Real Estate Rising in San Diego Area for 2013
Hot is not the right word to describe the condition of the San Diego real estate market in 2013. Home sales have been warming up for more than a year and now they are starting to boil. If the current trend continues, pretty soon, home prices in the San Diego area are going to be on fire.
Home buyers can feel the heat and pressure to make a strong offer when they see a house they want to own. It is not unusual these days to see a house in Coronado or Carlsbad, that just came on the market, get five or ten offers at or above the asking price. Something has been making home prices sizzle in this beautiful part of Southern California and it is more than just the sun.
Supply is tight and demand is high
The San Diego Association of Realtors has analyzed recent home sales and found that the average number of days that a home is listed before it sells is right around 60 days. Such a low number is a very good sign of a healthy and vibrant real estate market. Only 60 days is a far cry from the not too distant past when houses would stay on the market for six months or even longer before they finally sold. What that also means is that housing inventory is low. By some estimates, the number of houses on the market would have to quadruple to slow the demand and the rapidly rising prices of homes for sale in San Diego.
Median home sales hit $400,000
According to DataQuick, a firm that tracks real estate trends and home prices in the area, San Diego County median home sale prices touched $400,000 in April 2013, a level that has not been seen since April of 2008. That represents a 21 percent rise over the price of homes sold back one year ago in April of 2012. While still well below the $517,500 record set back in November, 2005, just before the infamous national housing bubble burst, it marks the eighth consecutive month of at least 10 percent year-over-year
home price increases in the San Diego area.
If you take a look at the MLS sales data in the affluent La Jolla community, you can get a good idea of the San Diego area housing market. For the YTD period ending April 15, 2013, there have been 183 home sales with 100 of them under $1 million, 66 of them in the $1-$2 million range, 14 in the $2-$4 million range and three that sold for more than $5 million.
Right now, there are 217 active homes on the market. Year-over-year the housing inventory supply in La Jolla has dropped from a seven month supply down to just a four month supply. Similar statistics exist in other upscale communities as well as in many other towns and neighborhoods across the County.
Latest numbers for San Diego home sales
According to Trulia, for the week ending May 8, 2013 the average listing price of homes for sale in the San Diego area was $671,239. The average price per square foot was up to $302, up 17.1 percent when compared to last year’s figures. The median home sales price shot up $82,000 a 25.9 percent increase over the same one year period in 2012. The overall number of homes sold also was up by 2.5 percent from 2012 numbers.
What is making the San Diego real estate market sizzle?
Enthusiasm and optimism about the economy and prospects for the future are driving many people to either shop for their first home or sell their current home and move into a bigger and more expensive new home. Anecdotal stories include one man who went so far as to send a picture of his family to the home seller along with a letter telling him why they wanted the house so much. It is unsure whether he got the house or if it went to the highest bidder.
Foreclosures and short sales are working their way through the system and those “really great deals” are far and few between. The tightening of supply and the increase in demand is driving home prices up. New construction and the number of building permits being pulled are a good indicator that the trend for a strong San Diego housing market should continue for the foreseeable future.
The relatively low supply of housing inventory in the San Diego area can be attributed in good part to the number of investors who came into the market and bought up houses by the handful when the prices were 30-50 percent their current levels. Some of those savvy investors were hedge fund managers who saw the opportunity a few years ago and invested hundreds of millions of dollars in homes that are now equity-rich and can be sold or rented for excellent returns.
Interest rates and the availability of mortgages are always an important component in any type of real estate market. With the Federal Reserve keeping the interest rates they charge to banks at less than one percent, mortgage lenders can afford to loan money out at less than four percent to borrowers with good credit.
While a $500,000 home may seem incredibly expensive to own, with twenty percent down on a 30 year mortgage at 3.5 percent, your principal and interest would be just under $1,800 per month. You would be hard pressed to be able to rent a home worth $500,000 for less than $3,000 per month. Low mortgage rates in a rising real estate market encourage people to switch from renting to owning homes.
Sellers are in a very strong position as the demand for homes continues to rise. More families will be looking for homes in the summer months before the new school year begins. Now is still a good time to buy a home because you can get a low-interest mortgage on a home that is likely to appreciate in value in the next few years. At some point, the housing market will level off, but for now, the San Diego area is still hot.
Article Copyright ©2013 – All Rights Reserved Patrick Belhon (patricksellshomes@gmail(dot)com)