Statistically the first quarter of 2010 North County Real Estate Sales was similar to the 2009 first quarter numbers. The total number of homes sold was right around 250 units for both quarters. The average sale price of a single family home came in at $287,000 both quarters. Even the sale pending numbers came in right around 100 units for both quarters. From these year to year numbers it is clear that the market has stabilized in North County.
We predicted more residential single family homes will sell in 2010 than did in 2009. We felt this increase in sales could be as much as 10%. Banks have been holding back foreclosures and this is one reason the total number of sales is not increasing. With no new construction the new inventory is mostly foreclosure product and short sales. It feels as if more foreclosures will get to the market quicker but time will tell. A good 40% of the market will be distressed properties in 2010. Pricing is stable and firm below $400,000 in North County. Above $500,000 buyers are more selective and seller concessions are a bit more generous.
Homes on acreage, 5 acres and up, have been dormant for well over a year. Foreclosures have quickly hit this final segment of the market in this first quarter. There are a number of distressed properties in this category that will dribble into the market in the coming months. Banks take longer to get these properties on the market. Financing is difficult for these properties. Often times the value is centered in the dirt. Seller discounts for these distressed properties will initially be very generous. These ranches are not commodity items so values are a bit more subjective. This is not a large segment of our market but we should see buyer activity as the year plays out.
Raw land has been slow across the board for a few years. We have had a few recent North County closings of parcels above 20 acres. While no one would categorize the buyer activity as vigorous, we do see more buyer interest in acreage than we have seen in the past few years. Inventory is real thin. Foreclosure dirt is almost non-existent. Sale prices are down. Buyers are seeing value. This buyer interest trend should slowly inch forward.
Our local wine industry is feeling the effects of our economic malaise. Tasting room sales are soft and demand for fruit is tenuous. Visitors are still coming to our community and buying wine. Most of the wineries feel that we are at the bottom of the consumer demand for wine. Everyone is still selling wine and our area continues to grow in stature. It’s just a tough business for most of the industry today.
Commercial Real Estate is soft in terms of rents and property values. There is some demand for space from smaller office and retail users. No demand for commercial acreage. There is a fair amount of middle sized vacant office space for lease in North County. The savvy building owners are working hard to make deals and keep their current tenants. There will be foreclosures, in the coming years, in the commercial real estate category.
Sales velocity is a leading indicator for price. Stable sales have created stable pricing in most categories. Any sales increase will probably not have an immediate impact on pricing because we have a good year or two left in the supply of most properties.
Its true there is a lot of money on the sidelines and many buyers have been reluctant to make decisions. We have noticed an increase in the number of buyers coming in our office. This small uptick in buyer interest should show up over the latter part of the year. This recovery will be a process of activity spurts. Demand will pick up slowly. Absent another economic shock we should see activity slowly increase in 2010. Cautious Optimism!