If you're thinking about buying or selling a home in the San Diego real estate market you may want to be aware the market is starting a cyclical swing. As a real estate professional here in the North County area (Encinitas, Cardiff, Carlsbad) for a number of years, I've had a passion for staying ahead of the market data and listened to the word on the street that usually precedes things like newspaper articles (I take issue with Saturday's Union Trib story), flyers from the title companies and national headlines. That's one of the reasons I love open houses because it not only exposes the market to properties you're trying to sell but it gives you a chance to meet the real buyers on the street and take their pulse.
Since March of 2006 most of the real estate professionals here in San Diego have been wondering why all the buyer traffic virtually dried up and now it's in the full blast mode. There's a few factors to consider. The holidays are a distraction to buyer focus which makes the sellers anxious. When the sellers become impatient they're forced to address realistic pricing if they're motivated to sell. If not, they rent their properties or pull them off the market completely. In January 06 we had about 22,000 homes on the market and now in January 07 we're approaching 15,000. Consumer confidence has heightened over the last quarter of 06. Buyers are tired of hanging out waiting for the market to change and they think it's bottomed about as far as it's going to go (I agree). Interest rates are slightly above 6 percent for a 30 year conventional, the jobs report is favorable indicating stability in the economy, although retail sales were somewhat disappointing for the end of year. I think those indicators explain why there's been so much buyer activity since New Year.
What's really interesting about the market right now is that seller activity hasn't caught up to the buyers needs. This is really important to know if you're going to sell in the first two quarters of 07 because you're timing is excellent. There's always a moment in time in any market when it's good to jump in or out. Now's the time to jump in if you've been waiting to sell because we're approaching our traditionally strong selling season when inventory increases. You're ahead of the curve right now. When inventory is down, you have a better chance of getting the price you wanted for your home if there are fewer homes available.
Multiple offers seem to be occurring more frequently. The sellers who have begun to price realistically are getting simultaneous offers from buyers who have watched and waited by monitoring their "automatic email" updates. As an real estate professional, I have access to over 900 programmable fields on our MLS database that I can program and automatically give you an update via email every time there's a price adjustment or a new property on the market. This is a great way to shop without pressure or watch the market for signs of change.
Lastly, foreclosures are on the rise. I haven't seen any effect on the San Diego market as a whole but it has affected individual neighborhoods where the sellers bought at the peak, lived off their equity by pulling money out of the their home to pay bills or make improvements and now they're upside down. Some of the "scary loans" (ARM's and interest only) that people engaged 3 years ago are now adjusting upward. With homeowners mortgage payments out of balance with incoming salary, they have no choice but to walk away. Most of the buyers that I'm working with now have bigger down payments to avoid that situation.
What I see as "on the street" indicators that most people won't see until market data is released for several months, points to stability in the San Diego real estate market. By March or April we'll be fully into the selling season here so it will be interesting to see if inventory increases. If it doesn't, that points to buyer confidence because the inventory is being used up faster than it's being supplied. Call me if you want to chat, email me or leave a comment here. I'd love to know about what you're seeing, hearing or doing so we can share it with everyone.
Hi Mickey,
You make some great points here about the current market. Sellers need to price their homes realistically to attract the right buyer. Savvy buyers want value - they recognize it when they see it and buy. Sellers can position themselves to be the "winner" of the "ready-willing-and-able buyer pool" by making their home as presentable as possible and by being willing to work with a serious buyer.
I appreciate the strong marketing and negotiating skills you bring to both buyers and sellers - it becomes a win-win for everyone when they work with a knowledgable Realtor like you.
Thanks for sharing this solid and very valid information with the public. San Diego real estate is some of the most desirable in the world. Becoming a homeowner here is the smart thing to do. For the long run, a person cannot go wrong owning property in this county.
Posted by: Jill Morrow | January 31, 2007 at 03:49 PM