Central Coast-Pismo Beach-Nipomo-Santa Maria-Real Estate + Homes

Central Coast Market Report


Central Coast Market Condition Report

The Real Truth In This Market

Southern California Home Price Declines Bring Back Pre-boom Affordability

Home buyers may emerge as the biggest real estate winners in 2009, as affordability improves to levels not seen since 2003

Delores Conway, a real estate economist at the University of Southern California, says home prices have come down 40 % in Los Angeles and Orange County since the middecade peak. She notes that those prices, coupled with record low interest rates, mean today’s buyers can secure the same monthly payments home buyers enjoyed six years ago. “Most people are aware that home prices doubled and in some places went up as much as 150% — but they’re less aware that rents have also gone up,” Conway told Marketwatch on January 27. “People have to live somewhere.” While occupancies are tight and there is pentup demand, she noted, concerns over job security and the difficulty of getting jumbo loans are keeping the Southern California housing market subdued. Borrowing could improve if the $819 billion economic stimulus package passed by the House of Representatives and in review in the Senate includes additional housing incentives. For example, the current $7,500 first-time homebuyer tax rebate in effect through July 1, 2009, must be repaid over a 15-year period. The House is proposing that the rebate be paid to the buyer at closing, and that the buyer will not have to repay the incentive. Further, the House has recommended that FHA/GSE (Fannie Mae, Freddie Mac) conforming loan limits be permanently raised from $625,500 to $729,750. Senate leaders recognize that more housing stimulus is needed. They are debating government subsidies to expand the tax credit to as much as $15,000, to lower interest rates to qualified home buyers to 4%, and to place a brief moratorium on foreclosures, among other proposals.  Meanwhile, all eyes are on jobs. According to the UCLA Anderson Forecast, employment in coastal California will contract because of less demand for goods and services. The volume of imports coming through California ports is declining, the report notes, while the global recession is weakening demand for manufactured California exports. The fourth-quarter 2008 report also suggests that unemployment could rise as high as 8.5% in Southern California through 2009. Rising unemployment will pressure housing markets further as job losses result in foreclosures that inflate inventories. Yet, there’s hope on the horizon. In January, Fannie Mae announced it is testing a new program to speed up approvals on short sales, keeping additional homes from going into foreclosure. The good news for home buyers is that foreclosures are selling. Out of 838,261 filings made in California in 2008, 165,079 were sold at 39% below the original purchase price, according to RealtyTrac. Home buyers in Southern California are now challenged less by price than by loan availability. With fewer lenders, underwriters and loan officers on the job, there are fewer workers to take new applications, see them through the process, and get loans closed. As interest rates drift down, there are more applications for purchase loans, as well as refinancings. In turn, interest rates rise as lenders reach capacity, to better manage their pipeline. The outlook for home buyers is that affordability is not likely to improve much more. The best home selection in terms of both price (foreclosures, short sales) and appeal (desirable neighborhoods, schools) is disappearing. Buyers should start looking now and be ready to buy when they find the home that best meets their needs for the long term. They should have realistic goals about their housing investment, knowing that home price recovery will be slow for the next few years unless government subsidies ignite a new housing boom.

Fourth quarter results for Santa Barbara were largely positive, illustrating once again that affordability is driving housing sales volumes skyward. This is significant because Santa Barbara is one of the most sought-after communities in Southern California, with more listings in the luxury price range than any other county.

Buyers want to purchase market "Best Values". Buyer's agents know this and select the best values to show their clients. Therefore, if a property is not being shown, it is not perceived as a best value by buyer's agents (Realtors account for more than 80% of sales). Best value status is achieved by price position relative to other current sellers, not by promotion.

