SLO County Real Estate Market: 2022 vs 2021 / Will interest rates drop in 2023?

January 9, 2023

(Sources: CRMLS & C.A.R.)

Despite Q3 and Q4 slowdown due to rising interest rates, the market locally remained strong.

Through out the year, home sales declined consistently largely due to continued and increasing affordability challenges resulting from increasing interest rates and high home prices. Home sales declined approximately 30% in 2022 from 2021.

Homes sat on the market longer than what we have seen the last couple of years, but the average through out the county for the year was only 9 days on market. Home prices appreciated approximately 14% in 2022 from 2021.

What's expected for 2023? Some experts are predicting a drop in mortgage rates toward the end of the year, to just over 5%. I would expect prices to remain steady, overall. Some areas may see a small decline, others slight appreciation, but all in all I expect prices and interest rates to be fairly consistent with the current numbers. Keep in mind, if interest rates do indeed drop, that will in turn increase demand and competition. If you are considering entering the market as a Buyer, it's imperative to work with a savvy lender to help you come up with creative ways to combat lack of affordability, such as an interest rate buy down, among other options. We may be able to figure out an alternative to higher interest rates while demand is lower, versus waiting for rates to drop and having to compete with more Buyers.

Sellers, the market is still strong and homes are still selling as long as they are priced correctly.

Reach out if you would like to see figures for a certain city or another region, or to start the buying/selling process.