San Diego Coastal Real Estate Resource

San Diego Real Estate The Road Ahead to 2010

by Jeffrey on November 20, 2009

in AAA Favorite Posts, Communities, Coronado, Del Mar, Downtown, La Jolla, Rancho Santa Fe, Real Estate, Statistics

Market predictions for San Diego Home Sales in the Months Ahead

To say that real estate has not been going through some changes over the last few years would be like saying Michael Jackson had a good year. On everyone’s mind is where our local real estate market is headed in San Diego as we wind up 2009 and look forward to 2010.

Market predictions are worth what you pay for them, this article is free, and certainly you can find anything from outright optimism to downright gloom and doom. As usual, I think the truth lays somewhere in the middle of the road. I would sum it up as cautious optimism.

While no one has a crystal ball, and there are too many moving parts for anyone to have the real answer, here are some guesses. The following are just personal opinions that I have formed from practicing real estate over 20 years – only the future market reality performance will confirm me as a market whiz or a complete idiot! I’m going to bet on those odds, but I am hoping for the first.

For those San Diego Lifestyle readers who have been following my blog, I post a weekly report on Downtown real estate sales. You can visit the category here for weekly reports on which buildings have sold and for how much. For the most part, units that are selling are in the lower price ranges and they are closing escrow for at or above asking price. Once you get above the $500,000 closed prices are further off asking prices and inventory is more plentiful.

Higher priced luxury markets are a much different story in coastal San Diego. I also post weekly sales for Rancho Santa Fe.

Looking at real estate sales in Coronado, Del Mar, Rancho Santa Fe, or La Jolla indicate ample inventory, climbing days on market, and falling average prices. Those properties that are selling are the cream of the crop with buyer’s cherry picking the best real estate values.

An article today on Bloomberg.com summed up what I think are some accurate assumptions.

Bouncing at Bottom

Josh Levin, a housing analyst at Citigroup Global Markets Inc. in New York, said he expects sales to continue to be slow until January or early February, followed by a surge as buyers try to beat the April 30 expiration of the tax credit.

“The bouncing along the bottom is distorted by government policies,” he said in an interview yesterday.

Foreclosures will also have limited impact on driving down real estate prices as long as banks are slow to put properties on the market and the government encourages loan modification programs, he said.

“It’s clear the government and banks don’t want to flood the market with foreclosed homes and it’s clear it’s going to be dragged out,” he said.

The article also references those markets that have improved:

There are signs that parts of the U.S. are rebounding. California, among the states where the housing bust started, is one of the few areas that’s beginning to recover.

October home prices in Orange County, San Diego and the San Francisco Bay Area increased from a year earlier, MDA DataQuick, a San Diego property information service, said this week. The number of sales also increased in the Bay Area and Southern California.

Lastly, what I believe is we will see a early 2010 rush in lower priced markets with low interest rates and buyer’s taking advantage of the tax credit. I also believe we will see some improvement in volume of sales in luxury markets.

Homebuilders and investors will get a better gauge of whether housing demand is stabilizing in 2010’s first quarter, said Robert Toll, chairman and chief executive officer of Toll Brothers, the largest builder of luxury houses.

The spring selling season for homebuilders typically begins in February, earlier than the resale market because families with children want to be able to move into a home before September’s start of school. It can take up to six months to build a home, and up to 9 months to build the larger houses sold by Toll Brothers.

In summary there is great opportunity for first time or lower priced buyer’s in the market. Low interest rates combined with lower prices and tax benefits will continue through mid 2010. Opportunity exists at the luxury level too with some fabulous properties on the market with few buyers and many sellers. Caution in both markets when buying, I am advising Clients to purchase value over cost – buy quality in good locations.

I am available to discuss your personal real estate goals, just send me an e-mail and call me anytime at 858-352-8280.

Photo courtesy of Flicker by Gmnonic

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