SLO forecast says housing can lift regional GDP

While there have been positives in recent years — rising household incomes, gains in tourism and continued operations at the Diablo Canyon Power Plant — SLO County’s gross domestic product has lagged behind California’s since around the mid-2010s, according to data presented at the event. Before that divergence, the county’s GDP was on the same general trajectory as the state’s.

Some of the bad news includes a shrinking labor force, stalled population growth and declining small businesses, according to Niree Kodaverdian, a research manager with Beacon Economics. Kodaverdian and her colleagues agreed there is potential for greater economic growth in the years to come if more housing is built.

“At current prices, (SLO County) has a shortage of homes its workforce can afford,” she told the audience at Alex Madonna Expo Center. “So, that ultimately means building more housing, which is going to put even more downward pressure on price growth and make housing more affordable for its workers.”

Melissa James, president and CEO of REACH, agreed, saying you want to create jobs and economic opportunities so more people have the opportunity to build a life and a future career here.

“They can’t do that if they don’t have a place to live,” James told the Business Times. “So, the opportunity goes with the people. If people have a place to live, the jobs are being created for them to be able to thrive here. We, as a region and as a community, need to be invested in an opportunity for people to live here, then the trickle-down effect of that is that they are powering the future of our region and our economy.”

INVESTMENTS AND ‘BETS’

James outlined a positive outlook for SLO County after significant investments in the past year. Those included four SLO County companies landing acquisitions and contracts totaling $1.6 billion, as well as French Hospital and Adventist Health combining on more than $700 million invested in multiple health care facilities across the region.

Rather than make a forecast, James opted to “place bets” on future growth. She is betting on expansion at Vandenberg Space Force Base, a new spaceport in Paso Robles, the state extending Diablo Canyon operations through 2045 and 10,000 new homes by 2030.

“It’s within reach; it’s something we could do if we leaned in and made those decisions,” she told the audience. “So, what is it going to take when a project comes before a council? That the people making that decision need to hear from all of us, from the workers, employers, families. Not just the opposition.”

WINE IS FINE

If or when the housing element improves, the Central Coast wine economy will likely continue to buck the industry’s downward trend across the state, according to Kodaverdian. Wine grape production in California has fallen 29% since 2015, she said, but in District 8, which covers SLO, Santa Barbara and Ventura counties, it has increased 8%.

Also, District 8 wine grapes are commanding significantly higher average prices ($1,751 per ton) than statewide ($986 per ton), Beacon Economics data showed. At one extreme, growers received $2,225 per ton for Zinfandel grapes, more than three times the statewide average of $692.

The tourism industry is also bustling, with SLO County Airport seeing a 7.2% year-over-year increase in its number of passengers from January through August and the city of San Luis Obispo seeing a record $12.28 million in hotel and lodging tax revenue for FY 2025-26.

MORE ROOFS, PLEASE

The housing market, however, must improve for the wine and tourism economies to continue thriving and to support the proposed aerospace expansions at Vandenberg and Paso Robles.

Home sales have been weak, with September sales down 4.1% from what they were in September 2025, and cumulative sales down 36.2% since February 2020, according to Beacon Economics.

Price growth has slowed, with SLO County’s median home price at $954,900 in September, up 3.6% year over year and up 48.7% since February 2020. By comparison, Santa Barbara County’s median price of $1.247 million is up 13.9% year over year and 95.9% since February 2020. California’s median home price of $776,400 has risen 0.9% year over year and 49% since February 2020.

While housing completions were at an all-time high in SLO County in 2025 (1,090), the number of permits fell 47%, indicating weaker future construction. Entitlements also plunged 74%, suggesting a sharp slowdown in new approvals. Those two numbers need to reverse course in order for the economy to grow, Kodaverdian said.

“The point is not to just not build anything because people want multi-family, and all we could build right now is single-family,” she told the gathering. “There is a demand for housing, so building single-family homes will allow the natural filtering process to take place where people move out of the homes that they have.

“Maybe there are people occupying starter homes right now that they’re staying in because there isn’t something else available on the market that would make that transition worthwhile,” she continued. “So even building more single-family homes is going to be a good idea here. We need housing that employees in major industries can afford.”

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