This is a look back on North County Real Estate in 2017 and some thoughts on the coming year. It’s a privilege to live and work in such a dynamic community.
Unit Sales for in town homes topped 900 properties for the second year in a row. The average sale price of residential single family homes in North County was $457,000 which reflects a 6% increase over 2016. This aforementioned market is by far the strongest market in our Community. We still have low historical inventory and new home construction is only starting to stir. Consistent demand coupled with lower supply is where we are heading in 2018.
Homes on acreage really jumped in price to an average sale price of $742,000 which reflects a strong 12% year over year increase. These properties had been lagging a bit but pricing is catching up. Atascadero and Templeton homes on acreage led the way. Million dollar homes also got some traction in 2017. The number of million dollar sales jumped up to 54 units over 38 in 2016. There is still a year and a half of inventory in this category but we went forward. Million dollar homes are still selling for well below replacement value.
Our rental market is still strong with little vacancy. However, there are close to 200 apartment units coming on in 2018. Also, we are beginning to see more infill residential construction throughout North County. If lending conditions remain favorable, we should see a significant increase in new construction in 2019.
The Wine Industry continues to drive a hospitality and entertainment industry that is actively accelerating. We have new hotels under construction and new restaurants. Paso Robles is the focal point of all this economic activity. Wine grape prices are solid and producing vineyard prices are firm. Even though Millennials are a quarter of the population these youngsters consume 42% of the U.S. wine! So we have that going for us which is nice!
Commercial Real Estate has been consistent. Retail is a little spotty with internet sales being strong. Financial industries, like banks, are growing. Office space is stable. Industrial is still driven by user demand but the Wine Industry is providing demand for storage, crush, etc. Multi-family sells quickly if it’s priced right.
Talk of the bubble has been replaced by the Tax Reform situation. Lord Zillow was quoted as saying in California homes could back up 4% in pricing later this year and go back double digit in 2019. Here is what we think in regards to North County. If the Tax Reform spurs GDP then Real Estate is good. If the Tax Reform kills growth, then Real Estate suffers.
We have lived for eight years with little growth and Real Estate driven by cheap interest rates. Now the Government is trying to replace a transfer of wealth economy into a growth economy. So let’s see what happens. Whatever happens we will compete. We do not live in fear, no one can predict the outcome.
North County is thriving for many reasons. We have a wealth of natural beauty and ideal weather. Our local government helps our Community compete and grow. We have wonderful Community Leadership and citizen participation. Individuals have invested large sums of money into our Ag and Hospitality industries. We have a wonderful new Regional Airport and strong economic activity in our Medical Community. The Napa Wine Industry started in 1966 with Robert Mondavi. I believe our modern day Paso Wine Industry began in 1979 with Eberle, Stan Hoffman, Sauret, Tom Martin, Hopes, Dusi, and Herman among others. We have a long way to go.