In 2005, we hit the proverbial height of the real estate market. Prices were at an all-time high and the median price for a single family home in San Diego County was a steep $517,500. Then came the crash and all the foreclosures and short sales that accompanied it. In 2009 the trough hit bottom with a median price of a mere $280,000.
What comes down will surely come back up as prices began to inch up with the dawn of a new decade. In 2009, foreclosures as a share of the market peaked at over 53 percent in 2009; short sales at 23 percent in 2012. Compare with our summer 2016 percentages with foreclosures a paltry 2.6 percent of all sales. With little or no distressed inventory, buyers of today have nowhere to turn and with inventory generally low, they find themselves in bidding wars for good and even average real estate.
They are also competing with all cash buyers representing 18.3 percent of the buyers, and investors, comprising 19.1 percent of purchasers; these numbers courtesy of real estate tracker CoreLogic. With interest rates on mortgages still low, and the threat of higher rates always looming, buyers are not waiting on the sidelines or anticipating more favorable times.
In August 2016, the median price for San Diego County hit $498,000. On a resale single family, the median was $550,000, a 6.8 percent increase in the last year. Condos climbed to $377,750 and new homes to a hefty $684,500, the latter up 5.6 percent in the same period.
Under $800,000, the overall inventory was sufficient for only two months, leaving few choices for strapped home buyers. Though demand is up, supply is lagging, with few new units under construction.
Neighboring communities in Southern California are also seeing strong numbers. CoreLogic reported medians in Los Angeles of $530,000; in Orange County of $649,000. Even the exurbs saw big increases with Riverside County up 7.1 percent; Ventura County up 7.9 percent and even San Bernardino with an increase of 1.9 percent.
The trend is definitely up. We know California is a stunner, but across the United States, home purchases remain buoyant. The National Association of Home Builders is bullish, claiming the U.S. single family home market bounced up six points just this past month.
It is indisputable that the desire to buy one’s own home is an abiding American value. Even though reports claim millennials are not as enthused as their parents and elder siblings, chances are they will get on the bandwagon too. If there are jobs to be had, interest rates on mortgages remain relatively affordable and supply does not catch up with demand, it is likely that home prices will remain competitive. Great news for sellers, brokers, lenders and maybe even you.
