BY JOHN LYNCH DECEMBER 27, 2023
The San Luis Obispo County and California housing market experienced yet another month of limited sales, low availability and plateauing prices in November as home sales in the Golden State hit their lowest point since the Great Recession.
The California Association of Realtors’ most recent home sales and price report showed California home prices falling month-over-month in November, but marked the fifth straight month of year-over-year price growth.
However, though sales were weak and supply was tight, local housing experts said there might be a glimmer of hope on the horizon for the market as mortgage rates finally started declining in earnest.
According to mortgage lender Freddie Mac, 30-year fixed-rate mortgage rates finally began to trend downward in November after peaking at 7.79% Oct. 26.
Mortgage rates ended the month at 7.22%, and have since declined to 6.67% as of Dec. 21, according to Freddie Mac.
“While sales have been weak for the past several months, a tight supply of homes for sale is keeping home prices from falling,” California Association of Realtors senior vice president and chief economist Jordan Levine said in the report. “Going into 2024, the recent decline in mortgage rates, along with the upward momentum in home prices, could motivate more would-be sellers to list their homes for sale in the spring home buying season.”
Here’s what experts say November’s improvements in mortgage rates could mean for the San Luis Obispo County housing market — and what’s holding the market back.
MARKET LOOKING UP AFTER ONE OF THE ‘SLOWEST NOVEMBERS’ ON RECORD
San Luis Obispo County Realtor Lindsey Harn described the past month as one of “slowest Novembers” for sales of her career, and said the market will benefit from the past month and a half’s declining mortgage rate.
However, declines in mortgage rates aren’t the answer to all of the market’s problems, as low inventory and economic uncertainty are still some of the biggest forces in the housing market today, she said.
San Luis Obispo County Realtor Graham Updegrove said many of the local housing market already suffers from limited transactions due to a high share of second homes in the county — as high as 9% — and an older population with few incentives to move on from favorable mortgages.
Updegrove said because housing production in California has lagged behind its demand for the past three decades, tight inventory will continue to keep prices elevated, regardless of interest rates.
Lower rates will allow more buyers to get a foothold in the market, Updegrove said, but could also mean slightly higher prices as sellers capitalize on renewed interest from buyers.
“As far as prices go, I think they’ll continue to be pretty stable, with minor appreciation in line with inflation,” Updegrove said. “Sales have been pretty weak, especially this year — I mean, our sales figures on the annualized rate are basically half of what they were in 2021, which was the peak here.”
SALES CONTINUE TO SLIP STATEWIDE
In November, sales dipped across California, falling in all five of the California Association of Realtors’ major regions.
The Central Coast region — which consists of Monterey, San Luis Obispo, Santa Barbara and Santa Cruz counties — registered the second-highest decline in sales in the state as sales declined 10.4% compared to last November.
San Luis Obispo County posted identical sales figures to November 2022, with 144 sales last month based on 348 listings, which was up 5.5% over that time.
Median home price was similarly static last month in San Luis Obispo County, climbing by 0.5% year-over-year and falling 0.8% from October’s price of $895,000.
Though Monterey County saw more growth in median price, rising by 15.2% year-over-year and falling 14.4% from last month for a median of $944,000, it performed more modestly in terms of sales and listings.
In Monterey County, 124 homes were sold in November — a 2.5% year-over-year increase — based on 270 listings, which was down 16.7% year-over-year.
Santa Barbara County saw far more significant increases in sales and listings, with 111 home sales and 291 listings last month — year-over-year increases of 24% and 10.6%, respectively.
Median price declined month-over-month in Santa Barbara County last month, falling 14.4% to $900,000, though this was 12.5% higher than the previous November.
SOME PRICES FLUCTUATE AS SALES DECLINE ACROSS SLO COUNTY
Within San Luis Obispo County, only a few cities saw notable fluctuations in price, sales and listings in November.
In San Luis Obispo, median price reached $1.13 million — a 16.8% year-over-year increase and a 4.6% month-over-month increase.
Last month, 25 homes were sold in San Luis Obispo, a 38.9% year-over-year increase, while 36 homes were listed, a 2.9% increase.
Farther north, median price declined 1.2% year-over-year and 1.7% month-over-month in Paso Robles, reaching $741,000 in November.
In Paso Robles last month, 32 homes were sold — 33.3% more than this time last November — and 70 homes were listed, same as the previous year.
Nearby, Atascadero posted a median price of $710,000 after falling 11.3% from last year and declining 27.3% from October.
Sales declined 21.1% year-over-year, while listings grew by 58.6% to 46 in November.
Templeton’s median home price of $1.35 million was the highest in the county in November, and represented a 76.5% year-over-year and 50% month-over-month increase, though this high median can likely be attributed to low sales.
Last month, six homes were sold for a 40% year-over-year decrease, though listings increased 13.3% year-over-year to 17.
In Cambria, prices softened by 41.3% from last November but rose 12.6% from October, reaching $800,000.
Sales grew by a whopping 300% to a total of eight in Cambria, though this is likely due to few sales last year, with listings rising 28.6% over that time to 27.
Morro Bay experienced a small rise in median price, growing 8.7% from this time last and falling 3.7% from October to $1.03 million.
Just two homes were sold in Morro Bay last month — a 71.4% decline — while listings fell 26.3% to 14.
Los Osos posted a median price of $928,000, which was 5.8% lower than last November and 14.6% higher than October’s median price.
In November, eight homes were sold and 10 homes were listed — year-over declines of 11.1% and 47.4%, respectively.
Arroyo Grande posted South County’s highest median price at $1.3 million — a 21.3% year-over-year and 22.6% month-over-month increase.
In Arroyo Grande, sales increased 10.5% from last year to 21, while listings slipped 3.8% to 25 over that time.
Grover Beach was home to the least expensive homes in the county, with a median price of $642,000 that was 11.8% lower than last November and 16.6% lower than October.
Just six homes were sold in the South County city last month, which were 40% fewer than last year, and its eight listings were 33.3% lower compared to last year.
Pismo Beach ended November with a median price of $966,000 that was 16% lower than the previous November and 7.5% higher than October.
The 24 listings in Pismo Beach were up 84.6% from last year, while its five homes sold represented a 16.7% decline.
Nipomo saw prices decline 16.4% from last November and 4% from October, settling at $792,000.
Last month in Nipomo, 10 homes were sold — 37.5% fewer than last year — based on 27 listings, which increased 12.5% over that time.
HOW FAR COULD RATES FALL?
As usual, the market is cooling during the holiday months, when buyers have less time to shop for homes, Harn said.
“A lot of home buyers tend to get distracted — they have family visiting, and there’s all of the typical distractions where (house hunting) doesn’t become a priority,” Harn said. “Looking at homes in the pouring rain is usually not as not as glamorous of a process.”
Though interest rates of 5% could become a new norm in a few months and rates are trending in the right direction, Harn said there’s no guarantee they’ll continue to fall.
“I think a lot of it’s really going have to do with how retail and a lot of consumer spending goes,” Harn told The Tribune. “I think (rates are) definitely tracking to be down — it’s just how much lower that’s going to be.”
This story was originally published December 27, 2023.