Higher Sales Numbers: The number of detached homes put into escrow each month has been consistently increasing all year and March numbers were the highest we've seen since July 2005. Here are the numbers from last year and this year:
|
2008 January: February: March: April: May: June: July: August: September: October: November: December: |
1186 1455 1823 1973 2047 1921 2055 2101 2247 1985 1797 1609 |
2009 January: February: March: April: May: June: July: August: September: October: November: December: |
1992 2110 2408 |
View the current Market Velocity chart displaying the above stats
Government Incentives?: The new administration has various plans to incentive buyers and help troubled homeowners from putting further financial pressure on failing banks. How and if they ultimately do this is yet to be played out, but 2 programs are clear:
1. $8000 federal tax credit to “first-time buyers” (or anyone who hasn’t owned in 3+ years)
2. $10,000 CA state tax credit for purchasing a new home (split up over 3 years)
Home Loan Rates VERY Low: Although there has been day-to-day volatility, home loan rates have been steadily dropping the first quarter of this year, going down about 1% since January 1. Currently, I am seeing quotes in the 4.5 - 5% range on a regular basis. Let me repeat that, I am seeing home loan rates below 5%!!! This is an incredible low-point for home loan rates - it is truly an unprecedented opportunity for home buyers to lock in one of the best rates in history. When rates drop from 6 to 5%, that is a 17% drop in your cost to own the same priced property.
View a couple historical charts on Home Loan Rates here:
30-year fixed rates from 1971-2006
Home loan rates and Prime Rate from 1991-2008
Market stratification - luxury vs. lower-end: One of the things I noted in my 2008 year in review was that the lower-priced homes were selling much quicker than the high-end homes. This trend has continued and we have seen significant price drops on higher priced homes with motivated sellers. We are seeing more short-sales and foreclosures in higher priced neighborhoods, which has been driving the pricing in these high-end markets downward. I’m not sure how long this will last, but it is clear that the luxury market took the biggest hit in Q1 of 2009.
The low-end sales, however, are extremely competitive. One of my clients placed an offer on a bank-owned foreclosure home in Mira Mesa in March that had over 30 offers on it. Multiple offers and sales over asking price is commonplace right now in the more affordable markets. In the lower-price ranges, it seems clear to me that we have hit bottom. At the very least, we know that it has become a seller’s market, which usually signals a rise in home values….at least in a normal economy it would. I’m not an economist, so you will have to interpret the stats for yourself.
Who’s buying right now?: If you think about the market stratification I just reviewed, it’s easy to believe me when I tell you that our two largest pools of buyers are first-timers and investors. Rates are low, prices are down and rents are still relatively high (although softer now than 1 year ago). Investors are finding immediate cash flow on investment properties that they hope to gain good long-term appreciation on. First-time buyers are looking at monthly payments that are nearly half of what they were facing 3 years ago on the same home, while rents have gone up about 20% during the same 3 years.
What should I do?: I don’t know… It depends on your current situation, your goals and your whims…I am happy to offer free consultation to you, your friends and family whenever requested. I continue to appreciate the referrals I have been receiving and look forward to helping a friend of yours buy or sell a home soon.
In closing, I will remind you of a famous quote from Warren Buffet:
“Be fearful when others are greedy, and be greedy when others are fearful.”
Thank you for reading – here are a couple resources you might find useful:
Search All listed San Diego County Homes for sale - updated daily
Get a current home valuation - need a property tax reassessment?
I hope you have found this useful and I appreciate any feedback you have for me. I also appreciate your referrals - if you know of anyone thinking of buying or selling real estate in San Diego, I would be happy to work with them.
Warmest regards,
Adam Pascu
Team 73 Degrees
Keller Williams Realty
858-761-1707