15% to 17% in the first quarter of the year even as statewide median prices reached an all-time high in April, according to CAR.
California Coastal Real Estate Realtor Graham Updegrove said interest rates were trending in the right direction to start the year, but recent fluctuations pushed the rate north of 7% for a 30-year fixed-rate mortgage.
“Interest rates are still expected to decline eventually, however the Fed has pushed back expectations of when the federal funds rate is likely to be decreased,” Updegrove said in an email. “Any hope for rates in the high 5’s by end of 2024 is looking slim.”
Inventory rising but still limited
Updegrove said new listings have been increasing month-over-month as summer approaches, which is relatively normal for San Luis Obispo County’s market.
That said, with around 400 active single-family homes for sale as of May 17, Updegrove said low overall inventory will still play a limiting role in the market’s performance this summer.
Since early 2021, inventory has been generally depressed from its normal summer levels, Updegrove said.
In the pre-COVID-19 pandemic years, it wasn’t uncommon to see more than 1,000 homes for sale in San Luis Obispo County during the peak summer months, Updegrove said.
With low inventory, buyers across the county are routinely selling for around 99.8% of their listed price, meaning buyers looking for a discount or making low offers may be at risk of being beat out by those who can meet the asking price outright, Updegrove said.
In recent months, this bottleneck in sales caused by low inventory has driven prices up across the state, with the state’s median home price pushing north of $900,000 for the first time in the state’s history, according to CAR data.
“It is super important to have ‘ducks in a row’ when looking at homes, as most properties are going into escrow within the first two weeks of being listed for sale,” Updegrove said. “For buyers waiting a week or more to view a home and/or get financing lined up, they are often too late as an offer has often been accepted already.”
SLO County prices hold steady as city prices rise
Across San Luis Obispo County, April prices were down 3.3% from this time last year, with 186 units sold out of 354 active listings during the month, according to CAR’s data.
Sales and listing figures were 30% higher in April than they were the previous year, while the countywide median of $894,000 was around 3.3% lower than this time last year.
In San Luis Obispo, prices were up 18.4% year over year, reaching $1.24 million. Listings grew 28.6%, reaching a total of 36, while sales grew by 68.4% over that time to 32.
Pismo Beach led all cities tracked by CAR in the county with a median home price of $1.56 million, a 7% year-over-year boost.
Pismo Beach’s five homes sold represented a 16.7% year-over-year decrease, but listings grew by 43.8% in that time to 23.
Elsewhere in the South County, prices softened as listings grew.
In Arroyo Grande, 16 homes were sold — a 20% decline — and 31 homes were listed for sale, 29.2% more than the previous year.
Arroyo Grande’s median home price fell by 5.1% year over year to $1 million in April, according to CAR data.
Neighboring Grover Beach’s median price similarly declined, falling 17.4% to $823,000, while listings spiked 325% year over year to 17 and sales grew by 100% to 10.
Farther south, Nipomo homes sold for a median of $890,000 in April, declining 18.3% year over year while sales improved 22.2% for a total of 11 and listings grew 123.1% to 29.
In the North County, prices were generally lower, with Atascadero’s median price falling 4.2% from last April to $775,000.
Atascadero’s 20 home sales were a drop of 9.1% year over year, with listings falling 20% to 24 in April.
In nearby Templeton, median prices fell 41.4% from April 2023 to $886,000, while sales improved by 16.7% for a total of seven based on 18 listings, which increased by 20%.
Paso Robles was the second-least expensive place in the county despite a 19.3% increase in price, ending April at $795,000.
Last month, 44 homes were sold in Paso Robles — an 83.3% year-over-year increase — while listings grew 49.1% to 82.
Along the coast, Morro Bay’s median price grew 27.4% from last year to reach $1.31 million. In April, 18 homes were listed in Morro Bay — a 12.5% increase — while seven homes were sold, same as April 2023.
Nearby, Los Osos was slightly more expensive at $920,000, with the median price falling by 12% from last year. Sales in Los Osos declined by 12.5% over the past year for a total of seven, while listings spiked by 366.7% over that time to 14.
Cambria’s median price reached $950,000, rising 23.5% from April 2023, while 24 homes were listed — a 41.2% increase — and sales jumped by 166.7% to a total of eight in April.
More inventory, more sales to come
South San Luis Obispo County Realtor Barry Brown said the market remains strong for sellers thanks to that lack of inventory, but the consistently high mortgage rates may negate that advantage somewhat.
Brown said the average number of days on the market started the year at around 85 days and is currently sitting at 86 days.
Median list prices for homes in San Luis Obispo County are also up, increasing from around $1.1 million to around $1.2 million today, Brown said.
Brown said he was confident that more inventory will mean there’s still more selection for buyers and a potential increase in sales.
“Currently, the hottest seller markets are Los Osos with Atascadero next based on the rate of sales vs. available inventory,” Brown said in an email. “We had hoped there would be a greater easing of interest rates, but that has taken longer than the new year projections due to a stronger job market and inflation still not controlled as completely as the Federal Reserve has hoped for.”
This story was originally published May 22, 2024 at 10:56 AM.
