Is the Real Estate Market Getting Better?

It looks like the housing market MIGHT be improving. In March San Diego county’s median price was $285,000 which was unchanged from February and up $5,000 from January 2009. The number of home sales has skyrocketed to 3,020 up 43% from a year ago which is the biggest increase for any March in five years per DataQuick.

Sales are improving due to current low prices (stemming from the foreclosure market) and because interest rates on loans are MUCH lower than they have been in years. In March 2008 the average mortgage payment was $1,841 compared with $1,074 in March of 2009. In the low-end market [under $300k] prices are speculated to be at or near rock bottom, but in the high end, further price declines are expected.

DataQuick reported that for all of Southern California housing sales VOLUME was up 52.1% from March 2008 while PRICES were down 35.1% and the median price of $250k was unchanged from February. This has been the trend for the first quarter of 2009.

According to the San Diego Union Tribune, analysts still caution against declaring an end to the four year housing slump in which the local median price has fallen 45% from the peak of the market in 2005/2006 and 28% in the past year. The prediction is that May and June may still be troubled months despite the summer typically being known for bringing a better market.

Another positive sign is the housing inventory [number of homes for sale] has decreased 26% from a year ago and is the lowest since 2006 per the San Diego Association of Realtors. This will hold true to the supply and demand theory, since the supply is low eventually the demand will increase and with the demand will come a change in our market. But remember, whether we are at the bottom or not, the turnaround will not be overnight, prices will not shoot up, they will level for awhile and then slowly increase.
There are still a number of foreclosures, in February 51.1% of all resale homes were foreclosure properties. These foreclosures are still driving down the median home price and are a heavy competition for all ’regular’ traditional sellers. The biggest issue with these foreclosures is they are often under-priced, exciting buyers, leading to multiple offers and a bidding war which can leave a buyer paying too much. Are foreclosures a good deal? Usually, but if the price seems too good to be true, it often is.

Sales of the higher-priced homes remain sluggish primarily because many of these sellers are not willing to price their property realistically and compete with the foreclosures. Loan availability is also more difficult in the higher price range. Judging from past declining markets we have found that high-priced homes, in general, don’t come down nearly as much as lower priced homes and condos. In this declining market, more so than usual, buyers want a steal of a deal and want that ‘foreclosure price’ even with traditional sellers.

If you have any questions or would like more information please do not hesitate to ask, we are here to help!