We’re back once again for another real estate market update for the San Luis Obispo area. We’ll touch on what’s happened in the month of June, give you an update on interest rates, and take a closer look at real estate on a global level.
This past month, we ended with about 6% more homes for sale than in June 2018. At the same time, we had about 7% more homes go under contract and closed sales dropped by about 7% as well. This means that more and more homes are starting to fall out of escrow. If you’re a buyer or seller, know that you’ll have to compromise a little more so that we can get to the finish line of escrow.
Now, let’s take a look at interest rates. They’re still at historic lows right around 4%. A buyer can lock in a 30-year rate at that price right now, which is fantastic. If we go back 42 years, you’ll see that the average rate was over 8% more than half of the time. That really puts today’s low rates into perspective.
Finally, I want to talk about real estate in general and why it’s such a great investment. The reason real estate is so great is that it’s tax-preferred. If you own a home, you’re married, and you’ve lived in it for a few years, where else can you sell an investment and take up to $500,000 in tax-free gains? It’s unheard of. Additionally, you can deduct all of your mortgage interest, which you can't really do with any other type of investment unless you own a business. With real estate, you’re encouraged to take these deductions and they ultimately make the home more affordable.
As for investment real estate, my brother-in-law is nearing retirement and is using an addition to his property as a rental. If you own investment real estate like him, you can get passive income that also has preferential tax treatment.
In conclusion, we have a very steady market, historically low interest rates, and a preferred tax treatment that makes real estate an unbelievable investment. If you have any questions for me in the meantime or you want to take advantage of the current conditions by buying or selling, don't hesitate to give me a call or send me an email. I look forward to hearing from you soon.