Home prices in SLO County are holding steady — and relief for buyers may be coming

Median home prices in San Luis Obispo County held steady from July to August, even as housing prices across California reached their highest point in 15 months.

San Luis Obispo-based Realtor Graham Updegrove said the area’s housing market operated at a more “sustainable” pace this summer than it did during the peak of the buying frenzy that followed the peak of the COVID-19 pandemic.

Updegrove said the steady pace was has been driven largely by a decline in sales.

Even with interest rates for 30-year fixed rate mortgages holding at or above 7%, Updegrove said there’s a chance the market will become more buyer-friendly in coming months.

“Since June, we’ve seen an uptick in the number of active listings on the market, and we’ve seen a pretty significant drop in the number of pending sales,” Updegrove said. “I think there’s a potential that things are shifting, or just slowing down.”

Here’s how the housing market in San Luis Obispo performed in August — and what it means for buyers and sellers alike.

Housing prices stagnate in SLO County, rise statewide

According to the California Association of Realtors’ most recent housing market report, August’s statewide 15-month median home price peak was the highest the peak median home price in California reached $893,200 in May 2022.

The median home price in the Golden State rose to $859,800 in August, rising by 3% from $832,400 in July, the report found.

Three of CAR’s five major regions —the Bay Area, Southern California and the Central Valley — posted price increases compared to this time last year, while the Far North region experienced a moderate price drop, the report found.

The Central Coast region was an outlier in August, as home prices across the region remained unchanged compared to August 2022, the report found.

Regionally, all five major regions recorded double-digit year-over-year sales declines in August, with sales in the Central Coast region falling 17.9%.

In the Central Coast region, which CAR identifies as San Luis Obispo, Monterey, Santa Barbara and Santa Cruz counties, home prices and listing changes were far from uniform in August.

While San Luis Obispo County’s median price of $868,810 grew just 1% between July and August, the other three counties experienced more turbulence.

Home listings took a 21.9% year-over-year hit, with 296 in August, and the 168 home sales in the county were 4.5% fewer than August 2022.

Monterey County’s median home price dropped 5.5% from July to August, from $949,000 to $897,000, a 6.5% year-over-year increase from August 2022’s median.

Home sales and listings in Monterey County were similarly depressed, with 168 sales amounting to a 4.5% year-over-year decline and 296 listings representing at 21.6% decline from last year.

Santa Cruz County also saw its median home price drop, from $1.3 million in July to $1.2 million in August, a 7.7% decline that brought prices 7.7% lower than those seen in August 2022.

Santa Cruz County’s home sales and listings performed slightly better than the rest of the region, with sales falling 14.8% year-over year to 121 in August and listings risking 1.6% to 249 over that time.

Santa Barbara County proved to be the exception. The median home price in that county jumped 30.2% year-over-year to $1.295 million from $994,470.

Santa Barbara County’s home sales and listings largely followed regional trends. Home sales there fell 25.7% year-over-year to 153 in August and listings fell 13.3% to 319 over that time.

Where are home prices rising in SLO County?

SLO County’s stagnant median home price was largely driven by modest increases and declines in price across the county’s cities, Updegrove said.

Any significant changes in median home price — such as Pismo Beach’s 31.9% year-over-year decline to $985,000, or Cambria’s 26.8% decline to $813,000 — were likely skewed by low sales that inflated the amount of year-over-year change, Updegrove said.

Pismo Beach saw just two home sales in August, a 77.8% year-over-year decline.

There were eight sales of Cambria homes in August, a 42.9% decrease from the previous year.

Pismo Beach saw listings rise 76.9% year-over-year to 23 in August, while Cambria saw listings rise 78.6% to 25.

Elsewhere, changes in price, listings and sales were more normal for this time of year, Updegrove said.

In the city of San Luis Obispo, the median home price grew 4% year-over-year to $1.1 million, while sales declined 61.1% to 14 and listings fell 44% to 28 over that time frame.

North of San Luis Obispo, median prices in Templeton increased by 12.4% year-over-year, reaching the $1 million mark.

Home sales were up 28.6% year-over-year in Templeton, reaching nine in August, while housing listings rose by 13.3% to 17 over that time frame.

Farther north, Atascadero posted the county’s lowest median home price at $683,000 after housing prices fell 12.7% since last August.

Home sales in Atascadero declined modestly year-over-year, falling 4.2% to 23 in August, while home listings rose by 27% to 47.

Nearby, home prices fell 7.4% year-over-year in Paso Robles to $725,00, while sales slowed by 32.2% to 40 and listings rose 9.1% to 72 in August.

On the North Coast, Morro Bay homes reached a median price of $1.19 million after prices rose 17.2% year-over-year, accompanied by seven sales and nine listings — half as many as in August 2022.

Los Osos experienced a similar rise in median home price, reaching $1.05 million after prices rose 17.6% from August 2022. The coastal community posted 10 sales, identical to this time last year, and saw listings fall 22.7% to seven over that time.

In South County, median home prices fell by 15.4% in Arroyo Grande to $965,000, along with a 2.8% increase in sales to 25 and an 8.1% increase in listings to 34 between August 2022 and August 2023.

Grover Beach homes reached a median price of $825,000 — a 13.8% year-over-year increase — as sales fell by 38.5% to eight and listings slipped 16.7% to 10 in August.

Nipomo homes also reached a median price of $1.05 million in August, based on 18 sales from 19 listings, which represented year-over-year declines of 21.7% and 47.3%, respectively.

Realtor: Market may soften for buyers soon

Updegrove said a closed sale in August likely means the contract to purchase a home was signed in June or July, as home sales usually clear escrow after around 30 days.

That falls in line with seasonal trends in the housing market, he said.

According to Updegrove, many real estate transactions take place in the late winter, spring and early summer as families try to schedule their moves before the start of the school year and the colder season.

“We’ve seen this decrease in the number of sales because we’re past the good times,” Updegrove said. “There’s just fewer buyers that can afford the prices, and and sellers still want to capture those high prices.”

Interest rates — which have stayed north of 6% since September 2022 — are not likely to come down from their current rate of 7.18%, Updegrove said.

Lack of inventory has kept home listings low, which in turn keeps housing prices high, Updegrove said.

“You look at new construction, and that is decreasing, I think, because there’s less confidence in the market by major builders,” Updegrove said. “In August, (construction) was down nearly 15% from this time a year ago, because of those factors: higher mortgage rates, increased cost of labor, and the cost of building new homes.”

As a result, buyers in the current housing market will likely need to compromise to get available homes in their price range, he said.

Despite struggles with inventory, sales have declined more than active listings in recent months, leading Updegrove to believe in the next few months, SLO County will “trend toward a slightly more balanced market.”