Okay, I admit to being a total wimp when it comes to cold weather. Waking-up to frost on the roofs and going out for a walk with gloves and a hat is not my favorite part of living in San Diego in January. But I have to tell you that my heart is warmed as soon as I turn on my computer, look at my emails, my transactions, and the MLS and realize that the San Diego real estate market is hot, hot, hot!

This is due to 4 primary factors:

1) Employment in the County in October was up by 1.9% over October 2011*
2) Consumer confidence (Pacific West) is up by 36%*
3) Interest rates remain at record lows
4) Inventory is approximately 50% of what it was a year ago*

The lack of homes to sell in San Diego County is clearly illustrated in these two graphs, which show unsold inventory at lowest point since 2005, and that homes in the $750 – $1000K range are the most scarce. However, as there are fewer people able to buy in that range the impact is less dramatic. The price range where we are feeling the greatest impact is the $300 – $500K range. If you’re a seller, you love it as you will likely have multiple offers within days of listing. If you’re a buyer, not so much, as it’s likely you’ll be in a bidding war with several cash buyers.

unsold inventory 10.12 sm

unsold inventory 2 10.12 sm

This of course has driven down the length of time homes stay on the market from approximately 60 days in January of last year to just 40 days in October.

time on market10.12 hero 2

The net result of all these factors is that prices in the San Diego real estate market are increasing at a steady rate, up 10.7% this October, over October 2011.

Median price 12

So is it a good time to buy or sell in San Diego? Absolutely! Barring any economic catastrophe I believe we’ll continue to see a strengthening real estate market throughout 2013. So if you’ve been considering a real estate investment, best to get in the game now as I predict prices will continue to rise. Please give me a call to discuss the opportunities available in America’s Finest City!

* Graphs and statistics courtesy of the California Association of Realtors®. All statistics reflect sales activity for detached homes.

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La Mesa, CA Real Estate Market Update – November 2011

 

                                                 

 

 

 

La Mesa,CA is a great place to call home!  From the quaint downtown filled with restaurants and antique shops, to the views from Mt.Helix, there are many wonderful neighborhoods with their own distinctive vibe.  But like most everywhere throughout the county, real estate values continue to slip, as noted in this real estate market update.

La Mesa, CA Single Family Home Sales – November 2011

Total number of sales                       51

            Short sales                                 9

            REO sales                                   8

Average price                                     $381,197

Average days on market                 71

Average price 2010                          $417,252

Average price YTD 2011                 $387,727

Prices for single family homes have not showed a significant decline throughout the year, which may be a sign that the market is starting to level out.

La Mesa, CA Attached Home Sales – November 2011

Total number of sales                    14

            Short sales                             3

            REO sales                                2

Average price                                  $190,807

Average days on market              51

Average price 2010                        $190,580

Average price YTD 2011               $167,587

The average price for November for attached homes is surprisingly high when compared to the preceding months.  As we enter 2012 we will have to see if this is a trend, or merely a month with more sales of higher priced units.

To learn more about the La Mesa, CA real estate market, just give me a call!  I’ve lived in the area for over 20 years and would love to show you why this is such a great place to call home.

Check out the latest San Diego County home sale and value statistics. How well has your neighborhood fared in 2011? Just give me a call for specific information about your home.

Anyone who knows me would probably say that I’m a fairly optimistic person, but lately it seems as though the real estate market is developing into a vicious cycle with no way to correct itself.   In a report released on Monday, the researchers at Capital Economics said that we could expect nationwide home prices to fall an additional 3% this year, bringing the year’s total decline to about 5%.  So, despite the fact that some markets inSan DiegoCountyhave seen modest gains in home prices over last year, overall, the picture is less than rosy.

So what are the driving forces behind this downward spiral?  Well, the obvious answer is that there are many complicated factors at play, but the cycle we’re seeing is really pretty simple:   Housing prices are falling due to low demand and too much inventory. Normally after a recession, home sales start to pick-up, but that’s not what we’re seeing.  Instead, demand is being strangled by increasingly stringent lending requirements which restrict buying power.  So instead of more buyers coming into the market to take advantage of the low interest rates, we’re seeing fewer that are able to qualify because of high credit score and/or high down payment requirements.   Even existing homeowners looking to sell and buy up or down are caught in a stalemate as most have limited or no equity to leverage against a new property. 

The cycle picks up momentum every time prices drop.  Lower prices, mean less equity for existing homeowners and for those with a mortgage, an increasing number of borrowers are choosing strategic default.  These voluntary defaults are adding to the foreclosure inventory already on the market and the estimated 5 million foreclosed homes lurking in the shadows.  And so the cycle continues; more foreclosures create a bloated inventory.  With an insufficient number of buyers able to buy, sales drop and prices fall, which breeds more foreclosures, and on, and on.

