2013 Real Estate Market in San Diego: Everything You Need to Know
If you had to pick just one place to live in the entire world, a 9,000 square foot oceanfront mansion in La Jolla would not be a bad choice. Currently listed at $19,950,000, there is such a house just waiting for the right buyer. If you can put down about two million and not blink when you have to pay a monthly mortgage of $100,000, not including taxes and insurance, this might be the right house for you.
Yes, some of the world’s richest people live in San Diego, but so do millions of others who go to work every day just to be able to pay their bills. Real estate in San Diego runs the gamut from small homes selling for less than $100,000 to prime properties that run into the millions. No matter how much you can afford to spend, there are some things you should know about the current and future real estate market in beautiful San Diego, California.
Recovery in median home prices
San Diego median home prices hit their lows of approximately $285,000 in early 2009. The economy bottomed out in March of 2009 and as it started to recover, so too did the San Diego real estate market. According to Data Quick, the median home price in San Diego County for February 2013 was $359,000. While the $74,000 increase is excellent, median home prices are still close to 30 percent below their November, 2005 all-time highs of $517,500.
Positive trend is continuing
Recently released data by Trulia, for the first quarter of 2013, showed that the median price of homes sold in San Diego was $379,057, an increase of 26.4 percent over the first quarter of 2012. The average listing price for the week ending April 3, 2013 was $656,901, a $10,194 gain and an increase of 1.6 percent over the previous week.
Distressed property sales are down
San Diego realtors are still dealing with a very large number of distressed properties. Distressed properties are properties that are in foreclosure or in danger of going into foreclosure. Approximately 42 percent of homes that were sold in the month of December, 2012 were either foreclosures or short-sales. While normal levels for distressed property are usually less than 10 percent in a healthy market, the 42 percent figure is much improved over the 71.4 percent of homes sold in January 2009 at depressed prices.
One reason that the distressed property sales are continuing to decline is that there is more cooperation and incentive for banks to agree to terms on short sales. Banks find it more cost effective to permit the sale of homes for prices below the mortgage balance so they can get those properties off the book and comply with government mandates that were set in place to deal with the foreclosure problem.
Another indicator that things are looking better is the reduction in the number of Notices of Default. Before a bank can foreclose on a home, they must send the mortgage holder a notice informing them of their intent. Notices fell from 1,773 in March of 2012 to 669 in March of 2013, a 62.3 percent decrease.
Is it a good time to buy?
Even though prices have been going up steadily, it is still a good time to buy a house in San Diego. Mortgage rates are still near their historical lows and buyers can get some great deals by focusing on bank owned properties or short sales.
Qualifying for a mortgage is not as easy as it was five years ago. You can still take advantage of the favorable terms of a VA loan if you served in the armed forces. As long as you have good credit and a down payment, you can find a lender who will issue you a 30 year mortgage for around 4 percent. Even if your credit is not so good, you can get a loan at a little higher interest rate.
Renting a home will cost you as much or more as paying a mortgage. In a rising real estate market, you can build equity quickly. You should not make the mistake so many home buyers did back in 2005 and 2006, by buying more home than their income could justify. Buy something in your price range, put down twenty percent, and you should be just fine.
How about sellers?
While it is a good time to be a buyer, it is an even better time to be a seller. When homes were selling at less than half their original price, many astute investors, hedge fund managers and real estate groups, saw real opportunity. They purchased large blocks of homes, fixed them up a little, and then rented them out as income property.
Today, those homes have appreciated substantially and many of those investors want to cash in now. It is a sellers market as demand for houses in San Diego is high and supply is limited. It is a great time to be a seller.
According to the San Diego Association of Realtors, homes are selling faster in the first three months of 2013 compared to the first three months in 2012. A little over 5,000 detached homes were sold in the first quarter of 2013 and the first quarter of 2012. The average days on the market in 2013 was 68, compared to 92 in the first quarter of 2012. That indicates higher demand which leads to higher selling prices.
Homebuilders are building more homes in San Diego. The job picture is getting brighter every day. People love the weather, beach and everything else the city has to offer and want to live in San Diego.
San Diego has excellent schools and is a great place for families with young children. The business climate is robust for those in their working years. Seniors can spend their retirement years relaxing in their homes.
Almost every real estate expert believes that the San Diego housing market will continue to do well throughout the year. Unless Ben Bernanke and the Federal Reserve decide to stop their quantitative easing policy and allow interest rates to go up, mortgage rates will remain low and more people will be able to afford to buy a home.
The truth is that San Diego is one of the best places to live in America and the real estate market is hot now and likely to stay hot for some time to come.
Article Copyright ©2013 – All Rights Reserved Patrick Belhon (patricksellshomes@gmail(dot)com)