San Diego Home Affordability Still Riding The Wave

Over the last three years, sellers were more than pleased to see that homes were selling for a total of 25 percent more than three years before, according to the S&P/Case Shiller Index. Sellers were pleased; buyers not so much.

So far in 2015, slower gains for San Diego sellers have helped to make home affordability a more positive factor.

Sellers are still going to net more from a home sale than they would have in recent years.

But these same sellers, those who recently decided to trade up or move to a smaller place, are still doing buyers a big favor.

It's a lovely circle.  San Diego prices have been going up, which makes some sell, and that puts more choice homes on the market, which makes others want to buy. Even with the extremely tight resale inventory in San Diego, slight increases of great homes, combined with higher price levels result in prices becoming more settled and more of a balance plays out.

Real estate agents may be more likely to make recommendations that meet all the buyer's wants, instead of just a few.

Experts say it is too soon to calculate San Diego County affordability for this year, but if you buy a home in San Diego today it will definitely be more affordable than a year from now.

Quoted in The Wall Street Journal, Bill McBride, who writes the popular Calculated Risk blog, reminds us that in the existing housing market, active inventory may influence pricing somewhat, but it also influences sales. 

McBride says that in 2014, home sales were just so-so, mainly because inventories remained low. 

Mortgage interest rates for 30-year instruments have drifted back to about 4 percent or less in some areas. Some economists, however, say rates will rise beginning in June or July of this year.

According to Greater San Diego Association of REALTORS®, median sales price of existing homes rose 9 percent in 2014, with sales picking up at the end of the year. The prices of previously owned homes sold in San Diego County rose by 9 percent during 2014 , according to new housing statistics from the Greater San Diego Association of REALTORS® (SDAR).

While not as dramatic as the 20-percent rise in prices the previous year, the increase is a healthy sign for the local housing market. The 2014 median price of single-family homes increased to $495,000, while the price of condos and townhomes reached $325,000.Though the single-family home price in September and October was actually higher, weighing in at $510,000 and $500,000 respectively.

Sales increased in December compared to November. Single-family home sales jumped 11 percent, and condos/townhome sales were up 5 percent. For the year, however, total sales were 12 percent lower than 2013.
Active listings on the Multiple Listing Service (MLS) in San Diego County have been on the decline, and are now less than 6,000, about the same as one year ago, representing about 2.5 months of housing stock. (Five to six months is considered a healthy inventory level.) On average in 2014, homes were selling within 45 days of their list date.
As homeowners recapture more of their previously lost equity with home values rising to healthy levels, San Diegans will see more homes on the market this year, which will allow for the natural shifts to take place in the housing market. The projected increase in interest rates should boost inventory levels and drive sales.

We live in a wonderful coastal area with an outstanding climate. San Diego truly is one of the most beautiful places on earth. People want to live here and those who do are very fortunate.

In December, the zip codes in San Diego County with the most single-family sales were:

• 92157 (Oceanside) with 49
• 92114 (Encanto) with 43
• 92127 (Rancho Bernardo) with 42
• 92028 (Fallbrook) with 42
• 92009 (Carlsbad) with 40

The most expensive listing sold in the county last month was a 3-bedroom 3-bath, 2,500-square-foot beach home in Solana Beach that sold for $8.75 million.