North County 2011 Third Quarter Review and Forecast
Real estate in North County is healing across most product categories. The first step in the recovery process is an increase in closed sale transactions. Properties in all categories have experienced a year to year increase in sales volume. Some property types are generating more activity than other categories. This report will outline the first three quarters of 2011 real estate sales in North County.
Over 200 more homes sold throughout the first three quarters of 2011 as compared to the same period in 2010. The average sale price for single family homes is at $260,000 which is identical to the average price for the first quarter of this year. More than half of the residential singe family homes were either foreclosures or short sales. From a supply stand point there are 100 less homes for sale today versus third quarter supply of 2010.
All indicators point to a steady supply of distressed properties coming on to the market in the coming months. There is still a great disparity between demand for lower priced homes versus demand for homes above $400,000. The higher priced homes have yet to garner any real traction forward. Due to the increase in sales there are enough comparable transactions to define market pricing. Price is still the dominant theme in our real estate marketplace.
High end properties, in the million dollar category, saw a doubling of sales in 2011 as compared to 2010. Fifteen million dollar homes sales were recorded in 2011 versus eight in 2010. From a supply standpoint we still have 65 upper end million dollar properties for sale or four years of inventory. Buying activity, at the upper end, is very fickle.
Lots and raw acreage sales are still wobbly. This market remains the weakest segment of our real estate business. We are starting to see some interest in acreage for planting wine grapes. Grape pricing has firmed up and wine sales are holding their own market share. Successful wineries are looking to control their source of fruit for a longer period of time. Paso Robles has a lot of upside in the wine world.
There has been modest buying activity in commercial property. Most of the building sales have been distressed properties but buyers are buying on a selective basis. Tenant demand for rental space is still very weak. The foundation for a healthy commercial real estate market is tenant demand. Vacant buildings, for rent, must start to fill up before the commercial market achieves any forward traction.
Financially most people are more concerned with losing money than with making money. This aforementioned containment mindset is heightened during periods of economical duress. Our 35% increase in home sales tells us that buyers are comfortable with market values in North County. Many buyers have more concern with the safety of their money in banks and stock funds that they do owning real estate. Investors are seeing real estate as a flight to safety! You won’t see that flight to safety story for a while on CNN.
Our collective national psyche is laboring under a oppressive malaise. Most of the damage we have done to ourselves has been self inflicted. We believe America will figure it out. North County has a future brighter than most communities in the world. In the end it all comes down to supply and demand. The price reset has happened in North County. Clearly our market pricing is attracting buyer activity. We believe the demand for the North County lifestyle is growing. If you are fortunate to be above ground today where else would you rather be to enjoy the day? We will come out of this thing stronger than we went into it.