North County 2011 First Quarter Review and Forecast

            Real estate continues to be sluggish throughout North County.  Despite low interest rates and low prices the North County market has yet to experience any traction.  There are emerging signs, though, that market is poised for a real turn forward in velocity.  Prices will continue to lag and be erratic at best.  The real story is that sales are improving.

            Overall North County home sales increased 24% when compared to the first quarter of 2010.  Our company is about a third of the market and our sales doubled in January.  Prices dipped 6% when compared to year end 2010.  Most of the home sales have been at the lower price range of the market place.  This bulge at the bottom of the market, in sales activity, is the primary contributor to the drop in average pricing.  Price deterioration will abate as velocity increases.

            Velocity will likely increase the current average price point in sales.  Our office has a lot of higher priced properties due to close in the second quarter.  Higher end short sales, higher end foreclosures and demand for Westside product is fueling the uptick in velocity for higher end product.  The important thing to remember, in these coming events, is that prices are not going up!  The average price may stabilize or even tick up but this fact is due to velocity increases in higher dollar product.

            As these sales close, in the second quarter, the market values above the average price point will be more clearly defined.  Distressed properties will continue to dominate market share throughout next quarter and 2011.  This overhang of short sales and foreclosures will keep a lid on values at all price points.

            Lots and land sales are still very weak.  Financing for acreage is thin but demand is even thinner.  It seems like most sale prices, in improved properties, yield a non-existent value for the dirt when construction costs, permits and fees are subtracted out.  Dirt is dirt cheap!   There is a lot of upside in raw land if you have a strong stomach.

            Two major positive events in the wine industry are happening now.  Number one is the international publicity our appellation is receiving almost daily.  This publicity, long overdue, increases demand for our wines and hospitality businesses.  Secondarily wineries are out buying fruit today.  Now the prices for fruit are still low by historical standards, but it is a sea change in demand versus the last five years.

             The Commercial market is still dormant.  Absorption of new product is spotty.  Demand for space is weak.  Investor demand at the local level is tepid.  One big deal will happen and that is the sale of a major center south of town.  The numbers will be strong for that center. 

            We work hard to give you the best information we can in an honest and area specific context.  Real Estate has become a topic de jour on a nationwide bases. Real Estate is the most local of businesses and it takes intimate market experience to give clear and concise data to the local populace.  I’ve been doing this report for twenty years and I’ve been right and painfully wrong.  Our business is about putting our Clients in a position to succeed.  Our office dominates sales in North County and that hard work gives us a window into the fundamental dynamics within our community.  I stand on the shoulders of Giants.  These are the people in our office.  You hire one of us you hire all of us.  I thank every one of these folks for helping me put these reports together.   Augie August, Laurie Baldwin, Roberta Barrett, Kim Bankston, Eli Barbour, Alicia Bartlett, Alicia Bartow, Nancy Becker, Bob Bergman, Jan Stemper-Brown, Fred Bruen, Tim Bryan, Suzi Bussacco, Dave Conrad, John Donaldson, Scott Ehrke, Mark Farley, Bob Graham, Jennifer Gustason, Kyler Hamann, David Hill, Karen Horzen, Jim Irving, Deborah Johns, Elaine Kelly,  Jennifer Kranich, Sue Kretzu, Lisa Lewis, Pete Lischerelli, Diane Mandala, Sally Martinus, Liz Lee Marziello, Mark McConnell, Barbara McCormick, Jim McCormick, Carolyn McNairn, Joshua Miller, Dick Morris, Hugh Pitts, Gwen Severson, Cristina Sirotta, Jessica Smith, Michele Smith, Ande Steinbeck, Ed Steinbeck, Lori Jo Stribling, Wade Taylor, Brian Thorndyke, Joanie Williams.