San Diego Real Estate Market Bottom?
Sure San Diego real estate sales are up, but, San Diego home prices are off double digits from last year. Plus, last year was a terrible year for real estate!
With the federal $8,000 1st. time home buyers credit and the California 5% – $10,000 new home buyers credit, if San Diego and California home values do not bottom soon… fasten your seat belt for large drops in fall/winter.
Millions of baby boomers are looking at delayed retirement and pension and savings shortfalls. They are reaching the age where they become net home sellers, not buyers. This is also not an environment in which one would expect housing prices to take off.
Homes do not appreciate automatically. A lower median price in a market does not imply that those homes appreciate. Japan experienced 12 years of declining realty values, and Japanese consumers had higher savings and lower debt levels than our current population.
San Diego Real Estate News
INFO THAT HITS US WHERE WE LIVE It was reported last week that foreclosure filings FELL 10% from December to January. Foreclosure prevention efforts by lenders and the government seem to be having an impact. In addition, Treasury Secretary Geithner announced last Tuesday a $50 billion initiative to help borrowers stay in their homes. Expect specifics in a few weeks.
We also had the median price for single family resale homes dropping in a majority of metro areas, year over year. But Q4 sales increased in six states, a sign that prices are adjusting to levels buyers don't want to pass up. We even had home prices RISING in ten metro areas across the country. On Tuesday The Wall Street Journal reported the number of homes listed for sale declined 2.5% in January in 29 major metro areas. This is particularly encouraging because January is a month when the inventory normally increases after the holiday sales lull.
Finally, interest rates on fixed-rate mortgages dropped last week. Freddie Mac's weekly survey of conforming mortgages reported that 30-year fixed-rate mortgages averaged 5.16% for the week ending February 12, down from 5.25% the previous week. To get this rate, borrowers had to pay an average of 0.7 points. The 30-year fixed rate is now down almost 1.5% from its peak last year. This post information was provided by: Greg Brooks southwest area manager San Diego Mortgage Network (800) 287-8292 x 225 San Diego homes for sale
San Diego Real Estate Appreciation
Reasons why a San Diego real estate bottom may not equate to San Diego real estate appreciation:
A. Very high unemployment rate in California.
B. California state government's massive debt.
C. More people are leaving California than moving to California.
D. 60% of Option ARMS (worth approx $750B in loans) of the entire nation are within California, the fact the majority of these loans will recast within the next 2-3 years.
E. Only about one in five can qualify for the average San Diego home (and that's after prices have already dropped almost 40% from their peak).
F. The myth of ‘you can’t lose investing in real estate’ has been broken.
G. San Diego recently has seen a softening in the rental market. San Diego MLS listings
San Diego Home Sales Up … Prices Drop 30%
A total of 19,926 new and resale homes sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties last month. That was up 19.2 percent from 16,720 for November, and up 50.5 percent from 13,240 for December 2007, according to MDA DataQuick.
Regionwide, foreclosure resales accounted for 55.7 percent of December's resales activity, up from 54.7 percent in November, and up from 24.3 percent in December 2007.
| Sales Volume | Median Price | |||||
| All homes | Dec-07 | Dec-08 | %Chng | Dec-07 | Dec-08 | %Chng |
| Los Angeles | 4,430 | 5,848 | 32.0% | $470,000 | $320,000 | -31.90% |
| Orange | 1,731 | 2,580 | 49.0% | $565,000 | $397,000 | -29.70% |
| Riverside | 2,503 | 4,435 | 77.2% | $355,000 | $209,000 | -41.10% |
| San Bernardino | 1,518 | 2,862 | 88.5% | $315,000 | $180,000 | -42.90% |
| San Diego | 2,468 | 3,325 | 34.7% | $430,000 | $300,000 | -30.20% |
| Ventura | 590 | 876 | 48.5% | $525,250 | $338,000 | -35.60% |
| SoCal | 13,240 | 19,926 | 50.5% | $425,000 | $278,000 | -34.60% |
San Diego Real Estate … Will Low Interest Rates Help?
Will historically low interest rates be the key to turning around or putting a bottom in place for the San Diego housing bust?
Mortgage rates are near their lowest levels in nearly 40 years. Plus, the government wants to offer new borrowers a 4.5% mortgage rate as an incentive.
Ivy Zelman, chief executive of housing-research firm Zelman & Associates, estimates that nationally, even with such a low rate, only about 67% of U.S. households can afford a house. Homeownership was nearly 68% in the third quarter, according to the Census Bureau, implying there is virtually no untapped demand for homes.
San Diego Home Values Drop Over 30%
MDA DataQuick just reported median price of all homes sold fell nearly 6 percent from October to November, dipping to a 6-1/2 year low to $305,000. Since November 2007, the median price of all homes sold was off more than 30 percent. Plus, the median price was off more than 41 percent from the market peak of $517,000 in November 2005.