San Diego Housing Recovery?
San Diego housing
Considering some San Diego home prices are off 40%+, large home buyer credits are available, home interest rates are near 40 year lows, and the seasonably high time to purchase real estate is here, a small uptick in median San Diego home prices should not be a surprise.
But, a number of builders report that any recovery in housing demand seen over the past few months is predominantly coming from the low end of the market, where government programs and tax incentives for first times buyers coupled with very low interest rates have brought out buyers. However, in the upper end of the market, rising unemployment (which likely will continue for some time), a huge oversupply of units, tougher mortgage terms and higher rates for jumbo mortgages (above $470,000) make it highly likely that more pain is ahead.
The only things that will lead the housing market to recover are real economic growth and inflation. Both of these will tend to increase nominal income of potential buyers and make housing at any given price level more affordable. Inflation tends to create higher interest rates which will create higher mortgage payments(as well as all sorts of other undesirable effects) so it is somewhat of a double edged sword. We really have to focus on getting the economy growing again – if we succeed, the housing market will take care of itself; if we fail, there is really no way the housing market will recover.