A 22% Price Jump That Isn’t What It Looks Like

Every month we pull together the latest figures for San Luis Obispo County, and we almost always learn something new in the process. This month is a good example. Compared with a year ago, our inventory is up about 11%, which is the trend we’ve been watching build. Pending and closed sales are down roughly 8 to 9% year over year, while new listings came in 22% higher than last year. Sales are easing off, and inventory is climbing.

Then there’s the figure that surprises people most. The average price of closed sales is up about 22% year over year. That runs against a lot of what you may have been hearing, so it’s worth understanding what’s actually behind it.

Why The Average Is Climbing

A lot of the lower-end properties, especially condominiums, aren’t selling much right now. There’s been a great deal happening in the condo market, and first-time buyer participation is very low. The buyers who are active tend to be what we call equity refugees, people coming from other areas or carrying a fair amount of equity. That means our higher-priced homes are changing hands more often, and when the higher end makes up more of the sales, it pulls the average up. That means our higher-priced homes are most likely selling more often, and when they make up more of the sales, they raise the average.

What Buyers Are Seeing Now

If you’re a buyer and a well-priced listing comes up, expect competitive bids. We’ve talked about that before, and it still holds. Price reductions are about the same as they’ve been, with almost 70% of properties cutting their price every month.

What Sellers Need To Focus On

For sellers, the market has split into two groups. This past month we had 163 closed sales against 563 homes on the market, which means only about 30% of active listings are actually selling, a supply of roughly 3.2 months. A year ago we had 471 active listings and 178 sales, so about 37% were selling then. When we sit down with a homeowner, our whole aim is to help them land in that 30% that sells and gets a good price, rather than the 70% that sits. Getting there comes down to pricing and condition, and to being genuinely competitive. Your entry price to the market is critical.

Two Real Pricing Examples

A client bought a home from us in 2022, and four years later, it looks like it will sell for about what they paid, maybe a little more. We priced the house under what they paid for it, at $995,000, and it’s set to sell for around $1.065 million. After costs, they’ve lost a little, maybe broken even, and with the equity they’ve paid down, it’s kind of a wash after four years. Nobody wants to sell for less than they paid, so we asked when they’d sold the home they lived in before this one. They’d sold in Los Angeles that same year, 2022, and made a killing on it. Had they stayed, that house wouldn’t be worth the same today. They sold at a high time in one market and are selling at a little lower time in another, so they were able to adjust.

The second example is more dramatic. In one San Luis Obispo condo complex, where the units are essentially identical apart from interior finishes, one recently closed at $480,000 within the last 30 days. We’re now representing a buyer on a comparable unit in that same complex that started at $540,000, dropped to $499,000, then to $450,000, and went into escrow below even that. It’s a true Gala-apples-to-Gala-apples comparison, and the gap shows how much the result depends on each situation.

Where Rates And The Market Stand

On financing, the Federal Reserve met recently and held rates steady, which helped the bond market, and our rates ticked down a little. Depending on the day, we’re seeing them in the low sevens. People have been asking us what the election will mean for the market. As of this writing, the honest answer is that nobody knows how it will affect things. There’s a lot moving in the world right now, but this remains an area people genuinely love living in. Markets have their ebbs and flows, and times like these are exactly when good guidance matters most.

Whether you’re weighing a sale or watching for the right buy, we’d be glad to look at your specific situation and help you make the strongest move. Call Team Sweasey at 805-781-3750, email us at hal@teamsweasey.com, or visit teamsweasey.com. We’re always happy to talk through what the numbers mean for your home.