The real estate market in San Diego continues to improve, especially in the lower price ranges. One interesting aspect is that many sellers are now changing their pricing strategy from the older "normal" method of pricing high and reducing their price until a sale occurs to pricing below market to generate an auction atmosphere and multiple offers fairly soon after going on the market. This second method is more similar to what has happened in northern California for some time. The bulk of the properties trading still are short sales and bank owned. It is possible we could see more foreclosures in the near future as lender moratoriums expire. Good news is that the government just approved the $8,000 tax credit for first-time home buyers (anyone not owning a home for the last 3 years) to be applied towards a down payment.
One of the most accurate leading indicators of future closings is the number of properties going into escrow in any given month and the average number of months it would take to turn over the entire inventory, i.e the number of current active listings on the market divided by the number of new escrows opened. The following numbers could be a little skewed because our Multiple Listing Service just modified the reporting process for short sales and bank owned homes to remove them from the "Active" category while the banks consider offers.
Number of New Escrows Opened (includes all property types and prices)
May 2009: 3,631
April 2009: 2,107
March 2009: 855
The current number of all properties on the market is 10,796 so this means that 10/796/3,631 = 2.97 months of inventory. Typically, anything under 4 months is a seller's market with prices rising or stable but ready to rise. Four to 6 months of inventory is usually a neutral market and over 6 months if a buyer's market.
Interest rates have increased slightly and usually that motivates serious buyers to action before they rise more and their buying power erodes. Many people believe interest rates must rise due to the massive Government borrowing that is needed to finance the bailout and stimulus programs.
The numbers above cover all of San Diego County but can be customized for whatever part of town and whatever property type or price range that interests you, so let me know if you'd like that done.
Here are a few recent articles from publications that I found interesting:
http://www3.signonsandiego.com/stories/2009/may/18/bn18housing11537/
Prices rise
http://www3.signonsandiego.com/stories/2009/may/19/1n19housing002351-sign-optimism-home-prices-rise/?uniontrib
Prices rising again
http://www3.signonsandiego.com/stories/2009/may/24/lz1h24credit19833-8k-tax-credit-shape-shifts-down-/?uniontrib
$8k credit as down payment
Rick Ungar is a Certified Distressed Property Expert, solving the foreclosure issue one homeowner at a time. Contact us today to learn about the best options to preserve your credit and buy again soon.
