IT'S TIME TO SYNCHRONIZE OUR THINKING ABOUT LOCAL PROPERTY VALUES

As you may have already noticed, real estate in San Luis Obispo County is currently experiencing a bit of a slump, not unlike many parts of the country. A big part of the challenge facing this industry today is the growing chasm between what a buyer thinks a property is worth and what a seller thinks the same property is worth.

A few weeks ago the chief economist for the California Association of Realtors, Leslie Appleton-Young, spoke at a conference held in San Luis Obispo. She addressed the near future economic forecast for California real estate and shared the many indicators that point to this slow-down in our market lasting over the next year or two. One of her points was that in today's market sellers are thinking about what property values were 6 months ago, while buyers are thinking about what the value will be 6 months from now.

This conflict of opinion is wreaking havoc on the local real estate industry. The days of "low-ball offers" have returned and buyers are expecting to get a bargain, while sellers still want top-dollar for their home. Real estate salespeople and appraisers are working overtime to bridge this chasm and arrive at a value that both buyers and sellers can live with.

There's an old saying: "The customer is always right". There's another saying more specific to real estate: "Value is determined by a ready, willing, and able buyer". When you stop to think that everyone who attempts to assess the value of real estate does so by looking at prices of comparable properties that have sold recently, both of these sayings ring absolutely true.

Real estate is a supply-and-demand driven industry. If supply is high and demand is low, we call that a "buyer's market". When supply is low and demand is high, it's called a "seller's market". In either market the buyers influence value by how much they're ready, willing, and able to pay. In a "seller's market" the seller has more influence on value, but it's still the buyer who ultimately confirms the value by willingly paying the price.

It would be safe to say that we are currently experiencing a "buyer's market" here on the Central Coast. The homes that are selling in this market are perceived as the best value in terms of either price, condition, or location; or a combination of all three. When a property sells there is synchronicity between buyer and seller, and hopefully there will eventually be satisfaction for both.

-Randy Steiger