Reviewing the 2023 housing market
By Jaime Silveira
BRE #01706045
A new year has begun, and 2024 is off to a good start. With statistical numbers now available, it’s time to look back and review 2023. The housing industry looked very different in 2023 compared to 2022. I have been talking about the real estate market returning to a normalized market for the last two years and we’re finally starting to see that. The number of homes sold on the Central Coast took a dip, but don’t be alarmed, because home values have continued to rise. We’re going to look at how the housing market has changed and talk about what the predictions are for 2024.
Let’s dive into the numbers! North San Luis Obispo County saw an overall decrease in the number of homes sold for a second year in a row. Looking at Atascadero, 259 homes were sold in 2023 with a median sales price of $755,000. Compare that to the 353 homes sold in 2022 with a median sales price of $750,000. That is a decrease of 27 percent with a 1 percent increase in the median sales price. That is a sharp comparison to the 497 homes that were sold in 2021 with a median sales price of $640,000.
Nearby communities saw real market decreases as well. Looking at Templeton, there were 93 homes sold in 2022 and a median price of $930,000. In 2023, Templeton had 76 home sales and a median sales price of $1.05 million. Paso Robles home sales were 589 in 2022 and a median sales price of $672,452. In 2023, Paso Robles had 502 home sales and a median price of $660,000. Templeton saw a decrease of 18 percent in homes sold while Paso Robles experienced a decrease of 15 percent. Although Templeton has a 13 percent increase in median sales price, Paso Robles saw a 2 percent decrease. Even though the number of home sales in Northern San Luis Obispo County took a dip, 2023 continued the unprecedented increase in home values.
I know this decrease in home sales may seem as a cause for concern but home appreciation is up 5.4 percent for San Luis Obispo County. This data is based on purchase and refinance data from January 2023 to September 2023 (FHFA.gov). This positive appreciation demonstrates that the Central Coast is still seen as an extremely desirable place to live, thus keeping home values rising in the upward trend.
The economy is something that’s on everyone’s mind this year, especially since it’s a presidential election year. Experts acknowledge that still-high interest rates and home prices will continue to create challenging conditions for many home buyers and sellers in 2024. Interest rates steadily rose during 2023. On January 19, 2023, interest rates for the average 30-year fixed mortgage were reported at 6.15 percent and the year closed with interest rates at 6.61 percent on December 28, 2023. (www.freddiemac.com/pmms). However, interest rates peaked at 7.79 percent on October 6, 2023. Experts are predicting that mortgage rates will go down gradually in 2024 as inflation improves with interest rates hopefully declining between 6 percent and 6.5 percent. This will be a key factor in starting to provide affordability relief to most homebuyers and especially to those first-time buyers that have been putting this major purchase on hold.
Supply and demand will continue to play a role in the sales forecast for 2024. The first week in January, Atascadero inventory shows a sharp increase when comparing January 2022 to January 2023 from 17 active homes on the market to 46. This increase has given buyers more options when purchasing a home, but still a long way from previous years.
As we continued to see the number of active homes on the market increase in 2023 we also started to see a greater number of homes with price reductions. For buyers this is great news. They have more inventory to choose from and should be able to purchase a home for a negotiated price as opposed to a listing price with no flexibility that can happen when there aren’t substitutes available. For sellers, you may have to be a little more patient and a little more willing to negotiate your terms. That said, currently, homes in Atascadero continue to close at or close to the asking price. In 2023, Atascadero sellers received 96 percent of their asking price when comparing the average sales price to the average list price. So, whether you’re a buyer or seller, the housing market on the Central Coast is a solid investment.
Putting these figures into perspective is helpful when deciding to buy or sell a home. As most know, circumstances typically dictate when a real estate transaction needs to happen. Whether it is a new job, downsizing, changes in the family dynamic, retirement, or any other life-changing event, making a real estate move will likely be a consideration. Deciding to act on that consideration is then typically determined by whether or not the financials work. What makes sense and what is financially feasible certainly frame any real estate transaction or major move. Remembering that our local real estate market does not follow urban patterns is also helpful. We are a niche market, flanked by the Bay Area to the north and LA to the south with communities that have more to offer with respect to geographical beauty and quality of life while maintaining the convenience of being centrally located in the state of California.
Data pulled from CRMLS for Residential Homes for 2022 and 2023.
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