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Housing Market Update: Sales, Construction, Mortgage Rates

SLO County Real Estate: Home Sales and Prices

Through May of 2014, there have been 1,012 sales of single family homes in San Luis Obispo County for a median price of $480,000.

Last year through the same period of time, there were 1,101 sales for a median of $430,000.

The outlook for the real estate market continues to change. Through the first five months of 2013, “distressed” properties (short sales and foreclosures) accounted for 21% of listings. In 2014, distressed properties are just 6% of listings.

Though total sales have declined, sales of “normal” properties have increased 9.7% year-over-year, from 865 to 949. As normal sales increase, foreclosures decline, and supply re-enters the market, the housing market continues to near a healthy balance.

All data according to Keith Byrd’s aggregation of Scenic Coast MLS data.


SLO County Real Estate: Construction

The SLO County Department of Planning and Building keeps construction statistics for non-incorporated parts of the County. Though not a holistic measure of local construction activity, the statistics are broad enough to reflect general trends in the local housing market.

Through May of 2014, we have seen a slight uptick in construction activity year-over-year, as measured by application input and permits issued. Please see our graphs of construction activity below.


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SLO County Real Estate: Mortgage Rates

Mortgage rates have  dipped in 2014, despite the Federal Reserve’s “tapering” of its stimulus program quantitative easing (QE).


The Fed enacted the bond purchase program to inject cash into the economy and lower borrowing costs. In September of 2012, the Fed added a monthly $40 billion mortgage-backed securities purchase to its existing $45 billion of bond purchases. The total purchase of $85 billion in bonds per month helped mortgage rates drop to record low levels.

In November of 2012, Freddie Mac measured the lowest-ever national average of the 30-year fixed, at 3.31%. Last week, Freddie Mac measured 4.20%.

One reason the 30-year fixed has jumped nearly 1.0% is that the Fed has started to “taper” QE by reducing monthly bond purchase. Interestingly enough, most of the jump in rates occurred prior to the “tapering” process, as markets anticipated the Fed’s exit from the market. Since the actual tapering program began, the opposite has happened – mortgage rates have dipped.

As housing market commentator Dan Green explains on his website The Mortgage Reports, “However, since the QE3 taper began, mortgage rates have managed to drop; the result of safe-haven buying and a smaller pool of available mortgage bonds. Investors are buying U.S. bonds at a faster pace than the Fed can exit the market.”

The Federal Open Market Committee – the policy setting wing of the Federal Reserve – will conclude its latest meeting on Wednesday, June 18. We would expect to see tapering continue at its current measured pace.

Turmoil oversees (most lately Iraq) continues to send investors to relative “safe havens” to put their money, so even as the Fed exits the market, investors are queuing up to take its place. Expect rates to remain near current levels.

Daniel Podesto, Central Coast Lending co-owner and co-host of Mortgage Matters radio on KVEC 920, had this to say about current lending conditions:

Rates are stable and remain historically low. A slow economic recovery continues to support low interest rates and hopefully the Federal Reserve Board agrees with that assessment when they meet shortly.  Rates have fallen about one quarter of a percentage point so far this year.

The low levels could “stimulate” the housing market, Nobel Prize-winning economist and home-price expert Robert Shiller said.  “These declines matter,” Shiller said in a CNBC interview. “People are watching interest rates.” Shiller’s remarks echo comments earlier this year from Federal Reserve Chairwoman Janet Yellen, who said that low rates “should serve as a stimulus to people coming back into the housing market.

We publish weekly updates of mortgage rates for 10 loan programs on our website. Click here for June 9 – June 13 


Central Coast Lending is a California mortgage broker and direct lender based on the Central Coast of California in San Luis Obispo County. Call us today at 805.543.LOAN or email to set up a free pre qualification. We are The Mortgage Experts: ask us anything!

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