 

This year/Last year

     Sales This Year Versus Last Year 

This Year 

 Last Year

Change 

% Change 

3,978 

3,540 

438 

12% 

Santa Barbara County Hot & Cold Zip Codes By Listings Sold Units

Property                          Q4/2007     Q4/2008     %Gain/Loss

Santa Maria 93458                 54              156             188.9%

Santa Maria 93454                 48              134             179.2%

Lompoc 93436                        14               38              171.4%

Grover Beach 93433               19               36                89.5%

Buellton 93427                        8                14               75.0%

Cambria 93428                       26                19             -26.9%

Santa Ynez 93460                   10                 7              -30.0%

Pismo Beach 93449                 23                16              -30.4%

Los Osos 93402                       31                21             -32.3%

Oceano 93445                         18                12             -33.3%

Sales By Price And Zip Codes 

Property                      Q4/2007          Q4/2008         %Gain/Loss

Bradley 93426               $327,167          $485,200            48.3%

San Luis Obispo 93401   $490,821          $646,844            31.8%

Santa Ynez 93460          $1,614,400       $2,102,429         30.2%

Morro Bay 93442            $492,302           $600,978           22.1%

Templeton 93465           $546,622           $622,188           14.7%

Solvang 93463             $1,328,583         $1,044,843         -21.4%

Nipomo 93444               $547,961           $405,389           -26.0%

Santa Maria 93454        $291,433           $213,812           -26.6%

Buellton 93427              $553,125           $394,875           -28.6%

San Miguel 93451          $398,044           $246,584           -38.1% 

Lompoc (93436) sales shot up 171.4 percent from 14 units in Q-4 2007 to 38 units in Q-4 2008.

In Buellton (93427), sales increased 75 % quarter over quarter, largely due to a 28.6 percent drop in sales price year over year. Home prices averaged $553,125 in Q-4 2007, and sank to $394,875 for the same period in 2008. Prices here fell the most of any area in Santa Barbara County at 28.6 percent.

Housing sales are more stagnant in Santa Ynez, where the number of listings sold quarter over quarter was down 30 percent. This trend parallels the area’s 30.2 percent gain in average sale prices, up to $2,102,429 in Q-4 2008 year over year from $1,614,000 in Q-4 2007.

Solvang home prices averaged $1,328,583 in 2007, trending down 21.4 percent to $1,044,843 in Q-4 2008.

Santa Maria Sales soared in Santa Maria neighborhoods (93458 and 93454), which more than tripled in volume: number of listings sold increased by a whopping 188.9 percent and 179.2 percent respectively. These high numbers illustrate the power of affordability as Santa Maria home sold prices fell 26.6 percent quarter over quarter. Weak retail, new construction postponements, and 11.2 percent unemployment (well above the national average of 7.2 percent) are chilling the city’s economy. But those with good jobs and credit scores are taking advantage of improved affordability.

Fourth quarter results for Santa Barbara were largely positive, illustrating once again that affordability is driving housing sales volumes skyward. This is significant because Santa Barbara is one of the most sought-after communities in Southern California, with more listings in the luxury price range than any other county.

With relatively few homes priced below $500,000, it’s not surprising that sales volume is up over 53 percent in 2008 after a slide of seven percent in price.

chart to 500.jpg 

Still within conforming loan limits, homes priced between $500,000 and $750,000 also trended upward in units sold for 2008, following a modest one percent in price declines.

Chart 500 to 750k.jpg

Homes priced over $1 million have continued to sell crisply, with owners standing firm on price. Prices are up 11.6 percent since 2006, with sales volume down 44.5 percent.

Chart over 1mil..jpg

In the jumbo loan category, home sales reflected the continuing difficulty in obtaining large mortgages. Over a two-year period, sales volume slid over 62 percent, while prices gave little ground, falling just 3.9 percent since 2006.

Chart Jumbo Loans.jpg

Santa Barbara sales over the last year are up one percent after a devastating drop in volume of over 41 percent since 2006. However, prices are down 16.3 percent for the year, indicating that sellers are a little more negotiable.

Chart Santa Barbara sales.jpg

Distressed Property Report

The current count of REO (bank owned)properties in San Luis Obispo counties is 814. The number of Foreclosures in 584 and declining. The rate of foreclosures in San Luis Obispo County per 1,000 is 5.4. The market leader in California is Merced County at 35.2 per 1,000 units, about 7 times the rate of San Luis Obispo County. The presence of REO properties will continue to negatively affect the price line even thought the count is relatively low. The exact realtionship between the level of REO/foreclosure and its affect on price is unknown.  

 

There are many opportunities availible in this market

Call Rita or Mike today

805-698-3771

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Michael  Anderson