North County Real Estate sales hit the ground running in the first quarter of 2004. The earthquake had no negative effect on sales numbers. Overall sales volume reached 180 million dollars. This number is a new record for sales in any one quarter.

           New home construction is beginning to catch up with buyer demand. In the first quarter, demand was stronger than expected and new construction was lagging behind demand. During 2004 we will see a strong increase in the supply of new homes for sale. Most new homes will be in excess of $400,000, which keeps resale home pricing strong. Inventory below $400,000 is very thin and these homes sell quickly. Homes priced above $500,000 are much more competitive and price sensitive in the sales cycle. Buyers are predominately move up buyers and inbound urban refugees. The average home sales price is close to $350,000.

           The high-end market, homes on acreage in the million-dollar range, had the best sales activity ever recorded in the first quarter. During 2003 the million dollar home market was sluggish especially in comparison to the residential single-family market. The first quarter million dollar market was strong because sellers of these properties adjusted their pricing to meet actual demand. Most high-end properties tend to come on the market above current comparable sales. Most high-end sellers are discretionary sellers and they will err on the high side of pricing. After a year or so on the market either the seller will adjust the price or the market will catch up in pricing. Most of the high end product that sold in the first quarter had been on the market for one to two years.

           Properties priced below a million dollars will sell much quicker than those valued well over a millions dollars.Raw land is in short supply and high demand. Generally speaking, the sales absorption time for land is one to two years. Again we saw in the first quarter land sell that had been on the market for over a year. Inventory of land for sale is thin. Demand is strong but financing constraints limit sales above $500,000. The west Templeton, Vineyard Drive, and Adelaide areas remain en fuego! There is still great demand for 5-10 acre parcels.

           The wine industry and the grape growing business are slowly rebuilding. It's not a great time to sell vineyards because pricing has adjusted to reflect softer grape pricing. Cabernet fruit prices are still down which has a material impact on the price of producing cabernet vineyards. Over the next few years look for older vineyards to be replaced and grape prices to trend back upward. There are a number of local wineries working very hard and making some exciting high quality wines. Our local wine industry has a great future.

           Interest rates are the dominant reason our market is hot. If interest rates jump up we cool off and price increases abate. Another factor in our strength is boomer drive for quality. We are a high quality coastal area that has low pricing in comparison to other high quality areas. We are inexpensive in comparison to other high quality areas like Carmel and Santa Ynez. As boomer wealth increases so will demand for this thing we have called North County. This is not a straight line up type event but quality sells. Our challenge is to recognize this demand and maintain our quality of life.

Pete Dakin
RE/MAX Parkside Real Estate

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