When the San Diego real estate market hits bottom, it will be just that, a bottom, not a reversal. Don’t believe that home prices will spike up and shoot back up to pre-bust levels any time soon! I find that highly doubtful even if the economy were healthy in other sectors because who is going to fuel this reversal? Will it be the people who have foreclosures and short sales on their credit history, or another group of salivating sub-prime buyers?

Credit is tightening up to the point that home buying is truly back to where you actually have to put 5 to 20% down and have a decent credit rating. That will restrict the pool of available buyers considerably, which will prevent another ridiculous up-ride on the home price roller coaster.

The “bottom” will be the new median home price, according to what the local marketplace and income levels dictate, with modest year to year appreciation.

Until the ‘real’ bottom is reached in the San Diego real estate market, expect many false upward spikes driven by people looking at only one set of data and incorrectly timing the best time to buy.

Related prior posts:

#1 Key To Purchasing Real Estate in the San Diego Market

San Diego California Home Sellers Lose Big

The San Diego California Real Estate Great Depression

Believe the local San Diego ‘experts’ that subprime delinquencies are slowing?

San Diego County Foreclosures up 125% from 2007

Jumbo Financing and the Impact on The San Diego Real Estate Market

Another Look at the June Rise in Pending Home Sales