Whether you are a seller, a prospective buyer, professional in the real estate industry or just a curious person, you are probably interested in the current state of the real estate market. Is it up or down, on the way in either direction, and likely to take a tumble? So here’s a check-in with the current state of affairs in California, and particularly our town, San Diego.
We know that incomes are still fairly stagnant even though unemployment is at a fairly low point. Confidence in the economy is not booming, but not in the negatives at the moment. It is expected that the economy may return to pre-recession employment levels in 2019. Interest rates on mortgages are holding at fairly low levels in spite of Federal Reserve hikes, but may tack up in coming months.
When it comes to inventory, numbers are fairly low, and the low availability of homes does make for a more competitive marketplace. There are fewer than 5,000 active listings in San Diego County as of March, 2017. Compare that to the over 13,000 listings in the fall of 2010. There is also a diminution of foreclosures and bank owned properties, as these have been absorbed and current lending standards are considerably more stringent.
As to demographics, i.e. who’s buying, we still see that millennials are struggling with sufficient income and down payments, thereby depressing this group. The folks with the resources to buy are the baby boomers, and as conditions improve for their offspring, we will see many of these boomers passing their properties to younger people, and downsizing into smaller, more age-appropriate housing for themselves. Surely, builders will be thinking over 55 communities, as these are likely to have great appeal in the remaining years of this decade.
So, with all this in the background, what’s the state of affairs? For sellers, it all adds up to good news. The median home price in San Diego County climbed to $515,000 in March, the highest in a decade. With affordability still an issue, this climb can be attributed to a scarcity of product, leaving those with sufficient funds little choice but to bid high to get the few properties available.
Another factor for the high prices is the relatively high price of rent. Once rents rise, tenants are more motivated to take the plunge and buy, trying to capture some security for the future. Real estate brokers report that condo prices have tumbled up over 8 percent to a median of almost $400,000. They also tell us that any property under the median is being pounced on by prospective buyers, which, given conditions, is to be expected.
What can we expect in future years? If trends continue and the economy keeps bouncing up, confidence should encourage many more buyers to get out there and buy. Millennials will have more job stability, and boomers will be ready to release their larger properties to these young families. We can also expect mortgage lenders contemplating the increased business, to perhaps loosen their standards a bit.
But stay tuned. The economy, politics and a host of other factors, are fungible. The best advice is still to make your decisions based on your personal needs, goals and lifestyle choices. Though we try to know the future, living in the present is probably still the best course to follow.
