How will homes prices and sales in 2009 compare to 2008? Will San Diegos real estate market see an increase in sales? Or will we see a further decline in home prices? Here is a summary of an article that was written by Alan Nevin that youll want to read.
1. Interest Rates will Fall
Nevin points out that as the price of money continues to fall, the U.S. [will maintain] its No. 1 position as a safe harbor for international funds. He goes further, arguing that because of this, investors will keep their money in the bank and away from international stock markets.
This will then force interest rates to fall, allowing more people to buy homes. Nevin feels that this will spur those who are renting, to move towards home ownership, taking advantage of short sales and foreclosures. Nevin points out that not everyone was affected by the zero down home purchases and that plenty of people have money to buy now “ this is something that I personally have witnessed over the last several months. Many of my clients are cash buyers, or are putting 10“40% down. For them, this is a great market!
And while I agree with most of this, my fear is that the government will not reduce Jumbo loan interest rates, which is where we need to see movement. Those who are looking at $700,000 to $1 million or more, need to be enticed by lower interest rates, so that theyre not tying up all their money on down payments – they need to spend that money and help the economy recover.
2. San Diego is wellSan Diego
Even though there are a lot of people who have, or are, losing their homes to foreclosures, most coastal regions have done well. And even though California saw tons of the liar loans that required zero money down, according to Nevin, only about 2% of the homes and condominiums in [San Diego] county were foreclosed. Additionally, since about 70% of San Diegans live near the coast and 70% of foreclosures were inland, most of the county is doing well. In fact, some of Californias other metropolitans saw up to 25% of its homes foreclosed on in 2008.
This all goes back to the reasons why people move here in the first place – the weather.
3. Things are Picking Up
Clearly the market is not great for everyone, but we are seeing an increase in activity. Nevin states that last years resales were at a low point of 1,215 sales in January, but that these numbers had doubled by November. This is also something that Ive personally witnessed, as my business has taken off since about October of 2008.
Similarly, Nevin suggests that the bottom of the market may have passed, but Im not sure I agree. I do think that some of the best deals have come and gone, but that we will continue to see a decrease on median home prices for the next year or so. This is primarily due to the fact that well continue to see short sales and REOs.
With that said, Nevin and I agree that as soon as this distressed sales are absorbed, well see that market stabilize. Im seeing more and more buyers coming off the sidelines, looking for those great deals and taking advantage of the low interest rates.
4. What Inventory?
Construction, on a residential level, is virtually non-existent “ especially for downtown San Diego. Most developers have put things on hold, or are no longer going forward. Most of the cranes you see downtown, are for commercial building and hotels “ not condos. There are a few buildings that are being competed, like Bayside and Sapphire Tower, but but side from those, theres not much going on. Additionally, there wont be anything new for several years!
Nevin anticipates less than 2,000 new homes being built in all of 2009, which is a 75 percent decline from the good old days of 2005. He does point out however, that there will be some major development on city infrastructure and military construction. Downtown will also see several changes, as the Quiet Zone Act, the Pedestrian Bridge and other projects are completed.
Overall, Alan Nevin feels that 2009 is a a pretty good year to sit back, watch and now and then pounce on a good deal. I agree that there will be some good deals, but sitting back and waiting wont get you anything. If youre looking for deals, get in touch with me, or someone else who will work for you. Dont think that you can just read blogs like this and hear about everything “ Im dedicated to my clients and the deals I post on here, are essentially leftovers.
If youre thinking about buying and you need to sell, call me right now. Waiting will not help you. Good luck and as I said earlier, if youre not working with me, find someone you like and most importantly, someone who knows what theyre doing.
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*Here is the full article for those who want to read more.