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Real Estate NewsletterPublished October 6, 2025
January 2023 Real Estate News
{original post 1/18/2023}Hello! Thanks for tuning in to this month’s newsletter. It’s our goal to bring valuable real estate content and local updates to you, so we hope you enjoy it! ☺️🏡💛 In this e-newsletter, we will dig deep into the new market, answer the questions everyone has been asking about affordability, and share some predictions on what real estate economists are thinking will happen next. The Schwaegerle Team strives to educate and empower all people on the ins and outs of real estate, so thank you for tuning in and following the team on social media! |
New Agent Highlight: Travis Ramsum  Travis Ramsum is a licensed Realtor, proud to be affiliated with The Schwaegerle Team at Keller Williams Realty Central Coast. He will do everything he can to meet your needs in the purchase or sale of local real estate. Travis has lived in San Luis Obispo County for 28 years and has 10 years of experience in hospitality as a top performer in sales, customer service, and management. He also has years of experience marketing and managing a local small business that he owns. He is an avid surfer and enjoys the amazing hiking trails this county has to offer. If you're interested in buying or selling a home in San Luis Obispo County, feel free to reach out to Travis! |
| New Year, New Market We recently went through a wild, redhot seller’s market. Listings were flying off the shelf with multiple offers, buyers were waiving all contingencies and paying several tens of thousands if not hundreds of thousands of dollars over the asking price, and appraisal gaps were being cured by buyers rather than sellers granting price reductions. That was happening through the beginning part of 2022. When did things start to change? It was sometime around May and June 2022 when the market started to shift. Rates rose more rapidly than they have before, more than doubling in less than a year from around 3% up to as high as 7.875%. That massive doubling in such a short amount of time caused affordability to go down. The same home was suddenly costing 30-40% more per month than it was just months prior. Most employers aren’t willing to give raises of 30-40%, so affordability has gone down, decreasing demand significantly. This caused prices to slow down, resulting in the first home price declines we have seen in a long time. Now, markets are still determined by supply and demand. A seller’s market occurs when fewer than six month’s supply of homes is available at any given time, whereas a buyer’s market occurs when six or more months' supply of homes is available. Technically speaking, we are still in a strong seller’s market given the low inventory. Next comes the big question: When is the market going to crash? When are prices going to be so low that we can all go buy up a bunch of houses? If we look at the data, we see that we are in a correction, not a crash. See the data from the National Association of Realtors below.  |
| Housing Shortage Continues There is a very severe housing shortage in the USA. We have underbuilt the number of needed homes for over a decade. Millennials, the largest cohort in US history, is entering the prime household formation years (35-45), and they are ready to buy homes. Boomers and other seniors are less likely to sell their homes. This concept is called aging in place. It has become more popular largely due to the number of at-home care options available to seniors as they age. A crash would take place if supply was larger than demand, yet we haven’t reached that turning point. |
| Affordability One of the big reasons price appreciation will slow is because of housing affordability. There are three components that make up affordability: housing prices, mortgage rates, and real wages. If a recession persists, we are likely to see real wages negatively affected, which would impact demand and decrease prices. If the Fed is successful in combating inflation, as they have been so far, we may see mortgage rates continue to decrease, which would cause many buyers to get back into the market. As long as house prices continue to be at unaffordable levels for most Americans, there will be less demand for housing, which can cause prices to slow down or decrease. A lot of affordability is going to come down to interest rates. If rates continue to go higher, we are likely to see prices continue to decline. If the Fed beats back inflation, rates may go down back into the 5.5% territory, which may become the new normal. Once the market recognizes that, the new normal buyers will sweep into the market, and the great buying potential and opportunities of today will disappear. |
| Foreclosures Many people think we may see a wave of foreclosures due to the economy. However, in California if you look at the data, only one in every 4,132 households is in foreclosure. That is approximately 0.000242% of California households. People are sitting on tremendous chunks of equity, and they will be able to sell or refinance before losing their home to the bank. |
| Inventory and Unit Sales Will Slide All of these economic factors are putting pressure on the market. We have already seen the number of home sales decrease in 2022. NAR reports that the unit sales for 2022 was down 16.2% and forecasts it will be down 7% for 2023. In SLO County the number of closed sales is down 41.1% year over year. This means there are fewer homes listed for sale and fewer buyers shopping for a new home. Essentially, there will be fewer people moving, less money circulating through the economy, and fewer transactions for Realtors to conduct. This usually leads to a number of people dropping out of the real estate and lending industries in search of more stable employment. Why fewer unit sales? We’ve gone over the affordability issues above, supply shortage, and lack of foreclosures. One other factor to consider is that many current homeowners are “rate bound” to their homes. They have a phenomenal interest rate after refinancing a few years ago and buying a new home will be at a much higher rate, ultimately creating an increase in monthly housing costs. For these reasons, we are seeing the number of active listings start to dip in our area. We are currently down to 441 listings available in SLO County, many of which you can check out on our website here. The number of listings was starting to climb in 2022 but peaked in July and started to decline. If the shortage continues, prices will most likely stabilize or go down slower than expected. |
| In Other News: Tax Deadline Extension for SLO County Taxpayers* Due to the local severe rains and flooding, SLO County taxpayers have been declared eligible for an extension on their federal tax returns, according to the IRS website. Here is some of the verbiage: The May 15, 2023, deadline also applies to the quarterly estimated tax payments, normally due on January 17, 2023, and April 18, 2023. This means that individual taxpayers can skip making the fourth quarter estimated tax payment, normally due January 17, 2023, and instead include it with the 2022 return they file, on or before May 15. *We are not tax professionals. Please consult with your tax advisor if you are eligible for this extension. |
| Let's Be Social Thanks so much for reading our newsletter this month! We want to hear from you! Please let us know how we can support you on your real estate journey. Whether you just purchased a new home, want to explore home-buying options, are curious about what your property might be worth, or just want to know more about the market, please reach out! @theschwaegerleteam @savannahsiador_ @closeinslo You can also follow us on YouTube and Facebook for more updates throughout the month. |
| Check out our newest listings! 9590 Marchant Ave, Atascadero - 2 bed 2 bath cottage right across from the Atascadero Lake 2350 Nutmeg Ave, Morro Bay - Vacant lot ready for your dream home with ocean views! 110 Hearts Pl, Paso Robles - Active vacation rental generating ~$130K gross annually - 3 bed 2 bath, 2000 SF + home with pool and views! |
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