I read an article this morning in the San Luis Obispo Tribune stating that new home sales are on the rise nationally.  Unfortunately, it’s hard to believe that’s the case on the Central Coast. Yesterday I drove from Orcutt & Santa Maria to Paso Robles to get an idea of the current status of new home construction; it was somewhat bleak at best. As I drove through each town, numerous subdivisions were left for dead, mothballed or in foreclosure. Very few were able to weather the storm of this economic downfall. Sad to see all the subdivisions with lots sitting idle, curbs and cutters already installed just waiting to create someone’s American dream of ownership. However, the Tribune article shared a glimmer of hope to the future. Across the nation, new home sales rose at the fastest clip in more than eight years! Understandably, part of this spike was due to the fact that values continue to fall, forbidding contractors to leap back into the market as their margins of profit marginal at best. The contractors of these subdivisions still have unsold inventory to sell, and at the current sales pace, there are enough new homes existing to last nearly nine months. Between not being able to secure money from the banks and not being able to sell what they already have, we are facing a notable challenge for this situation to change dramatically in the next year or so.
Many economists insist with this pace the worst of the housing recession is behind us, having seen three straight months of substantial sales. But this is from a national perspective, with the Midwest the strongest at a 43% increase in sales, 23% in the west and 29% in the northeast. They declined slightly in the south. I see the biggest obstacle to new home sales is the glut of foreclosures. Between the low prices and the tax advantages for first time buyers, resale homes are going to continue to dominate the market on the Central Coast. Let’s all hope this trend of rising sales continues for the good of America.

-Eddie Stanfield