In looking ahead to 2009, the San Diego Residential Real Estate market appears to be ready to shake off the doldrums of 2007 and 2008. While we probably shouldn’t expect to see 20% appreciation again, there are signs indicating a stabilization of the market and a preparation for a “return to normalcy”. What does this mean?
Let’s take a look at some of the factors that impact residential real estate in San Diego and their current trends.
Resale inventories are down dramatically. Existing home owners are responding to today’s market realities. If a home owner needs to sell, they are pricing to achieve a sale in this down market. If a homeowner does not need to sell, they are not putting their home on the market to “see what happens”. The MLS listings for November 2008 were 15,529. There were 20,599 in November of 2007. That’s a 25% decrease.
New home inventories are down dramatically as well. Builders have slowed down the building of spec homes and are re-creating their product for today’s cost conscious market. There has been over 2 years of continuous declines in new home inventories with levels that are off more than 60% since the beginning of 2006.
Total home sales are up significantly. Total home sales in October 2008 were 3,600. That is the highest monthly total since December of 2006!
Sales of foreclosures exceed additional homes being foreclosed on a monthly basis. We are selling foreclosed homes faster than we are adding them to the inventory.
Interest rates are at historic lows. Countrywide announced a 30 year fixed Jumbo loan in the mid 5% range.
A new administration takes the reigns this month, optimism is rising. Change is what the buzz is about and change is happening. A honeymoon period usually follows a new presidential inauguration and with control of the House and Senate, there is a real chance for the Democrats to push forward economic legislation to reverse the course of this recession.
Job loses are mounting, but focused on trade and construction jobs. With stimulus packages in the offing, most of which focus on infrastructure and other forms of “construction”, there is a good chance to get America back to work building things. That helps construction numbers and it helps the supporting industries of construction.
Prices are still falling, but at a much lower rate of decrease. The overall market median price is flat, but the reality is that resales have finally made the pricing adjustment necessary and the rate of decline fell for resale homes is down.
Consumer confidence is low. But, investor confidence in real estate is growing daily. Evidence shows many banks are receiving 3+ offers on foreclosed homes over the original asking price. While the consumer is worried about their job and their existing mortgage payment, bottom priced resale homes are getting snapped up and quickly.
What does all this mean? What it means to me is 2009 will be the “bottom” of the recession for the San Diego real estate market.
Prices will stabilize.
Absorptions will increase.
Confidence will begin to return.
Mortgage rates will remain very low.
Government incentives will be applied to strengthen values. Jobs in construction will return through stimulus packages, which in turn will halt the job loses in other sectors.
Inventories will remain low for both new homes and resales. Total sales will continue to increase.
Notices of Default and Foreclosures will decrease.
Lenders will find a balance for qualifying criteria and loan products will stabilize.
Demand will return and supply will be limited.
The real estate industry will stabilize and we will prepare for better days in 2010 and ahead.
I am also an optimist! What do you think?
No comments:
Post a Comment