Median home price: What can you buy around SLO County?

Atascadero: This 1,735-square-foot home at 3105 La Luz Road has 3 bedrooms and 3 baths and is listed at $495,000.
Atascadero: This 1,735-square-foot home at 3105 La Luz Road has 3 bedrooms and 3 baths and is listed at $495,000. dmiddlecamp@thetribunenews.com

After years of sitting on the sidelines, waiting for the economy to recover, homebuyers and sellers have re-entered the housing market, hoping to either get into their first home or trade up to a new one.

In San Luis Obispo County, however, just finding an available home can prove difficult, and that fact is contributing to higher prices.

“Limited supply is a huge issue in the San Luis area,” said Wes Burk, owner/broker of Patterson Realty.

“It is bad, even worse, in many areas around the state, such as San Jose and San Francisco, which are seeing 12 to 25 offers on nearly every new listing. The demand continues to be robust, and as long as there is more demand than supply, we will continue to see appreciation.”

The area’s overall median price — the midpoint at which half of the homes sell for more and half for less — rose to $454,500 in January 2015 from $400,000 for the same month in 2014, a 13.6 percent increase, according to the most recent housing data from DataQuick, which monitors the local real estate market. It is part of a larger statewide trend, with the median price of homes sold in January increasing 6.5 percent to $376,000.

The median price of a single-family detached home rose to $458,500 in January from $436,500 in the same month a year ago, a 5 percent increase from January 2014, according to DataQuick, which plans to release February statistics for the Central Coast on Monday.

Prices, of course, can vary widely in San Luis Obispo County, depending on location. Many buyers understand that it will cost them significantly more to buy even a modest single-family home in San Luis Obispo than in North County communities such as Paso Robles.

“Generally speaking, prices in the North County are more affordable than SLO or the coast,” said Jim Liptak, president of James & Sydney Liptak Inc., a broker associate with Patterson

Realty and former president of the California Association of Realtors. “There was very little building in those areas in the last decade, while there was a lot of construction in the north. Given the water situation, not just in the North County but countywide, I don’t see this dynamic changing.”

The variation in prices in San Luis Obispo County is similar to what it has been at least the past decade, Burk said.

“San Luis Obispo is the hub and garners the highest values,” he said. “As you move out from San Luis proper, values and demand decrease in almost concentric rings. Coast-front properties can be the anomaly.”

Each community has its advantages and disadvantages, said Natalie Tartaglia of Tartaglia Realty in San Luis Obispo.

“I try to help my clients by showing them the differences that their money can buy,” she said. “So much more can be bought in North County, but it’s difficult to explain that to somebody when they are just starting to search.”

The city of San Luis Obispo, where even fixer-uppers are in high demand, can be a particularly difficult market to get into, especially for first-time homebuyers who often have to compete with Cal Poly parents purchasing homes for their children, Tartaglia said.

“There is more affordable housing in just about every town in this county than in SLO, with the exception of Cayucos and Avila Beach,” she said. “All of the first-time homebuyers that I have ever worked with have been young professionals with excellent jobs such as engineers and teachers. What they usually lack is a larger down payment and inventory in their price range. They are priced out of the market by buyers who have equity in a house to sell, buyers who are moving up from another area with more cash and/or credit history.”

If they manage to find a home, the size of the down payment for a potential homebuyer depends largely on the type of financing they receive, Realtors say. However, 5 percent down is typical for first-time buyers, and 20 percent is required to avoid private mortgage insurance, Burk said.

“We are not seeing very much available in loan programs with less than 5 percent down,” he said. “When the last boom occurred, there were many zero-down programs.”

While the median price creeps up, the total number of homes sold in the county — including new homes, resale single-family and condos — decreased by 2.3 percent in January, compared with the same month a year ago. In the state as a whole, overall sales in January 2015 were down by 2 percent from January 2014.

Sales in the county increased about 12 percent, however, for resale single-family, which represents the majority of total home sales, according to DataQuick.

Jordan Levine, an economist with Beacon Economics, which studies the local real estate market, said the lack of inventory is one reason for the overall dip in sales.

Another key factor in housing sales is the “mortgage side of the equation,” Levine said.

“People see prices going up and want to partake in the market, but while the average credit score you need to get a mortgage has fallen and it’s starting to get easier to get a mortgage, you still have to have a high credit score,” he said. “People may want to get involved and lock in a low interest rate, but with the underwriting standards, it can be hard to do.”

A few years ago, it was “don’t ask, don’t tell” when it came to getting the financing to buy a home, Liptak said. “Now, it has swung the other way, making qualifying, underwriting and especially appraisal far more difficult. Even with interest rates very attractive, it is hard for first-time buyers to break into the market.”

A recent report from California’s Legislative Analyst’s Office found that the state’s high cost of housing is having an adverse effect on businesses’ ability to attract and retain employees.

Home prices continue to be higher than almost anywhere else in the nation, about 2-1⁄2 times the average national home price ($180,000), according to the report. The higher prices are the result of a shortage of housing in California’s major coastal markets, despite high demand for it.

Levine of Beacon Economics also contends that the state “has not built enough housing to keep pace with the population growth we’ve had, and that’s what makes the market so tight.”

However, the local housing market is showing some signs of promise looking forward, given that the economy continues to heal and the unemployment rate is starting to fall.

“There are still a lot of programs for first-time homebuyers,” he said. “And as prices go up, you will see people who were underwater on their mortgage start to get home equity back, and that should help boost homes on the market for sale. They can now sell and move into something better.”

Appreciation is affecting affordability for many first-time homebuyers, but Burk of Patterson Real Estate believes historically low interest rates and market conditions that are not overly competitive make transactions easier to navigate.

“We are currently in what feels more like a normal market than any I’ve seen in my career,” he said.