California’s Association of REALTORS®’ First Time Buyer Housing Affordability Index shows that San Luis Obispo County has an index number of 63. This means that 63 percent of the area can afford to buy an entry-level home. This is significantly lower than most of California, with index numbers in the eighties.

It is no secret that housing and rent prices are not cheap in San Luis Obispo. For a first-time buyer, this can be a struggle, yet housing prices are significantly lower today than they were even three years ago.  Interest rates on loans are also significantly lower, but they are also more difficult to qualify for.

When you compare prices to what the average income is,  and considering the unemployment rate, are homes really that affordable?

“Affordability is both relative and personal and based on short-term and long term evaluation. I have clients who, in the past, had resigned themselves to a life of renting and have been pleasantly surprised at what they can afford today,” said Dawna Davies, owner and broker of the Davies Company.

Interest rates are still under five percent, which makes buying a home more attractive to the first time buyer who can qualify for a loan. Economic consulting firm Clear Capital reported in a press release that prices have dropped 3.2 percent nationally in the first half of the year. 

They also predict that prices will continue to drop another 2.4 percent in the second half of the year. For qualifying first-time buyers, this can be good news.

"Clients of all ages report lack of return on their money in conventional places to put their cash, like banks and organized funds," Davies said. "They express discouragement about the general investment return in the stock market, and mention the anticipation of inflation. With that said, investing in real estate can be a great way to get return on underperforming cash investments, especially when you include possible tax benefits."

The California Association of REALTORS’® housing index for first-time buyers in San Luis Obispo County is higher than the traditional buyer housing affordability index in the area, which shows only forty percent of households can purchase a median priced home in the county. This shows that first-time buyers do have opportunities in the area and buying a home can be cheaper then renting. The Davies Company states that they have seen a ten percent increase in rents on average over the past year.

“If someone has even ten percent down, and already lives in the county, this year is a great opportunity to put non-performing cash into real estate and have control over their housing,” said Davies.

More real estate information can be found at www.daviesco.com.