Here is your November 2021 San Luis Obispo housing market update.
Today we wanted to cover a couple of things in our November 2021 market update. First, I’d like to thank you for all the wonderful referrals and online reviews we get. Also, remember we’re having our annual movie event on December 4, at 9 a.m. at the Fremont Theater. We weren’t able to do it last year, so we’re excited to start that up again.
Inventory is down 36% compared to last year, but our pending and closed sales are also down about 24%. That’s the slowdown you’re hearing about. The number of new homes coming on the market is up 15%, but that is based on a very small number, so it’s not that big.
Twice as many homes sold as homes that came on the market to replace them, so our market will continue to be strong, but it won't be as one-sided as it has been. With that change, it means there will have to be a lot more compromise between buyers and sellers if both sides want to achieve their goals. We’ve seen a lot of homes fall out of escrow recently, and when those sellers put their homes back on the market, they aren’t getting the same price. That means if you have a good buyer with a reasonable offer, you might want to compromise more and make sure the sale closes.
Interest rates have a huge impact on the cost of housing
Now, why would you buy in today’s market? I think people get caught up with the price of real estate instead of the cost. Last month I talked about a home that was bought 20 years ago for $520,000 and sold recently for $1,248,000. The seller feels great about that, but how does the buyer feel today?
Interest rates were 7% 20 years ago, and now they are 3%. The average income in our county is up 82% in that same time, so the person who bought that home today is paying a smaller portion of their income than the person who bought it 20 years ago. Interest rates have a huge impact on the cost of housing. That’s why this market is continuing strong, but we don’t know how long those rates will last.
If you have any questions, feel free to call us at (805) 781-3750 or visit our new website. We look forward to hearing from you.