Generally speaking the third quarter is the defining quarter in most Real Estate markets. Spring escrows turn into summer sales. Strong third quarter North County sales pushed the overall volume to 500 million dollars in sales for the year. It was not so long ago that 500 million was the record for the entire year.

     Prices for residential single-family homes jumped 20% as compared to 2002. The average price for a North County single family home climbed to $320,000. New homes continue to be built and sold with record speed. Existing home resales are strong but inventory is building quickly. Buyers are being more selective. Upward price pressure is limited.

     Homes on acreage sales dropped 30% in number of units sold. The actual dollar volume only dropped 10% due to a $100,000 increase in the average sales price to $537,000. Homes on acreage pricing is very buyer sensitive. High sticker prices have certainly slowed down the number of sales and excluded buyers. There is more demand for high quality, highly appointed homes on acreage. The market is not real crowded from either a buyer or a seller prospective. A very selective and discriminating market. Location is all powerful.

     Acreage sales volume jumped almost 20% but the actual number of sales fell by 23%. There is great demand for residential single-family lots. There is great demand for parcels up to 40 acres. Pricing for residential single-family lots is super strong. Large agricultural parcels have moderate interest and activity. The weak wine grape market has impacted the large parcel sales volume.

     Commercial properties doubled in sales volume to almost 28 million dollars in 2003. The population growth fuels the commercial market through consumer demands for retail, restaurant and hotel services. Commercial properties are also very interest rate sensitive.

     Speaking of interest rates, we experienced a bump of almost 1 point during a two-week period near the end of July. Refinancing stopped and many lenders were caught short with many irate Clients that lost their loan lock. The mortgage market has since calmed down but we saw once again how itchy the banks are to boost interest rates. Rates shoot up like flames but fall like molasses. Watch for this scenario to be repeated in the future.

     High-end properties, up to a million dollars, have enjoyed their best sales quarter in years. This market segment was lethargic throughout the first part of 2003. Activity looks to remain solid in the fourth quarter. Properties above a million dollars move much slower.

     With all of the whining about the California economy, North County has escaped damage because of the wine industry. We have quadrupled the number of North County wineries and in turn created the beginning of a quality tourist destination. Grapes are in an oversupply situation but United States wine consumption jumped up 6% in 2002, which was the best showing in a decade. Our community has the potential to grab a significant share of the lucrative tourist dollar for years to come. It's all about quality in the product and the area.

     This year will finish off strong. Things are good. Surprisingly I would suggest the biggest issues we face in the coming years will be water and traffic. Improvement conditions and costs for new development projects will sky rocket. There is a building roar in the community regarding traffic that has yet to be heard. The cities will not be able to raise taxes to create more water, sewer and roads. People just will not approve the levies. The term "smart growth" will be in play. Our goal should be to maintain our quality of life for our community. All of the aforementioned issues will be on us within the next couple of years.