Fourth Quarter 2001

   The 2001 real estate market experienced significant changes throughout the course of the year. North County sales volume exceeded 500 million dollars but the number of actual sales dropped 25% as compared to 2000. Some segments of the market remain very strong while other market segments have weakened. This report will take a close look at the local individual real estate categories.

   Residential single family homes are the strongest segment of our market. The median sales price of North County homes came in at $230,000, which reflects a 15% year to year increase. We expect a modest percentage price increase, in the low single digits, for 2002. Paso Robles issued a record 428 residential single family permits. Demand for new homes should remain strong with fewer built. Low interest rates have kept the home market vibrant.

   Selling homes, on acreage, has become a much more competitive proposition. Sales dollar volume and the actual number of sales dropped 20% as compared to 2000. The median selling price jumped 30%, to almost $400,000, for all homes on acreage. High land costs and high construction costs have pushed seller expectations to new heights. Properties priced above $600,000 are experiencing a much longer marketing time. High end softness, in the urban areas, is carrying over to our market. There is still a relatively moderate supply of homes on acreage for sale. Demand is moderate.

   Acreage sales dropped 30%, from 2000, with agricultural ground experiencing a 50% drop in volume as compared to 2000. Single family and small acreage parcels remained strong with no drop off in volume and very strong pricing. Parcels 20 acres, and up, are seeing less activity. Demand for plantable wine grape acreage is very soft due to the wine grape supply situation. There is not a lot of inventory but the marketing time for selling acreage will be significantly lengthened.

   Demand for income producing property is very strong. People want to own real estate that generates income in the North County. This appetite for income property includes commercial, industrial and multi-family. It's a very healthy sign, for our community, to have this strong demand for income producing real estate.

   Our wine industry continues to surge forward. There are some exciting wines being produced and recognized throughout the North County. Wine grapes are in a long supply position and the emphasis, at the grower level, is quality. The wine grape market is in balance today but there remains a lot of vines still coming into production. More North County wineries will receive county building approval this year.

   The urban areas of Los Angeles and the Bay Area have a material impact on our market. High end properties are soft in Los Angeles and very weak in the Bay Area. Los Angeles real estate remains solid with good pricing and good velocity. Bay Area pricing and velocity reflect the weakness in the technology sector. Overall the real estate markets in the urban areas remain healthy.

   There are some interesting issues to follow in the coming year. The backlog in allocations for building permits should shrink in 2002. Building fees will probably rise in the City of Paso Robles. Mold, in single family homes, will become a cottage industry for attorneys, inspectors and mold removers. Aggressively combat any mold you have in your home today. The State Department of Housing and Community Planning wants our County to add 50,000 new residents in the next few years. I wonder where they will go to school? The General Plan update will begin in Paso Robles. These are all issues we need to personally be involved with in the decision process.

   The demand to live in a place like North County is insatiable. How we manage growth, in relation to our quality of life, will be our legacy. We all can make a difference. Real estate laws have a significant impact on our community. Get involved. Our time is now.