Mid-Year Report 2004

           North County Real Estate sales neared 500 million dollars through June. 2004 should be another record sales year with over one billion dollars in closed transactions. Total sales volume has increased ten-fold over the past decade. Low interest rates, demand ahead of supply, strong urban pricing, and an elevated awareness of North County, because of the wine industry, have pushed forward this sales phenomenon. Many changes are on the horizon.

           Residential single- family homes account for nearly half of the North County sales volume. The average North County home now tops $362,000 with the $400,000 average number clearly in sight. Homebuyers continue to flock to our area because our pricing, on a cost value basis, is one of the best bargains in the state. A coastal influence, small town charm, clean air, rolling hills and a great climate make the North County very competitive in attracting discretionary buyers with wealth. Most new North County homes will be priced at $400,000 and above. A slight bump in interest rates should have little effect on this market segment.

           Interest rates are going up. In fact rates have gone up almost a point over last year. Higher rates will slow down price appreciation but rates will not immediately impact demand. The effect of higher rates on the economy and existing homeowners should be negligible in the third quarter. 85% of U.S. home loans are on long term fixed interest rates. A strong economy and short supply will keep home pricing strong.

           Homes on acreage and higher-end properties are the strongest price components of the North County Real Estate market. The average home sales price on acreage neared $590,000. More million dollar properties have sold this year as compared to last years total sales volume. Buyers are seeing the value offered in high-end properties and seizing the opportunity. Smaller ranchettes are in huge demand and short supply. As buyers snap up these properties, demand will continue to outstrip supply.

           Raw acreage is shrinking with no increase in supply. They are not making any more dirt. It's a great time to sell raw land and a tough time to buy acreage. There is a lot of buyer interest in raw land acquisition. Westside small acreage parcels are in high demand.

           The wine industry in North County is strong. Many small wineries are selling all of their product out very quickly. More and more high quality Paso Robles wines are catching the attention of wine consumers. Grape pricing is reasonable in some varieties but remains very weak in Cabernet and Syrah. New plantings are rare. New wineries continue to pop up with no end in site. This industry has a great future in the North County.

           The communities of Atascadero, Templeton, Paso Robles, and San Miguel are vibrant and alive. We have huge challenges in regards to water, sewer, traffic, and education. Real Estate values reflect the financial health of a community and our ability to attract wealth. We have a desirable product. Real Estate sales and pricing will be solid in the third quarter.

Pete Dakin
RE/MAX Parkside Real Estate

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