North County Real Estate maintained momentum throughout the first half of 2013.  Our County appears to be strengthening in both employment and overall economic activity.  Tourism and agriculture have helped our North County businesses and real estate.  Even our local municipalities are breathing easier from a financial standpoint.  This report outlines real estate activity for the first half of 2013.

            Residential single family unit sales totaled 630 sales for the first half of 2013 which was similar to the first half of 2012 unit sales.  The average sales price jumped up 22% to $325,000.  Pending sales, homes currently in escrow, ended the quarter at 250 units which is an increase of 41% over 2012.  Available properties for sale dropped 23% to just under 400 units, which equates to a 4 month supply at best.  For sure, more homes would have sold if more homes were available for sale.  Higher prices tend to bring out more inventory but we are still going to be faced with more Buyers than Sellers in the short term.

            In the million dollar property category we have seen a steady increase in sales and pending sales.  Prices are stable but prices still lag behind replacement value.  Appraisers are all over the map and lenders are extremely conservative in this price range.  The biggest change has been in the supply category.  We went from 68 million dollar units for sale in 2012 to 85 million dollar units for sale in 2013.  Again the million dollar range is vast in price points but we are still way long in supply.  Prime Westside estates are receiving the most Buyer interest.  Our feeder markets of Los Angeles and the Bay Area have had steady million dollar activity and this activity should continue to trickle into North County.  Strong grape pricing may also bolster this market. 

            Land pricing and lots for residential single family are strong.  Low finished home inventory is driving more builders into the spec home market.  Many local people have also taken advantages of lots for sale to build their dream home.  There appears to be no real immediate increase in finished lot inventory so Buyers are aggressive if the price is right.  It’s a cash money proposition in raw land for Buyers and Sellers. 

            We have some very strong large wineries in the North County and a handful of high quality smaller operations that all have international recognition.  It’s really remarkable to imagine we live in a community that has a recognized quality profile throughout the world wine industry.  Real money is being invested in vineyards, wineries, restaurants and hotels.  Agricultural lenders are also very strong and supportive in our community.  This wine industry and vineyard industry is healthy and growing.

            A quick word about interest rates:  Everyone is concerned about any uptick in rates.  Then again many people are concerned about the potential/coming problems of the monetary stimulus.  Often when interest rates tick up, people pick up the pace in buying homes because of the fear of further upticks.  We are not so sure Buyers will jump in so boldly with rate upticks: when a third of the Buyers are all cash, one wonders about the interest rate jump impact.  This is not a normal real estate recovery.

Commercial real estate reflects our local economy.  More activity in this market from investors and tenants.  There is still a lot of vacant space and small businesses are feeling the effects of the tax increases, health care costs and a “no growth” recovery.  Investor interest in apartments is strong and will remain strong throughout this year.  Residential rents are strong and commercial rents are tepid unless the space is A plus. 

            We are not in a healthy economy; we are in an unusual economy.  Ditto for our real estate markets.  Real and perceived headwinds are in the minds of all worker bees in our state.  There is that uneasy feeling that this no growth, entitlement heavy society is unsustainable.  The future may be uncertain but we believe North County will perform well in the coming years because of the quality of our lifestyle, location and the wine industry.