As I’ve noted before, I’m no economist and certainly don’t have all the answers, but there are clearly two actions that could put the brakes on falling prices and encourage increased sales:

  1. Congress should oppose the Quality Residential Mortgage (QRM) requirements being proposed.   The QRM would require an unnecessarily high down payment of 20% and impose a very stringent debt-to-income ratio for conventional loans.  The result would be that more borrowers would seek FHA loans, which in turn would likely raise qualification standards and insurance requirements.  The bottom line result will be fewer qualified buyers and fewer sales.
  2. Banks need to address the issue of negative equity by offering programs that provide principal reductions.  When a borrower feels that he/she is paying on lost equity that they will never recoup they are more likely to choose to default, adding to the inventory glut.

Do you have any ideas about breaking the cycle of falling prices?  I’d love to hear from you!

 

May got off to an interesting start with the release of several foreclosure reports that frankly, seem a bit contradictory.  There was good news.  There was bad news.  And I’m not quite sure analysts have a handle on what it all really means to the housing market.

Let’s start with the good news:  Mortgage delinquencies are down.  According to data from Lender Processing Services (LPS), delinquencies are down by 20% compared to this time last year.  At the end of March there were 6,333,040 loans nationwide that were past due or in foreclosure.  Sounds like a lot, but that is the lowest level since 2008.  The report would seem to indicate that modifications are helping as 23% of loans that were 90 days past due a year ago are current today.

Now here is where it gets confusing.  The same report showed that at the end of March foreclosure inventory was at an all time high – 2.2 million loans.  This inventory represents loans that have been referred to a foreclosure attorney but have not yet reached foreclosure sale.  The number of new foreclosure actions was 270,681 in March which is a 33% increase over the previous month.  So foreclosures are up but delinquencies are down?

Another piece of bad news was delivered in a HUD report detailing sales of FHA foreclosed homes.  HUD manages the disposition of homes that had FHA loans that were repossessed.  At the end of February there were 68,801 homes in the HUD inventory.  That is a 50% increase over the previous year.  The monthly sale of HUD homes has dropped from ahigh pointof 8,893 last June to a low of just 2,632 in January.  Thus new foreclosures are entering the market at an increased rate while sales have significantly stalled.

One factor not considered in the LPS report was the increase in the number of short sales over the last year.  In addition to loan modifications, which have not been very effective, short sales are presumably impacting the decreased delinquency rate as more homeowners are opting to sell short earlier in the delinquency cycle versus riding out the foreclosure timeline.    If you are a homeowner that owes more than your home is worth and are struggling to make your payments, the bright spot on the horizon might just be a short sale should a loan modification not provide the relief you need.

For the real estate industry overall, this jumble of numbers would seem to indicate that we’re still a long way from recovery.  With foreclosures increasing and sales decreasing, a bloated inventory of homes on the market will likely keep prices fairly stagnant in most markets.

A survey released on Monday shows that nationally, nearly half of all home sales in March involved distressed properties; either foreclosed homes or short sales.  This is the second highest level seen in the past 12 months.   And while this might not seem like good news, the statistics actually provide a glimmer of hope. 

The Housing Pulse Tracking Survey reported that short sales rose from 17.0% of total sales in February to 19.6% in March, and at the same time REO sales fell from 14.9% to 12.0%.  this is an all-time high for short sales.

So why is this a good thing?   Short sales, though not as speedy as we would like, are resolved much more quickly than foreclosures.  An REO can sit empty on the market for months, often falling into disrepair.  REOs are used as comparables by appraisers and thus drag down neighborhood property values.  Smaller numbers of REOs would be a positive sign for improved home values in the months ahead.

Additionally, from the point of view of an individual, a short sale is usually preferable in terms of both short and long-term impact.    A few of the advantages include the fact that a short sale does not have near the negative impact on a borrower’s credit score as a foreclosure;  there is no set time limit that disallows a borrower from buying again, and a short sale is not reported on a credit report for 7 years, as is a foreclosure.

If you have any questions about short sales, or any other real estate questions, please don’t hesitate to give me a call at 619-846-9249.

I’m almost feeling like we can breathe again.  We’re not out of the woods, but here in San Diego, we’re headed in the right direction.  And surprisingly, the next generation of home buyers is not running screaming into the night frightened by the plague of foreclosures, but rather embraces the idea of one day owning a home.  Check the numbers.  What do you think?

According to a January 2011 Harris poll conducted on behalf of Trulia, the American Dream of home ownership is alive and well.  70% of those surveyed say that home ownership is still part of their dream, and 78% of homeowners surveyed say that their home is the best investment they ever made.  Well, those are probably folks who didn’t buy in 2004-2006.  Buyers during those years are probably the 20% who feel trapped in an underwater equity home or the 14% who are considering just walking away.  Like I said, we’re not out of the woods.

But what I found very refreshing is that 88% of 18-34 year olds aspire to be homeowners, and overall  in the west 70% of renters plan to become homeowners.  In my estimation, this group will drive the long-term recovery, and drive the next real estate bump in value. Only 10% plan on buying in the next 24 months, but they will help prime the pump.  By 2015 we could be in the midst of the next upswing.

So when to buy?  Consult with your accountants and money managers, but my bet is now….just as we turn the corner and start to head up.