Hasten the day when every article doesn’t have the ubiquitous “Covid” word in it. Until then, sorry—the biggest news in real estate is that Covid made the housing market’s thermometer explode.
Best to just show you, so I’m going to try to keep this light on the text. And to keep it hyperlocal, all the data below is exclusively from SLO County.
A Graph is Worth a Thousand Words
Let’s start with the current supply of homes. You may have heard that inventory is pathetically low these days. Have a look.
In a typical year, July and August represent the high point for inventory, after which inventory starts to dissipate. Springtime, sellers come out of hibernation and start putting their homes on the market.
For the last five years, we’ve been averaging a little north of a thousand listings in a given February. Around January of this year, supply flatlined and February brought us a paltry 460 listings.
Next up, closed sales.
First of all, notice the obvious swell in sales for 2020. Even if I were to stretch the history of this chart back to 2008 (the farthest back our local data provider goes), you’d still find that sales for 2020 were at least 13 percent higher than any of those previous years.
More to the point, notice the mini-peak shortly into 2020? That’s April. The end of March was when the Stay-at-Home Order went into effect for our area. All the uncertainty in the marketplace caused a trough in this metric—buyers stopped buying and escrows were cancelled—leaving no doubt that home sales were going to take a bath in 2020.
But starting in June, sales skyrocketed so steeply that they more than made up for that dip in the second quarter of the year, to make it a record year for sales.
Now let’s look at how long properties have been taking to sell…
Countywide, the median number of days it takes a new listing to go under contract (“Days on Market,” or DOM, in Realtor-speak) took a nosedive into the pavement of around two weeks. Several cities reported a median DOM of 10 days or less, and it’s not at all uncommon to see listings get swooped up in their first few days on the market.
Last, but not least! Sales prices.
Unprecedented decline in inventory plus unprecedented demand equals unprecedented price growth. From February 2020 to February 2021, the median sales price grew around 11 percent for SLO County, with some cities, like San Luis Obispo and Paso Robles seeing 15 to 16 percent growth, or Nipomo, which saw 22 percent growth!
It should be noted that rising median sales price can indicate a swell in sales at the higher, luxury price point—which has been the case—but even stripping that data away, we’re seeing massive growth in home values.
There’s good reason to believe things will cool a touch in the coming months. Ultra-low mortgage rates, which have been a major impetus for homebuyers, have been trending up through February and into March—a half a point swing in the span of a few weeks.
On top of that, the traditional Springtime inventory uptick paired with the passage of Prop 19 and the vaccine rollout should bring a boost of supply to our thirsty market.