The 2023 North SLO County Real Estate Market Summary

Inflation and a floundering economy have brought higher interest rates which has cooled both buyer demand and seller listing activity. When you combine higher interest rates and continuing rising prices, we get a significant adverse effect on affordability thereby softening demand. Would be sellers are reluctant to list their homes that have a lower interest rate mortgage, then buy a home at a perceived inflated price with a new, higher interest rate mortgage. Would be sellers are also concerned that they won't be able to find their replacement property because of the limited inventory. These factors are keeping would be sellers from entering the market thereby keeping inventory levels very low. Kind of a conundrum. The following 2 graphs illustrate the number of sales on a quarterly basis and the rate of year over year change. The 4th quarter 2023 number of sales, 218, reverses the recent downward trend showing a slight increase of 2% over the same quarter 2022. I believe that fewer sales are a result of softening demand and the fact that we have fewer homes available to sell. Velocity is running flat. Market time is climbing, multiple offers are fewer in number, properties are realizing more downward price adjustments and sale price to list price is softening.

The 4th quarter 2023 median sale price comes in at $717,500, up 6% from the 4th quarter 2022, nearly gaining back the value lost in the first 2 quarters of 2023. I don't foresee any crash in values because of the extremely limited inventory and high desirability of the Central Coast region. Property value appreciation is predicted to continue to climb through 2024.

The absorption rate graph above still shows we're in a sellers' market but what's apparent is we were in a very tight sellers' market as we entered 2022, eased up over the first half of 2023, began to tighten again through the last half of last year, and showing signs of tightening as we enter the new year.

The graph below shares 8 industry organizations' forecasts for 2024 prices. I believe prices in our micro market will realize slight gains early in the year but will accelerate later in the year as interest rates fall and the velocity increases.

Prices nationally are forecast to rise over the next 5 years. If you're a buyer considering getting into the market, or a seller who wants or needs to make a move, don't let the stubborn higher interest rates hold you back. Prices are going to continue to rise so in that regard buying sooner is better. If you find the right home - go get it! Refi is a great option if rates go down significantly in the future.

Interest rates are trending downward. If this trend continues, it will stimulate activity on both the selling and buying sides of residential real estate. I'm looking forward to a brisk 2024 with more listings coming on market and more buyers entering the market. There is plenty of pent-up demand on both sides of the equation.

The number of new listings is up slightly when compared to the 4th quarter of 2022.

The median list price of new listings is up 5.8% over the same quarter of 2022.

This analysis is written, tracked and shared by our friend and associate, Fred Bruen.  Thank you Fred for your hard work and great analysis.