In the recent past, buyers were not buying real estate because they were waiting for prices to drop(further than they already had). Today, it seems as though buyers are not buying because they don’t need to. Interest rates are low and there’s no sign of them going up anytime soon. The same goes for home prices and demand. There’s no more government tax incentive and buyer’s are still hoping/thinking that prices will continue to drop. I get that and for the most part, I agree with them.
There really isn’t a huge reason to buy now, unless your current situation would improve by buying a home. In other words, maybe your home is too big for you and you’re tired of cleaning all those rooms you no longer use. Maybe you’d save money by buying, instead of “wasting” your money on rent. Or maybe you’re tired of moving and dealing with landlords who won’t let you change that ugly faucet/door/carpet/curtain/chandelier in your current home.
The times of buying a home as a short term financial asset is for the most part, long gone. Today’s buyers are those who want/need a lifestyle change and want to enjoy owning their own home. Sure, these people still want to make money on their purchase, but they aren’t expecting to make 20–30% a year. Today’s home buyer is in it for home ownership and the improvement in their quality of life.
So how has this change in how people look at home ownership affected the San Diego real estate market? Looking at the condos that have sold in the downtown San Diego market, it looks like those who waited to buy did indeed get a better deal. Downtown San Diego condos prices have dropped over the last several years, but are showings signs of recovery – a slow and long recovery.
Looking at downtown San Diego condo sales over the last two years, you can definitely see an increase in buyer activity. With the exception of two months, there have been a considerably larger amount of condo sales in 2010 than in 2009 so far. April and May of 2010 particularly had more sales, a result of the government home buyer tax incentives. With that said, as you can see in the chart below, 2010’s average condo sales prices were generally lower than those in 2009 – probably because of the continued onslaught of short sales of REOs. However, there were a few months in 2010 that were very close and in some cases, slightly higher(March and July) average sales prices than in 2009.
Looking at the number of active listings downtown, you can see that the summer months were typically busier, which is no surprise. Keep in mind that these numbers reflect how many active listings there were during that entire month – not necessarily at any given time. It will be interesting to see what happens over the next several months, especially if/when the government steps back in to try and stimulate the housing market. My guess is that things will pick up in December and make January/February pretty busy.
For those of you who are ready to buy, or are thinking about it, please let me know if you have any questions. I definitely think now is a good time to buy, but I wouldn’t rush into it. Make sure you think about what you can afford, what your life might be like in 5, 7, 10 years and think about why you want to buy. I do think that those who buy now will make money, but as we’ve all seen, you don’t want to depend on any one investment.
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Denny Oh 858–243–2092 [email protected]