San Diego values increased 0.8% from the fourth quarter of 2006 and 3.2% from the first quarter of 2007 compared to a year ago. While Southern California home sales hit a 12-year low last month, San Diego Sales did not feel the same impact.San Diego Real Estate…
It’s a good time to buy
San Diego values increased 0.8% from the fourth quarter of 2006 and 3.2% from the first quarter of 2007 compared to a year ago.
While Southern California home sales hit a 12-year low last month, San Diego Sales did not feel the same impact. Home sales here were off only 13 percent from a year ago, whereas home sales are down nearly 30 percent across the region.
John Karevoll who works for the real estate tracking firm Dataquick, says sales and home prices appear to be stabilizing in San Diego County. Karevoll says the average home price in the county is down only three percent from last year.
According to Karevoll, “When talking about the peak in San Diego, which occurred first for Southern California, we’re off of that peak by about as much as we probably will be. If we look at resale houses, for example, prices there in San Diego now have been pretty stable the past year,” notes Karevoll. While Riverside and San Bernardino counties showed the biggest declines in sales from a year ago. Both counties saw nearly 50 percent drops in the number of sales from April 2006 to April 2007.
San Diego values increased 0.8% from the fourth quarter of 2006 and 3.2% from the first quarter of 2007 compared to a year ago. The average luxury home in San Diego is now $2.17 million, according to the First Republic Prestige Home IndexTM by First Republic Bank, a leading provider of wealth management and private banking services.
First Republic Bank (NYSE: FRC) produces the Prestige Home Index each quarter with Fiserv CSW Inc., a leading provider of automated property valuation services and home price metrics to U.S. financial institutions. Historical results of the Index are accessible at www.firstrepublic.com.
The First Republic Prestige Home IndexTM is the first statistical model of its kind customized to measure changes in homes valued at more than $1 million in key California urban markets. Some common features of luxury homes in the Index: 3,000 to 6,000 square feet, three to six bedrooms, and three to six bathrooms. San Diego properties represent a cross-section of luxury homes in Carlsbad, Coronado, Del Mar, Encinitas, La Jolla, La Mesa, Poway, Rancho Santa Fe, San Diego and Solana Beach. In producing the Index, Fiserv CSW Inc. draws upon its economic database and years of experience in tracking single-family home values, collects and cross-checks data from multiple sources, achieves a weighted balance of validation elements such as repeat sales, comparable sales, and physical home characteristics, and combines this with First Republic’s extensive local market knowledge.
For the past several years, the real estate market has proven to be the investment of choice. The lower interest rates and aggressive mortgage programs have given many buyers, who might not otherwise be able to afford a home in San Diego, an opportunity to own a piece of real estate. According to Kate Sappenfield, Branch Manager of HLC Sales at Countrywide Home Loans, “the last five years have been a great ride, but now it is reality.”
The reality is that the market is experiencing a “normalizing” period. It is not as bleak as the media hype might suggest, yet the newspapers, analysts, and television programs seem to be fueling the fire. The focus has been on the slowing housing market and the volatility in the interest rates. This is causing both buyers and sellers to become anxious. But the reality is that it is still a healthy market. The properties that are priced right are still selling and interest rates are still affordable.
Sappenfield believes that “there are still many affordable financing options out there that will fit every individual’s needs no matter where the market leads. And if history repeats itself, buyers who keep waiting will miss the boat.”
“Even though the housing market appears to be adjusting, and mortgage rates seem to be creeping up, it is merely sliding back into normality. There is no denying how lucrative the real estate market has been over the past several years and no other investment has given us such prosperity over the short/long term and any slow down will only be temporary.” States Richard Faust of Wells Fargo Home Mortgage. “Despite the recent volatility, there is still money to be made and money to give away.”
Gregory J. Smith, San Diego County Assessor, Recorder and Clerk, has analyzed these cycles since the 1960’s here in San Diego and says there is no reason for alarm and, in fact, he is confident about this market. “First off, every severe real estate decline in San Diego was preceded by dramatic job losses caused a real estate decline in San Diego County, but it came back strong in the late 60’s,” claimed Smith. “In the 1970’s, Nixon’s wage and price controls and the resulting recession caused more job losses, but by the mid 70’s the market came back so strong that we had Proposition 13. Then came the early 1980’s and Paul Volcker with interest rates hitting 18%, effectively putting a clamp on the housing industry, but again we recovered by the mid 80’s. In the early 1990’s, the Savings & Loan crisis resulted in massive liquidation of properties by the Resolution Trust Corporation (RTC), coupled with severe job losses as a result of General Dynamics and Convair leaving town threw us into a tailspin,” continued Smith.
