Why 75% of SLO County Sellers Are Cutting Their Price

By Hal Sweasey

Hal Sweasey is a highly respected Broker and REALTOR® serving California’s Central Coast, bringing more than 35 years and 3,300 successful property sales.

Welcome to our October market update for San Luis Obispo County. There’s a lot to cover this month: what’s happening in our marketplace, where interest rates stand, and one change coming on the appraisal side that will affect both buyers and sellers going forward. Let’s dig in.

The market is continuing its shift. Year over year, the number of homes for sale is up about 8%, which is to be expected. Closed and pending sales are down 5 to 6% compared to 2025, and new listings coming to market are running about 7% higher. Interestingly, days on market for homes that sold actually dropped this past month, and here’s my theory on why: a smaller percentage of homes are selling overall, and the ones that do sell tend to sell quickly, while the rest sit longer. That mix is what pulls the average days-on-market number down.

The headline number: three out of four sellers cut their price. Last month I projected we’d see about 395 price reductions; we finished at 397, out of 523 homes on the market. That means roughly 75% of the homes for sale had a price reduction. That lines up with the reality that only about 25% of listings are selling each month, while the other 75% are having to make price adjustments. This is common in today’s market, but it’s not what we’ve been used to over the last three, four, or five years.

So how is the average sale price up 10%? It sounds contradictory, but it’s a mix-shift, not real appreciation. We’re seeing more higher-end homes sell right now, which pulls the average up, even as actual prices are softening. To put it plainly: a home in a certain neighborhood that sold for a given price at the start of the year is now, in some cases, being matched or beaten by larger or better-equipped homes selling for less than they would have earlier. So we’re genuinely seeing prices shift downward in real terms. Will it last? I don’t know, but that’s the current direction.

What this means if you’re selling. I’m going to dust off an old term I haven’t used in years: right now, selling is a beauty contest and a price war. To win, your home needs to be in the best condition and offered at the best price. Both matter, and both are critical in this environment. If you’re buying, newer homes on the market can still be competitive, and we’re still seeing strong offers, sometimes even multiple offers above list, on the right ones. But the longer a home sits, the more room you likely have to negotiate.

Now, interest rates. Mortgage rates have climbed significantly this year, from around 6.25 to 6.5% earlier to closer to 7.5% now. Will that hit our market as hard as others? Not as much, and here’s why: San Luis Obispo draws a lot of what I’d call “equity refugees,” buyers who arrive with substantial equity rather than starting with a small down payment and financing most of the purchase. When rates move from 6.5 to 7.5%, those buyers simply aren’t affected the way a highly-financed buyer would be. Who is affected? Unfortunately, the group that’s been squeezed for years now: first-time buyers, who have to start at that higher rate. There are still options for them, but the equity buyers who make up much of our market feel this rate change far less.

It’s also worth some perspective. Over the last 50 years, mortgage rates have averaged right around 7%, higher highs and lower lows, but about 7% on average. And think back to 2022: we started that year in the 3s and ended near 7.5%, a doubling of the rate in a matter of months. That was a genuine shock to the system, a bit like a sudden jump in gas prices. What we’re seeing now is a much smaller increase, well under 20%. Is it something to ignore? No. But I don’t believe it’s going to hit our market the way it will hit others.

One change to have on your radar. Starting November 2nd, appraisers, the folks who value your home for anyone getting financing, are moving to a new, more detailed appraisal report. In plain terms, it’s a more involved process that requires more work from the appraiser, which could increase the cost they charge and, in some cases, slow things down. It may even push some longtime appraisers to retire rather than learn the new form, and there aren’t a lot of new appraisers entering the field. Many lenders are already preparing for it, so it’s a bit of a wait-and-see, but it’s worth knowing about if you’ll be buying or selling in the months ahead.

So at the end of the day, we’re seeing a certain leveling in the marketplace. There’s a lot of inaccurate information floating around out there, so if you have questions, get firsthand answers. We’re here for you. Call or text us at 805-781-3750, email us at hal@teamsweasey.com, or visit teamsweasey.com. Let’s get on the phone and clear the path for you.