2024 is in the history books…and most Realtors would tell you that they are not sorry to see this one go. It was a year of historic changes for our industry and lots of meetings and seminars to retrain us in one of our most basic activities…working with both buyers and sellers regarding how we are ultimately negotiate and are paid for our services. Beyond this historic change in our business, the market itself confounded most economists who did not predict how sluggish this past year would be for both listings and sales. But despite the market and the changes, RE/MAX Parkside Real Estate still held the Number One position in San Luis Obispo County for listings, sales and overall volume for the year. We are celebrating that victory after a tough year and as a team, this company is ready to tackle 2025 and help more buyers and sellers this year accomplish their housing and financial goals. Thank you! Thank you!
On to the good news! Homeowner wealth has surged by nearly $150,000 in the past 5 years. After the pandemic, we had unprecedented demand for housing which led to sharp price increases. However, the slowdown in appreciation has begun and we expect no more than 3.5% for this year. Interest rates are a big factor and everything today is being driven by those rates. Last year we had an average rate of 6.7% and in 2025 we are starting the year at just over 7%. Rates are predicted to average out to about 6.5% by year end.
Statistically, 2024 saw an increase in the number of single family residential sales by 5%. We generally had fewer sales in the first 3 quarters of the year versus the same time period in the past 2 years, but activity did pick up in the 4th Quarter. And even with higher interest rates and low inventory, the median price of a home sold in 2024 was $799,000 vs $732,500 in 2023. That’s a 9% increase!
It took an average of 13 days to sell a home last year as compared with 11 days in 2023. And interestingly, homes sold on average at 100% of the listed price. This means that buyers are rarely writing offers lower that the list price. Rather, they are waiting for the price to be “just right” before they will bring in an offer. There is real hesitancy to make low offers, which I believe is a hangover from homes selling so much higher than the listed price a few years ago.
The “lock in effect” is a term referring to homeowners who are staying in place because they are hesitant to lose their low interest rate and move to a higher price/higher interest rate which could be a lose/lose for them. So homeowners are staying put and we expect low inventory to continue to be a factor this year. Beside the lock in effect, 69% of Baby Boomers plan to “age in place” and not move to a different home during their retirement years. It would appear that without new construction or a lowered interest rate, inventory could be tight for many years to come.
2025 Forecast
For 2025, home sales numbers are predicted to increase another 5% after hitting a 15 year low this past Summer. Consumers are feeling more optimistic about the housing market and rates should stabilize. But waiting for rates to drop is not a recipe for success in this market. We may not see rates improve out of the “6’s” for a very long time. In 20 years, buyers will look back and wish they had bought more and bought the sooner.
Another factor in today’s market is the availability of insurance. If you live in or are planning to purchase in a High Fire Zone (those zones are rapidly expanding) then be prepared for much higher than expected insurance rates. The good news is that legislation is now in place to force the insurers still in California to sell more policies in high fire zones and help ease the squeeze on homeowners seeking a fair policy.
The economic news is good for our Country and our County and the future ahead looks bright even with the challenges we face. Moderate economic growth is expected for 2025 and slow growth is good. Buyers are active, Inventory is rising and with the right strategy, you can jump into the year 2025 with plans to achieve your home ownership goals.
I’d like to add one more note regarding housing which may be of interest to you. The interest in having an ADU (accessory dwelling unit) is very high. The City of Paso Robles now has preapproved ADU plans available should you decide to go in this direction to add passive income or a place for family to reside. Go to www.prcity.com/adu for more information and to see the plans. Atascadero has the same idea with preapproved plans available to see at www.atascadero.org/service/Adus.
The end result of living in a beautiful, vibrant community is that lots of other people want to live here too. Our local governments are doing all they can to ease the housing shortage, which we expect to continue. We will continue to seek housing solutions for all who choose this place for community, solace, work, fun and a place to call home!
Cheers!
Joanie
*My statistics represent only single family homes in Paso Robles, Templeton, Atascadero, San Miguel, Santa Margarita, Creston and Shandon. I have not included any sales beyond these areas for local statistical purposes. DRE #01275065