“From 1990-1995, the average home price decreased approximately 20% to 25%. In the Assessor’s office, we reassessed over 200,000 properties down in value, for a total reduction of over $16 billion. Despite this, by the mid 90’s we came back strong, and from 1995-2005, we had unprecedented growth in real estate values and appreciation. This was due primarily to limited supply, strong demand, and low interest rates thanks to Alan Greenspan,” Smith added.
“The difference between those cycles and one we’re in right now is that the job market and the economy are still very strong in San Diego County.” Smith contends the problem is one of perception. “You have to remember we are coming off all time real estate highs in 2004 – 2005 with 20% to 25% increases in real estate values. Resale and new home values were going through the roof, with multiple offers on the same property. It simply couldn’t go on like this indefinitely.” Smith then states: “What we have now is not a collapse… not even close. It is merely a market correction and one that was overdue.”
The man who has been San Diego County Assessor since 1983 has refused to rest on his laurels.
Maybe that’s why 12 years ago voters agreed to add the County Clerk and Recorder functions to his duties as Assessor. And while he downplays the three hats he wears, there is no mistaking the fact that Greg Smith loves what he does, and his constituents like the job he is doing by re-electing him over and over again. In fact, in June 2006 he was re-elected by an unprecedented 89% of the vote. “San Diego is the greatest place to live in America, and that’s why, over the long run, the housing market will always be strong here,” said Smith.
Most credible job forecasts predict our region will create anywhere from 30,000 to 50,000 jobs over the next two years and that interest rates will level off by year end. With those numbers, it is difficult to see a steep decline or collapse of the real estate market in a job-creating economy like we have in San Diego.
Brian Coe, San Diego County Manager for First American Title has been in the real estate industry for 23 years and he has a unique perspective on all of this negativity. “The escalation in housing prices couldn’t go on forever, it had to settle down and that’s all this is. With interest rates where they are and the job forecast for our region, I believe the remainder of this year will be a terrific time to buy a house,” concluded Coe.
Inventory of new and existing homes would seem to bear out both Smith and Coe’s claims. With a healthy amount of available product, a wide array of mortgage products and interest rates still low, it appears it is a much healthier buying market than the media wants us to believe. National City Mortgage Branch Manager Jon Reed said, “It used to be a 30-year fixed mortgage was the loan program of choice but today, buyers have a vast number of loan options to select from,” Reed said. “It has never been easier to qualify for a home loan because the products are tailored to the home buyer like never before.”
Our present real estate market is nothing more than a natural reaction to the record run-up we experienced over the past several years. We still have favorable interest rates, strong demand and an attractive inventory out there.
After spending 27 years in television, I think I’ll trust the expertise of seasoned real estate veterans over uninformed, superficial reporters bent on disseminating cruddy news. If you’re seriously considering making the biggest investment of your life who will you trust? sdp
For the past several years, the real estate market
has proven to be the investment of choice.
PRICE YOUR HOME ACCORDINGLY
A good way to explain the market is like this:
Houses generally fall into 3 categories, Category A, B and C. Category A has the great location, good overall condition and priced accordingly. Category B has two of the three previous descriptions. Category C has only one. Let’s say 3,000 homes sold in San Diego in 2004 when the market was the hottest (this is just an example) and because of inventory all the A’s sold and a lot of B’s and C’s sold too, but when the market starts to slow the A’s go first, fewer B’s sell and even fewer C’s. That is what is happening in now. This tends to prop up the average sales price.
So the advice from the experts is:
Price your house according to what you and your realtor think is a fair market price and make any necessary changes (Staging Your Home) to make it appealing to buyers out there today and with both of those areas covered your house will sell.
Home prices are expected to recover in 2008 as inventories decline, with existing-home sales picking up late this year and new-home sales rising early next year, according to the latest forecast by the National Association of Realtors®. Existing-home sales are expected to total 6.11 million this year and 6.37 million in 2008.
San Diego Premier Vol 14 August 2007