San Diego Real Estate Market Bottom?

For San Diego real estate the two most often asked question I get is: have we hit the bottom, and are prices going to rebound from here?

My best guess is that, for San Diego real estate a bottom may be in sight, but not this year! As far as a real rebound in San Diego home values, but probelity not for many years down the road. So, for you San Diego homeowners expecting some type of “V”  bottom/rebound or double digit annual home appreciation, it’s time to wakeup and face the new reality.

Once our San Diego housing bottom has been in place for some years, will home apprecialion outperform inflationary pressure in the entire economy? Probably not. I will say this, however: when rates and prices are shooting skyward, having a personal residence with a relatively low interest-rate fixed-rate mortgage is a great position to be in – assuming you have a job, and you are going to be able to keep it. First, there’s the tax deduction on the mortgage interest. But more importantly, a fixed-rate is just that: fixed. Even as all other prices and rates move higher, the mortgage payment doesn’t – making it a progressively smaller part of a household budget.

With the hyper-inflationary economy our government has all but guaranteed in the coming years we all have to live somewhere, and if part of your cost of domicile is going toward equity, and the interest you’re paying is fixed — in an environment of rising rates and prices — well, I guess it doesn’t get much better than that. The alternative is to rent — and leases escalate with inflationary surges.

In general, however, the reason I believe housing won’t outperform inflation is that credit is all but gone; no matter what any of the pundits say on CNBC, the stark reality is that people can’t get loans. It doesn’t take much to recognize that if the consumer can’t borrow, then he can’t buy a house. And if that condition has become the status quo – and I believe it has – then what will drive the housing market?

Plus, our distrous housing downturn has broken the back of the myth that California housing can only increase in value. It will take a long time before this realization fades into the background of the public concious. Plus, the Obma adminatration has already proposed limits on home mortgage interest rate write-off for higher income taxpayers (for starters). The country voted for change and change is what we are getting…live with it!

Real Estate Market Bottom or Wishful Thinking?

San Diego real estate market bottom? Seems all the media outlets are announcing the bottom, or “about to occur real estate market bottom.” Naturally, being a real estate broker, I hope the media ‘talking heads’ are correct, but I have reservations.

home mortgage interest rate resets

First, look at the cart above, showing the number of adjustable loans due to have their interest rate reset. Currently, with interest rates low,the actual reset may not be the real worrisome point. I think the adjustment process will be an awakening point to many San Diego homeowners that their mortgage balance is now actually greater than the current resale value of their home.

How many may just decide that instead of making mortgage payments that are not building any equity, and may be much higher than renting a similar home, that it would be best to walk away?

Another important question is how can the San Diego real estate market bottom while unemployment is still rising?    San Diego real estate listings