Everyone is asking the same question, Have we hit bottom? Well to give you a quick answer its absolutely and not yet. No I haven’t lost my mind in this drastically changing market. Ive experienced first hand that we have an extreme stratification of the real estate market here in San Diego. First time home buyers looking for starter homes and investors looking for historically low bargains, if you aren’t actively looking right now than give me a call. This market segment is moving faster than Usain Bolt. If you are looking to upsize or if you are looking to buy a property in the mid to high end market than there is still a ample amount of inventory out there.
For example for Carlsbad homes there are 468 active, 249 pending (homes that have an accepted offer and are in escrow) , and 112 contingent homes (short sales or foreclosures that have accepted offers but have not opened escrow) in Carlsbad while Im writing this update. If I look at homes priced under $700k, than there are 198 active, 187 pending and 86 contingent. The reason I wanted to illustrate this is that the lower my price range the more of a sellers market it is.
The stats for sales have been holding around 2,000 a month for San Diego County. We did see an increase from March to May, but that may be do to the Summer sales increase. Another factor in the numbers is that the system San Diego uses to track the numbers has changed.
Contingent REO/Short-sales: A new category We also need to take into account that our statistics have changed (starting with June numbers) because our data categorization has changed. We used to just have 3 categories: active (homes for sale), pending homes (in escrow) and sold homes. We now have a new status category called contingent in response to the growing number of short-sales and bank owned properties on market. A contingent home is a short-sale or REO (Bank Owned Property) in which the seller has accepted an offer, but the bank is reviewing the offer and has not approved it or received all of the necessary paperwork to open escrow. Currently, contingent homes appear to make up roughly about 25-35% of our inventory! In the past, some agents left these as active and some put them pending. It is hard for us to fully compare the new data to the old data because of this.
Federal Incentives: 1. $8K for first time home buyers
2. $10,000 CA state tax credit for purchasing a new construction home (split up over 3 years). By the way last time I checked over $80 million of the $100 million allocated for this had been spent. The federal tax credit is good for any homes closed prior to November 30th. There is talk about extending and modifying this credit, but we have nothing more than hearsay to report on this matter.
Historically low interest rates: Yes there is financing available! The first thing I hear from people now is “no one is able to get a loan”. That’s just not true, there are great loans available and the money is flowing. Rates are currently hovering around 5-5 1/2 percent. That’s an amazing historically low rate that many buyers are taking advantage of.
Will rates hold at current level? The experts are saying that inflation will play a big factor in the future of rates. The typical economic response is fighting inflation with increased rates. Also, rates tend to ride the stock market. If stocks go up usually rates to as well.
Market stratification – luxury vs. lower-end: Luxury prices continue to drop, while low-end homes appear to have hit bottom. I may mention this concept a lot, but it is the core factor of what Im seeing in this market right now. The market is based on what you’re in the market for. You have to understand your price range and the micro market of the area you’re interested in.
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